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CH7 caused by extenuating circumstances - FHA Loan possible?

Hello. I was forced into a CH 7 BK due to reduction of income due to a medical crisis. I am one year post-discharge. Are lenders considering FHA funding 1 year post discharge when there were extreme circumstance causing the BK? Also, what do lenders consider to be extenuating circumstances? Thanks!
  • November 18 2010 - Mount Kisco
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Answers (2)

FHA will allow you to purchase another home after one year of the bankruptcy.   Here is the link referencing this in their guidelines. http://www.fhaoutreach.gov/FHAFAQ/answerPre.jsp?solutionid=AAVA-2F1U08  However, there may be investor overlays.  You will need to check with different lenders.  As far as extenuating circumstances, this is usually due to loss of a main wage earner, loss of job, illness, things that are unforeseen and life altering.  However, they do not consider Divorce to be an exception.  Hope this helps you some.

  • November 18 2010
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An elapsed period of less than two years, but not less than 12 months, may be acceptable if the borrower can show that the bankruptcy was caused by extenuating circumstances beyond his or her control and has since exhibited a documented ability to manage his or her financial affairs in a responsible manner.  Additionally, the lender must document that the borrower's current situation indicates that the events that led to the bankruptcy are not likely to recur.
  • November 18 2010
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