A bankruptcy lender specializes in providing mortgage loans to those either in bankruptcy or recently out of bankruptcy. Specialized lenders exist for various niches such as apartment loans, VA loans, construction loans, and commercial loans to name just a few. When borrowers have unique needs, a specialty or niche lender offers tailored loan programs that a general lender does not provide. A bankruptcy lender understands their client's unique needs, provides bankruptcy friendly loan programs, and knows how to get their clients approved.
What does a bankruptcy lender do?
A bankruptcy lender is knowledgeable of the various types of bankruptcy filings and understands what happens to someone when they go through the process. A bankruptcy lender knows how to work with the borrowers bankruptcy attorney to successfully file the court motion. They also know the bankruptcy trustees and what specific lender information they need to get court approval in less than three weeks (which can take up to 2 months if mistakes are made during the process). A bankruptcy lender knows how to package the mortgage loan application with the underwriter for a fast approval. A bankruptcy lender knows what happens to your credit and how to update and remove items with the three credit agencies to improve scores.
A bankruptcy lender typically offers four types of mortgage loans:
Refinance just the mortgage and keep the chapter 13 plan in place
Refinance the mortgage and payoff the chapter 13 plan
Refinance a mortgage right after the chapter 13 or chapter 7 plan is discharged
Purchase mortgage after the chapter 13 or chapter 7 plan is discharged
A focused bankruptcy lender has several loan programs for each of the above scenarios and matches a borrower to the best terms and rates depending on their situation. For example, there are different loan program for one day out of the discharge versus six months past discharge. A general lender typically has one program that requires 2 years past discharge. If you work with a specialized bankruptcy lender, you ensure your chances of obtaining loan approval and funding your loan with the best terms possible.