HELOC after dismissed Chapter 7?

Question

I was trying to get a HAMP for about a year. Just before I was  to get a modification finalized the bank said they were "out of time" to  make a decision and they were going to sell my home on the Court steps  on Dec 5, 2013. In order to keep from losing my home, I had to file  Chapter 7 Bankruptcy. I filled a "skeletal" petition. I had to file or  lose my home. Of course about two weeks later the bank granted a  modification and I kept my home. I never filed the full petition or  filed further papers and the Court dismissed it. I did not have to  "re-affirm" my mortgage because my BK never completed. There is no  discharge date since it was dismissed. However, it does show on my  credit report as a BK that was dismissed.

I have  good assets and income. I own three rental properties outright. I cannot  get a mortgage on those because of Fannie Mae's 7 year bankruptcy rule  on investment property. I have plenty of equity in my home and I'm  looking to get a HELOC with 70% LTV. My income is good and DTI is low. I  do not want to re-fi because I have a super low rate for the life of  the loan.  I saw that Nationwide was doing HELOCs but they have  discontinued them. Does anyone know of an actual bank or lender that  will work with my situation? Is anyone a broker or lender that can work with me? Thanks in advance!

Billy Bob · Answer

Thanks again for the replies! I have been unable to find a portfolio lender in CA. Fremont Bank is a PL but they gave me the same story about no HELOC for four years after a BK. The CUs out here have had stricter lending requirements or they farm the loans out and I'm back in the same boat with those lenders. I wish I could find a loan in the 5% range! @Darrell, I'll send you a message.

Darrell Shepherd · Answer

VERY doubtful you can do a HELOC with a bk7.  Chris is right a CU is your best bet.

There's some neat long term programs coming out that fill that void in the market, though.

Lending Home is a 630 score, no DTI, no tax returns, 5/1 ARM 5-8% rate.  Has prepays yr 1-4.  Up to  75% LTV.

Lima One Capital has a 30 year am, it's full/light doc, 620 score(?), prepays yr 1-5. Up to 75%, no down pay requirement.

Only in some markets, and they're both new products (like this month), so don't hold me to being exactly right above.   I'm thinking we see more of those come down the pipe, Wall St. money is coming into our industry.

I'd have to check on the BK on those, should be fine as long as there's no foreclosures.

You can go direct on either or shoot me a note if you want more info.

Chris Simmons · Answer

look at a portfolio lender that will loan to your llc with you as a guarantor.  whatever weakness is associated with your bankruptcy info can be mitigated by a lower ltv or more cash to close.  You should still be in the 5% range.

if you want something with equity on your primary, look to a credit union for the equity loan....most don't do helocs.  you can have better luck with credit committee at credit unions if other fundamentals are sound.

Billy Bob · Answer

Thanks guys! I have only been able to find hard money loans for the three rentals and the rate is fairly high. Because of the BK normal lenders won't do it. @Dave. Thanks, will do!

Dave Jeltema · Answer

I would work with a "real" credit repair company, they may be able to get something done with the reporting issue connect with me and i can send you the name of the best I know!

Neil Aggarwal · Answer

You should also consider using your three rentals as collateral instead of your primary residence.