When does the 2 years start ?

[Houseofcards]

This question may have already been answered here - if so forgive me for asking it again

We are preparing to file our BK very soon - we do not know which chapter yet because of our income situation. We have self emplyment income (me) and fluctuating income (wife - tip earner) - but that is for another thread. Our attorney seems to have it all figured out.

My question is this:

If we file chapter 7 - all debt is "included" as I understand it. We would "pay through" on our first and second (HELOC) mortgage to keep our house.

Lets say that we decide after filing that we want to "walk away" from our house because of negative equity.

We want to buy another home. When does the "2 years before a FHA loan consideration" start ?

I am asking because if it starts from the filing date - and you stop paying your first mortgage 1 year later - and they then foreclose which can take a long time - couldn't you almost stay in your old house right up to about the time you can buy a new one - for less - down the street ?

-or-

Does the "2 years before FHA loan consideration" begin after the house is foreclosed on? I understand that the "hit" to the credit is only one thing - the BK - and all debt will show "included in bankruptcy" - but does the time frame have anything to do with how long you have been "off the deed" from your old house ?

It has been a long day - I hope this post makes sense.

thanks in advance for your input

BTW - what is a "DH" that a lot of you refer to - asuming you are refering to your spouse ?

[Logan]

2 years from BK discharge for Ch. 7.
3 years for foreclosure.

[Flamingo]

(Snip...) I am asking because if it starts from the filing date - and you stop paying your first mortgage 1 year later - and they then foreclose which can take a long time - couldn't you almost stay in your old house right up to about the time you can buy a new one - for less - down the street ? (Snip...)

-BTW - what is a "DH" that a lot of you refer to - asuming you are refering to your spouse ?

___________________

Well if your first paragraph I quoted above could actually be done, the mortgage industry would probably just collapse completely for reasons which are quite obvious! Everyone and their uncle would file BK and foreclose to take advantage of that system and those who continue to pay their mortgages and struggle to keep their homes would probably revolt! :-)

Nothing comes easy after you file BK or foreclose on a home. Those two items, and also repossession, are the worst things to have on one's credit report. Nothing is guaranteed as to mortgages or credit after filing BK or foreclosing on a home, or having a vehicle repossessed. That info will be on credit reports for 7 to 10 years hurting you when you least expect it, even several years after filing. There is no guarantee you will ever be able to get a mortgage again and there are those that can get them but you have to qualify and all lenders are different in who they accept and don't accept. In all liklihood and just keeping things in actual reality, it will probably be a good 3 years or more, and if you qualify at that time, to get another mortgage. By qualify I mean stellar credit (no lates on anything including electric, phone, etc.) and few credit inquiries on your reports. Everyone thinks coming out of a BK is easy but that is just the beginning of many other issues as everyone finds out.

DH I believe refers to "Dear Husband"

[Houseofcards]

So - let me see if i understand. Discharge of chapter 7 BK has to happen at least 2 years before FHA will look at you for a loan - and obviously you would still need to qualify and have a down payment.

But if you have a foreclosure - the FHA "look back period" is 3 years - so - 3 years removed from the date of the foreclosure. Again you would still need to qualify and have a down payment etc.

Now i am a bit confused.

Since you include all of your debt in your BK - which would include your mortgage on the house you are keeping - isn't the BK the one event that reports on your credit ?

And further - if you walk away from said house at a later date - isn't that still reported as "included in BK" ?

I am asking this because we are borderline chapter 7 or 13. If we do a chapter 13 we will be trying to lien strip our HELOC - we would keep the house. If we do a chapter 7 we may end up walking away from the house and looking to the future.

I guess i am asking if "walking away later" is another event - a foreclosure - which is essentially what happens when you walk away. Is this a foreclosure or included in BK ? My question relates to "rebuilding credit after BK in order to buy another home".

Our current situation is this:

$220000 is what an appraisal would currently be
$210000 is what we owe our first
$81000 is what our HELOC balance is

2 months ago our apprasial would have been $245000

Who knows what next month will be - we will see.

[Tbornetun]

It should be reported as included in bankruptcy. The mortgage company should not be able to report it as a foreclosure.

[RickInMich]

Unfortunately, it is 3 years from the date the house transfers out of your name, usually at foreclosure. Even though the house is included in Ch 7., and it's true that on the credit reporter there will not be a public record called "foreclosure," underwriters will know the house was foreclosed upon. They will find the records.

I wish it were 2 years from discharge. Dear God, I wish that were true. But from my exhaustive research online, and many many many posters asking this same question, everyone says it's 3 years from date the house transfers out of your name.

[halloweendmb1]

correct from the date of transfer

[UpsideDown]

If I'm reading correctly, your house is worth more than you owe on the 1st, which means you cannot strip the lien on the HELOC. To do a lien strip, the house has to be appraised at less than you owe on the 1st, making the 2nd "wholly unsecured".

BTW, good luck on this. This waiting period is a major concern of ours too. We just want to be able to get a loan. I'm in a better position to afford a mortgage now than I've ever been and it appears just about impossible to get one. : (

[Funk4Crunk]

What if foreclosure is *not* started for months after BK?

I am asking because if it starts from the filing date - and you stop paying your first mortgage 1 year later - and they then foreclose which can take a long time - couldn't you almost stay in your old house right up to about the time you can buy a new one - for less - down the street ?

Well if your first paragraph I quoted above could actually be done, the mortgage industry would probably just collapse completely for reasons which are quite obvious! Everyone and their uncle would file BK and foreclose to take advantage of that system and those who continue to pay their mortgages and struggle to keep their homes would probably revolt! :-)

Actually, I believe I have read news reports about the fact that there are over 600 milliion foreclosed properties that are not listed for sale. People have moved out of their homes after court judgments, only to be sued by the cities for damage to the vacant property many months later, because there was never a sheriff's auction to transfer deed ownership.

I am in contact with RealtyTrac about whether mortgage companies are not even initiating foreclosure actions at all, now.

Reason? Because now they can list our properties at the best appraisals. Once the properties are sold, they will have to recognize the losses with very public headlines about foreclosures and related losses. I believe the lenders are in much worse shape than they are admitting, if my situation is any indication.

See my situation of *two* properties with neither note holding company having initiated legal action for foreclosure, even after BK7.

http://www.bkforum.com/showpost.php?p=290784

For my home, it's been great - no "rent" at all since last October.

For my rental property, however, I'm in a dead panic about the many "blank checks" I may be sued for at any point in the future.

As you can see, if you go the foreclosure route vs. short sale or other option, you have zero control over when the actual foreclosure date will be in terms of qualifying for another mortgage (something I am not interested in at all).

[gophermn]

What if my home was IIB (CH7) but I am still living in the house and still making payments out of good faith to the mortgage company. Does that still fall under the 2yr mark? I have proof of payments ontime thus far.

[Logan]

What if my home was IIB (CH7) but I am still living in the house and still making payments out of good faith to the mortgage company. Does that still fall under the 2yr mark? I have proof of payments ontime thus far.

Was there a foreclosure?

[brokeNconfused]

i have been looking into this too. I have been in contact with broker becasue i am finally at my 1 year mark in a 13. the broker said it is 3 year after closing a 7, but if a 13 she called me back and said its 1-2 years with no lates during the 13 they will re-fi if trustee agrees.