VA Home Loan Bankruptcy Glitch Fixed

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VA Loan Approval with Bankruptcy
VA Loan Pre-Approval with Bankruptcy

In the mortgage world, what you see is not always what you get.  VA borrowers with a prior bankruptcy know this all too well.  Scores of veterans with a prior bankruptcy have been denied or made to jump through so many hoops they give up.  The worst part, its all often due to a software issue.

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VA Approvals and Software Misreading BK Dates

According to VA, veterans must be at least 2 years beyond their chapter 7 bankruptcy discharge date (exceptions to this exist).  Easy enough right?  Not so fast.  For years, an automated system responsible for analyzing VA mortgage applications has misread bankruptcy discharge dates.  Rather than reading the actual discharge date, the automated system often misread the bankruptcy discharge date.

As a result, many VA home-buyers with bankruptcies over 2 years old were declined a home loan.  This, all due to the automated underwriting system misread their discharge date as less than 2 years old.  Prior to May 2014 veterans and their lender were powerless against this.

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VA Fixes Software Related Bankruptcy Issue

Declining veterans for a home loan due to a global software shortfall is a thing of the past.  Thanks to a software update, the automated underwriting system now accurately reads a veteran’s bankruptcy discharge date.   The key is that the bankruptcy must appear in the public records section of their credit report.  What a concept – reading the bankruptcy discharge date correctly!

By Jeremy House

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