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I am trying to help a client currently who is in a bit of a sticky situation. Here is their situation:
They are currently in Chapter 13 bankruptcy and litigation.
It was started in 2014, but paperwork was never filed. In March of this year, they brought it back up and are moving forward with the bankruptcy.
They want to underwrite a new loan for 235k on a value of 350k.
She has said that her current loan was a predatory loan.
Their current rate is 12.375%.
It is their second home, occupied by their disabled son.
She said she could use proposed funding for this new loan to settle the BK and litigation.
I know that if she has been in the bankruptcy for 12 months and has paid it, she is eligible for a FHA loan, however they haven't been able to pay for it because of the predatory nature.
Is there anything that I can do for them besides a hard money option?
Could possibly put them into an ARM around 7.00 - 7.99%, then refi out of that into a "regular' mortgage when proper Bankruptcy payment history has been establish. We'd want to set things up to refi them out a week or 2 after that 12th bankruptcy payment posts.
FHA is not possible as it's not a primary residence. And they would make, what, 4-5 payments on the new loan prior to refi? ( the base payment = about $1,760).
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