Underwriting Help Desk

Lately, we have seen many late payments in the past 12 months from mortgage loan applicants. I just got news from Alex Carlucci that he got clear to close on a manual underwritten FHA loan for a borrower with many late payments due to extenuating circumstances. Due to extenuating circumstances, Alex Carlucci got approved with tons of late payments in the past 12 months via manual underwriting.

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Can I Pay Off an Active Chapter 13 With an FHA Cash-Out Refinance?

I am looking for a mortgage lender or broker experienced with an FHA cash-out refinance during an active Chapter 13 bankruptcy in Pennsylvania.

My goal is not to take money out for personal spending. I want to explore whether a court-approved FHA cash-out refinance could pay off the remaining balance of my Chapter 13 repayment plan and combine everything into one affordable mortgage payment.

Quick Summary of My Situation

• Active Chapter 13 bankruptcy
• About $30,000 remaining in my Chapter 13 plan
• Current mortgage balance: approximately $178,000
• Estimated home value: approximately $278,000
• Estimated equity: approximately $100,000
• Current mortgage interest rate: 4%
• Primary residence located in Pennsylvania
• Stable full-time government employment with documented income
• Current mortgage payments are up to date.

What I Hope to Do

I would like to refinance my primary residence and use part of the available equity to pay the remaining balance on my Chapter 13 plan, subject to approval by the bankruptcy court and trustee.

I understand that replacing a 4% mortgage rate may not make sense unless the overall payment, closing costs, mortgage insurance, and long-term financial impact are carefully reviewed. I am looking for an honest preliminary review, not a quick quote.

Questions for FHA Lenders or Mortgage Brokers

1. Do you work with borrowers who are currently in an active Chapter 13 bankruptcy?
2. Do you offer FHA cash-out refinance loans with manual underwriting when needed?
3. Can refinance proceeds be used to pay a remaining Chapter 13 trustee balance if the court approves the transaction?
4. What credit, debt-to-income, equity, payment-history, and income requirements would apply?
5. Would my current 4% mortgage rate make this refinance impractical even if I qualify?
6. What documents would you need to review my eligibility?

Documents I Can Provide

I can provide my mortgage statement, Chapter 13 payment history, trustee payoff information, bankruptcy documents, court approval if required, income documentation, bank statements, and property details.

I would appreciate speaking with a lender or broker who understands FHA refinancing during an active Chapter 13 bankruptcy and can determine whether this is realistically possible before I move forward.

Thank you for your time.

HUD guidelines on FHA loans states that an active Chapter 13 does not automatically disqualify a borrower once at least 12 months of the repayment period have passed, payments have been satisfactory, and written bankruptcy court permission has been obtained. Final eligibility still depends on the court, trustee process, appraisal, equity, income, credit, and lender underwriting. (answers.hud.gov)

My credit scores are low. BUT I have 12 months of Chattel loan, 24 months of lot rent, and nine years with the same employer. Can Gustan Cho Associates help me? I found a house that I absolutely fell in love with.

Can Gustan Cho Associates help me qualify and get approved for an FHA loan with a 530-credit score? We have the 10% down payment.

Are there doctor mortgage loans 9ffered by banks, mortgage brokers, or mortgage bankers? I remember many years back fidth-third bank offered doctor home loans for MDs, DDS, DVM, DOs, DC. Thank you in advance.

Hello,

I’m looking to get pre‑approved for an FHA loan, possibly an FHA 203(k), for a manufactured home.

My credit score is around 530. My income is $75,000 a year (W‑2).

The property is a 2000 double‑wide on its own land in New Bern, NC. It’s early stages of foreclosure and needs some repairs.

The estimated purchase price is $30,000.

I would like to get pre‑approved and find out what documents you need from me to begin the process.

Thank you.

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Do you know anyone who lends to properties in a land trust?

A great blast from the blast

Midnight Oil. Beds are burning 🔥 😤 😒

https://youtu.be/ejorQVy3m8E?si=4vjely_3TLfOA_96

I was referred by my brother-in-law, Julio Munoz, and his partner, Dimitri Slovek, about getting a home loan. My brothers and I are contractors and have worked together for many years. My wife and I are first-time homebuyers looking to purchase a single-family home in Illinois. Our combined annual income is approximately $135,000. Our credit scores are currently around 540, but we have stable employment, consistent income, and are prepared to move forward with an FHA loan. We are looking for a lender experienced with lower-credit borrowers and manual underwriting, if needed. We are serious buyers and would like to obtain a pre-approval as soon as possible. We are available to provide all required documentation immediately.

New Mortgage Programs for Homebuyers and Investors

gustancho.com

New Mortgage Programs For Homebuyers And Investors

Gustan Cho Associates has launched new mortgage programs include no-doc loans, DSCR, VA RENOVATION, AND FIX AND FLIP LOANS

Mortgage Qualification Question: Federal Student Loans In Default But Not Reporting On Credit

Good morning,

I have a mortgage qualification question regarding a potential homebuyer who may be looking to purchase a home within the next 12 months.

The borrower currently has good credit, with scores around 720. His credit cards and other accounts are in good standing. However, he has older federal student loans that went into default. These student loans no longer appear on his credit report, but they are still showing in the federal student loan system as being assigned to Debt Management and Collections.

The borrower wants to correct the default status before applying for a mortgage, but he wants to make sure he handles it the right way from both a credit and mortgage underwriting standpoint.

In this type of situation, is it usually better for the borrower to resolve the default through student loan consolidation, rehabilitation, or another available option?

One of his biggest concerns is what happens after the default is resolved. Would the loans simply come back as active federal student loans with little or no negative credit impact, or could the process cause older derogatory history to reappear on the credit report and create a new mortgage approval issue?

From a lending standpoint, what would be the best way to approach this before applying for a mortgage? Also, how long should the borrower wait after the default is resolved before starting the mortgage application process?

I would appreciate any guidance from mortgage professionals, underwriters, or anyone who has handled a similar situation.

Thank you,
Cameron Alan Pearlman, Jr.

There are many homeowners with historic low rates on their first mortgage. Many have rates in the 2% to 3% range and do not want to refinance at that low rate. What type of second mortgage loans are out there today? Can you please go over traditional second mortgages or HELOCs, and non-QM second mortgages and HELOCs? If you can cover HELOCs for self-employed borrowers using bank statements versus traditional income tax returns or W-2s. I really appreciate any help you can provide.

Hi Everyone.

What are the options when a borrower has no recent rental history? For example, let’s say someone has been living in hotels for the past year, or maybe they were staying with family or friends and didn’t have rent in their name.

If the borrower has decent income, good DTI, and a low credit score around 590, how do you approach this for VA or FHA loans? Especially in cases where manual underwriting might be needed.

Can hotel stays be documented as housing history? And if they were staying with a relative, is a letter from the homeowner or utility bills in the homeowner’s name usually accepted?

Just looking to hear how others are handling these situations. Appreciate any input.

• This discussion was modified 1 year ago by  Chad Bush.

If someone has been on a payment arrangement with the IRS . I know you have to show payment history. Has a history of payments spanning multiple years each month 297.00. In September 2024, payment amount was adjusted, with the new payments set to begin in November. Per letter from IRS. However, the payments didn’t actually start until Feb 2025.

Will he still be required to show three payments of the new amount before proceeding?

Thanks in advance for any insights!

Can anyone tell me more about contract processing? I do not know how contract processing works and want to know how this concept will benefit my home buyer. I have been a real estate agent and managing broker for 25 years and have worked with dozens of loan officers over the years and never hear of such thing. Is it better for real estate agents to refer clients to mortgage brokers without contract processing? Do real estate agents connect with contract mortgage processors? Who pays for contract processing? Are contract mortgage processors competent and experienced? I think processing is the most important step throughout the mortgage process. Thank you in advance.

Time flies, and everyone wants to limit the wasteful. The time they spend going to the wrong source for research on buying a home and getting approved for a mortgage. Over 80% of our clients at Gustan Cho Associates are borrowers who could not qualify at other mortgage companies due to the lender’s overlays or because the lender did not have the best mortgage loan option

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