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chapter 7 can we get a house?

Here is the scenario:I am 27, and my wife is 28. I owned a corporation since 2000 that went belly up, and I had to file an individual Chapter 7 bankruptcy because I owed all the debt the corporation couldn't pay. My wife wasn't involved with the corporation, so she did NOT file a bankruptcy -- she didn't own any of it, didn't work for it, and didn't sign/owe any of its debts. I haven't had any income to show for from the company for the past two years, I cut out my paycheck thinking things would get better. SadWe are starting a new company in her name, so don't have any income to show for there.At the end of 2008, my wife just hit a gambling jackpot for $45,000 (woohoo). We are fully declaring the money on our taxes. After paying back family that we owed, we have about $30,000 in assets left over and the only debt we have is her student loans of about $15,000 which are actually on deferment. We would also be getting the $7,500 tax credit if the House gets their stimulus package through, but wouldn't get anything if the Senate gets their version through. (Due to a net operating loss we won't have tax liability for a few years, and the Senate's version although being $15,000 is non refundable past a person's tax liability.)Her middle credit score is 654 (695 TU, 654 EXP, 643 EQU.) My middle credit score is 609 (609 TU, 583 EXP, 623 EQU.)We are hoping to buy a home for around $100,000, and would wind up paying less on mortgage+pmi+property tax than we have been paying on our apartment and storage facility. We have been getting by with paying rent, buying food (very much on a budget, mainly what's on sale.)We looked for a lender that would put the house and mortgage in my wife's name. I have no problem not being on it whatsoever. Keeping me off means no bankruptcy issue. Not suprisingly, we can't find anyone who will write a mortgage at the moment without a cosigner - even having about 2-3 years of mortgage payments already in the bank, or even providing a 30% down payment. I understand that even with her credit and our assets, they won't write us without being able to prove income (and they don't treat gambling winnings as income since it isn't recurring). My father is debating cosigning for us, especially if we put most of our money in a CD so he knows we have 2-3 years of payments banked up and can't blow it on anything. But, he's not positive if he will cosign for us. His credit is about 800, and his ratios even with our mortgage payments is well under 30%, so he would qualify us for a mortgage.My wife was helping me with my business, so is also unemployed at the moment. She has a degree in a field that completely isn't hiring right now, so the chances of her finding a job with enough W2 income to afford a mortgage is pretty slim, especially being in Michigan.* Assuming he doesn't cosign, what is the quickest way to get a mortgage?* Anyone see a way for us to accomplish this earlier than 2 years, without needing a cosigner? (I'm not very interested in the idea of a land contract, btw.)Any income I earn won't be looked at for about 2 years, because I just had my bankruptcy discharge about six months ago.Her income is going to be W2 income from a corporation she owns, so they will consider her self employed, and will want to see 2 years of self employment income along with business accounting statements and tax returns.Understandably, no one is offering no income verification or no doc mortgages at the moment.What should we do? by chrisga from Columbus, Georgia. Oct 26th 2009 Reply


Leo Harvey (LHARVEY)
#7 ranked lender in Pennsylvania - 142 contributions

The quick answer for you is have your wife find a job paying w2 income in sufficient amount to qualify her. It looks like you have done your research and understand all the implications of your past history and the guidelines for getting a mortgage. although there are a few lenders offering NINA and no income verification loans the LTVs are in the 50-60% range. Emigrant is one that we work with. A 70-80% LTV loan is not going to happen without verifiable w2 income. Probably FHA is the best option for your case especially if you have to go the co-signer route. Unfortunately I am sad to say you already know the answer to this dilemma. Wait 2 years and build your credit or hope your wife can find a job even though not in her field. I wish you good fortune. You will need it.

Oct 26th 2009
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