[Benjamin Parker]

You’re in a tough situation, but it is not hopeless. Let’s look at how a complicated housing history could affect your chances of getting a mortgage and the workarounds available to you.

A 24-month housing history is a requirement to get a mortgage. Lenders might still be able to work with your situation.

Here’s What You Need to Know:

Most lenders want a stable housing history over the previous 24 months as evidence of financial stability. Although your situation of living in a hotel for 18 months could raise a few concerns, the key is that you had no choice. It was due to the sale of your residence, which you had lived in for the last 12 years.

Helpful Documents, Letter of Explanation: Start with a Letter That Includes the Most Important Details Below:

• Sale of your residence
• Your 12-year tenancy
• Circumstances of your hotel living
• Any efforts to secure permanent housing

1. Proof of your 12-year residence: Include documents demonstrating a stable housing history.
2. Proof of your 6-month current rental history: Include rent receipts or bank statements showing timely payments.
3. Some lenders may want more history before approving a mortgage.
4. Marine Corps Documentation: Include your military service and discharge documents to add stability and character.

Potential Lender Options

• VA loans: As a veteran of the Marine Corps, you have the option of the more flexible VA loans.
• FHA loans: FHA loans tend to accept non-traditional housing options more easily.
• Manual underwriting: Compensating factors such as good credit, good income, and a good down payment may lead a lender to manually underwrite your loan with less reliance on automated systems, depending on lender standards.

Steps to strengthen your application

1. Try to wait until you have a full 12 months of current rental history, if that matches lender standards.
2. Try to increase your credit score.
3. Save for a larger down payment.
4. Get pre-qualified with as many lenders as possible, including VA loan lenders.
5. Consider using a mortgage broker to help you find lenders that work with special circumstances.

Your status as a veteran may assist you in your current situation. There are programs that directly serve the veteran population and help them overcome some of the housing issues they face. Contact a VA loan lender or mortgage broker to discuss your options and next steps.

https://gustancho.com/va-mortgage-loans/

• This reply was modified 4 days, 15 hours ago by  Sapna Sharma.

[Benjamin Parker]

Based on the search results, several states have specific distance requirements between a Mortgage Loan Originator’s (MLO) personal residence and their company’s branch office, while others have explicitly removed such requirements. Here’s a breakdown of the states with distance requirements:

States with Distance Requirements:

• Rhode Island has provisions requiring that a remote work location be within a “reasonable distance” of the licensed place of business or branch location.
• Several other states have mandatory distance requirements between an MLO’s residence and the nearest branch office, though the specific states aren’t fully detailed in the search results
• North Carolina has specific requirements where MLOs can work from home but cannot originate residential mortgage loans from their residence unless it’s also a licensed branch office.

States Without Distance Requirements:

• Ohio explicitly states there are “no minimum or maximum distance requirements” for MLOs in relation to company office locations
• Massachusetts clarifies that “MLOs are not required to live within a certain distance of a branch office.
• Pennsylvania permits in-person consumer interaction at remote locations that are not personal residences
• California has issued guidance permitting remote work by employees of licensees under the California Residential Mortgage Lending Act
• Illinois amended its Residential Mortgage License Act of 1987 to specify requirements for licensed MLOs working from remote locations
• Montana enacted legislation permitting MLOs to work remotely.

The specific distance requirements vary by state, and what constitutes a “reasonable distance” in states like Rhode Island may be subject to interpretation by regulators. Additionally, some states that have written distance requirements may not apply them as strictly as written, as noted in Rhode Island’s case.

For the most current and detailed information about specific distance requirements in each state, you should consult the NMLS state licensing resource or contact your state regulator directly.

[Benjamin Parker]

Bottom line

They may be able to dismiss the Chapter 13 and file Chapter 7, but that is not a decision to make before a Pennsylvania bankruptcy attorney reviews the deed, creditor list, mortgage arrears, and Chapter 13 docket.

A better question for counsel is often:

“Should we modify the current Chapter 13, convert the existing case to Chapter 7, or dismiss and refile?”

A Chapter 13 debtor generally has the right to convert to Chapter 7 or request dismissal. A direct conversion can avoid some of the risks created by dismissing first and filing a new case later. (U.S. Code)

The equity issue is the major concern

Based on the numbers provided:

• Estimated home value: $300,000

• Mortgage balance: $170,000

• Approximate gross equity: $130,000

That is substantial equity. A Chapter 7 trustee would examine whether there is enough nonexempt equity to sell the home, pay the mortgage, cover sale and trustee costs, return exempt funds to the couple, and still pay creditors.

The answer depends heavily on how the home is titled and whether the $40,000 in medical and credit-card debts are joint debts or belong to only one spouse.

Pennsylvania tenancy-by-the-entireties protection

If the home is owned by husband and wife as tenants by the entireties, Pennsylvania law can provide very strong protection against creditors of only one spouse. A creditor of Husband alone generally cannot execute against entireties property owned by Husband and Wife together.

However, that protection changes when there are joint creditors.

The Third Circuit has held that Pennsylvania entireties property may be reached for debts jointly owed by both spouses. In other words, if both spouses signed for a credit card, are jointly liable for a medical bill, or jointly owe another unsecured creditor, the equity may be available to satisfy that joint debt.

So the critical homework is to classify every debt:

• Is the debt owed by Husband only?

• Wife only?

• Or both spouses jointly?

• Was one spouse merely an authorized user, rather than a legal borrower?

• Are there tax liens, judgments, or other secured claims?

That debt-by-debt review may determine whether Chapter 7 is safe or dangerous.

Is there a Pennsylvania homeowner exemption?

Pennsylvania does not provide an unlimited automatic homestead exemption that protects all home equity.

Pennsylvania residents may generally choose either:

1. Federal bankruptcy exemptions, or

2. Pennsylvania/state and nonbankruptcy exemptions, which can include tenancy-by-the-entireties protection.

A married couple in one joint case generally cannot have one spouse choose federal exemptions while the other chooses the state/nonbankruptcy route. (U.S. Code)

For a new case filed after April 1, 2025, the federal homestead exemption is $31,575 per debtor. Because exemptions generally apply separately to each debtor in a joint case, a married couple could potentially protect up to $63,150 of qualifying home equity under the federal homestead exemption, assuming both own and occupy the property.

That still may leave significant equity exposed before accounting for selling costs, liens, trustee compensation, and any other valid exemptions.

The Pennsylvania general monetary exemption itself is only $300 per debtor, so it is usually not the main protection for a home with substantial equity.

Why dismissal before refiling can be risky

A dismissal ends the automatic stay. Creditors may resume collection activity once the case is dismissed, including mortgage enforcement if there are uncured arrears.

Also, if they dismiss and file another bankruptcy within one year, the new filing can face an automatic-stay problem. The stay may expire after 30 days unless the court extends it, and a dismissal for failure to perform a confirmed plan can create a presumption that the new filing was not made in good faith.

There can also be a 180-day refiling bar if the court dismisses the case for a willful failure to follow court orders, or if the debtors voluntarily dismiss after a creditor has filed a motion for relief from the automatic stay. Whether that applies depends on the actual docket, motions filed, and language of any dismissal order.

Two missed Chapter 13 payments do not automatically mean a 180-day bar applies, but they do make timing and wording very important.

Conversion may be safer than dismissal and refiling

A direct conversion from Chapter 13 to Chapter 7 keeps the case alive instead of creating a new filing. Under the Bankruptcy Code, conversion generally does not change the original petition date.

That can be helpful procedurally, but it is not automatically the best financial choice. It may also mean they should not assume they will receive exemption amounts available in a newly filed 2026 case, because the current case began in January 2025.

There is another mortgage issue: if the pre-bankruptcy mortgage arrears were not fully cured through the Chapter 13 plan, conversion does not necessarily erase that default. The Bankruptcy Code provides that an uncured pre-bankruptcy default continues to have its normal effect under applicable law after conversion.

They should obtain a written mortgage status from the servicer showing:

• Pre-bankruptcy arrears originally claimed

• Amount paid through the trustee

• Remaining arrears, if any

• Post-petition payment history

• Escrow shortages, fees, or other unpaid amounts

• Whether the lender considers the loan fully current

Other options before dismissal

Before surrendering the Chapter 13, they should ask their attorney whether one of these is possible:

• A plan modification to catch up the two missed payments or reduce the payment.

• A temporary arrangement approved by the trustee or court.

• A direct Chapter 13-to-Chapter 7 conversion.

• A hardship discharge, although that is difficult. It requires circumstances beyond the debtors’ control, a showing that unsecured creditors received at least what they would have received in Chapter 7, and proof that modification is not practical. High nonexempt equity can make this option harder.

Practical recommendation

With approximately $130,000 in gross home equity, I would strongly recommend a consultation with a consumer bankruptcy attorney in the district where the Chapter 13 is pending before voluntarily dismissing anything.

Bring the attorney:

• The recorded deed and title report

• The Chapter 13 plan, trustee payment history, and dismissal notice

• The mortgage proof of claim and current servicer statement

• A current broker price opinion or appraisal

• Mortgage payoff amount

• A creditor list showing whether each debt is Husband-only, Wife-only, or joint

• Recent pay stubs, bank statements, tax returns, and household budget

• Any motion for relief from stay filed by the mortgage lender or another creditor

The most favorable scenario is usually: the home is truly held as tenants by the entireties, most unsecured debts are individual rather than joint, the mortgage is fully current or fully cured, and Chapter 7 eligibility works under the means test. The dangerous scenario is: meaningful joint unsecured debt, a remaining mortgage arrearage, and enough nonexempt equity that a Chapter 7 trustee could liquidate the home.

[Benjamin Parker]

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