If I BK the house but stay 2yrs (making pmts) then apply for mtg...

[gophermn]

I am in the same boat as you all are. My home is IIB yet I have been making payments ontime the last 14 months after discharge. Despite it's a kick in the butt that my ontime payments are not being reflected in my credit report, its also nice knowing I can run 31 days behind and not have it show up either :-)

Golden rule I follow is whatever transaction I do, I want to sleep at night. If I am going to buy a new house (FHA) or refinance my house in the next year or two, I will show proof that I have been making payments ontime/every month. I think that has more weight and credibility then doing the "buy and walk" like HHM said.

One would think with the mortgage meltdown that rules would change and those who now have awesome DTI because of CH7 or CH13 could get into a house much faster then the two year mark. I like the good-ole-boy policy of not being able to file for a new loan for 2yrs out of Bankruptcy. I think that should be revisited.

[Tom_Mi]

So, the bottom line in all of this is...

-Forget all the hoopla about fun ride-throughs.

-Reaffirming the house ain't bad, because ride-throughs don't do jack for you.

-If you bankrupt your house....and try to leave...

-You WILL rent for 3 years.

Period.

[imoverit]

We tried the buy and bail thing when we first started our plan to ditch our upside down house. Right before we made an offer on a home FHA changed their guidelines about the "rental prop" and we lost out. We hadn't done the BK yet at that point. The problem I see with that plan is... you have to provide bank statements (deposits should match your paystubs/they might want copies of checks used to pay for current home) and their title searches will surely bring up some questions. If you lie and the lender figures you out your dead in the water and that is technically mtg fraud. A short sale maybe? Although, I hear everywhere that the FHA looks at a short sale the same as a foreclosure. I am thinking unless some guidelines are changed about the foreclosure/short sale thing you are SOL. Believe me, I feel your pain

I hope they change the foreclosure timeline thing for mortgages. I really think I was incredibly smart financially to get rid of that house. I don't care what anyone thinks!

[HHM]

So, the bottom line in all of this is...

-Forget all the hoopla about fun ride-throughs.

-Reaffirming the house ain't bad, because ride-throughs don't do jack for you.

-If you bankrupt your house....and try to leave...

-You WILL rent for 3 years.

Period.

-No point in reaffirming unless you can get a better deal. Also, unless you have a carefully worded reaffirmation agreement, the reaff amounts to no more than a ride-through and now you are stuck with the debt. Most BK judges won't even sign reaff's anyway, so reaff's are not really an option.

-If you bankrupt the house, and leave, you will rent for 2 years. (the BK acts as the mitigating circumstance to the foreclosure so you are only on the BK clock, not the foreclosure clock).

Buy and Walk is mostly a dead strategy.

[OhioFiler]

-Buy and Walk is mostly a dead strategy.

What about Walk and Buy? Could I quit claim the deed to the bank then shop for a new house?

There has to be a way to do this. FHA underwriters can't consider your BK after 24 months. If the house is not titled to you, you're in your 25th month post discharge and you meet the other lending guidelines such as downpayment and debt to income I think it could be done.

P.S. I am not an attorney nor a real estate professional.

[HHM]

To be valid Quit claims must be signed by both sides; it is highly unlikely the bank will do it.

[RickInMich]

-If you bankrupt the house, and leave, you will rent for 2 years. (the BK acts as the mitigating circumstance to the foreclosure so you are only on the BK clock, not the foreclosure clock).

HHM, is this true? I've read so many conflicting things about this. We discharged in March '08, our house went back to the bank October '08. The house was included in the bankruptcy. So are you saying we could get a loan in March 2010 (two years post bankruptcy?) Man, I so hope that is the case.

[afterbkloan]

Hi folks i work in a mortgage division that specializes in FHA after BK.

This is the deal if you let your house go and it is anywhere on your credit or in your bankruptcy be prepared to provide proof of status of the home.

If it was foreclosed or given back deed lieu the FHA clock will start when the actual transfer of ownership on the deed itself.

So lets say you are discharged after bankruptcy and you decide to walk away but the bank doesn't foreclose until 1 year later and actually forecloses and the paperwork is processed at the courthouse 1 year after you walk away. That is when the clock will start for FHA 3 years to get financing.

My suggestion is keep your house when you are ready to go get another one have a executed lease agreement with deposit showing that is a legal contract not just another make believe lease agreement.

[Tom_Mi]

Thanks for the info afterbkloan....

Question: Is FHA ok with a short sale on the bk house if I can get one approved? ..or is there a 3yr wait even for a short sale?

[Mi Bankruptcy]

Why does there have to be a rental or lease agreement? If the home was IIB. You show them the proof and then tell them you are staying there without a lease and provide your pay stubs as proof of house or rent payment? If they ask about the house you tell them you don't owe anything on the house and you are interested in buying a new one. WTH.. be brutally honest and see what happens?

[afterbkloan]

Tom

It all depends on the lender you choose. But a lot more with the economy are taking the short sale as what you have to do in a declining market. Just make sure you ask your lender upfront about this when you get your approval. I hate when someone says one thing in the beginning and then changes before you close the loan.

[gophermn]

Why does there have to be a rental or lease agreement? If the home was IIB. You show them the proof and then tell them you are staying there without a lease and provide your pay stubs as proof of house or rent payment? If they ask about the house you tell them you don't owe anything on the house and you are interested in buying a new one. WTH.. be brutally honest and see what happens?

I agree here. To ask my mortgage company to provide a lease would never happen. One would think the legal bk papers on my petition that explicitly state "I will continue to make payments on good faith" and show proof of payments would suffice.

[afterbkloan]

ok let me make this clear if ownership has not been transferred on title and you have been staying in the home, you are the homeowner period.

Even though the BK may say you have put the home inside the BK. You have been staying their and making good faith payments on the home. As a lender that says you still want to keep the home.

The lease agreement is for when you go to get the new home to show that you are going to rent it out so the your payments on the old home will not affect your DTI too much for approval. Or you can just sell the home before getting new home.

I hope this clears this up for you how a lender will look at your old home because if you say you are not responsible for the payments for that home it will be considered a foreclosure. Then you would have to wait until the forclosure process is completed. Then wait 3 years from that date of completion.

I am just giving you the view of what an undewriter would look at when viewing this. Hope this helps!

[Tom_Mi]

FHA should waive or lower the 3yr if you're surrendering an IIB home to one of significantly lesser value. To me it demonstrates prudence and keeps the market (home sales) moving.


It'll Never happen.

[BkinTX]

Ok, this all has me very confused. I hope no one minds if I hijack with a question of my own...

We are riding through on our home (I don't think reaffirm is even on the table -- Bank of America). We will be here for a few years (military). Our payments are reasonable, and we are not under water on the mortgage at this point.

We are current on payments and intend to keep paying and then walk away when we move (probably 4 years from now).

I was under the impression that by that time, we would be able to purchase a home. Is that incorrect?

What needs to happen so that we can eventually purchase a home?

Also, are we allowed to sell this home? We have a VA loan, and some paperwork I received stated that if we pay off this home (which I assume includes by sale), the VA will give us another loan.

Sorry if these are stupid questions...