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

[pa308]

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).



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...

If you are current, not underwater, why wouldnt you sell the home 4 years from now? You'd have to have some equity (proceeds to you) after the sale? Just because it was IIB, lender will still get whats due them and rest would be your $ unless I'm missing something....

[BkinTX]

Well, if "Quizzle" is correct, we are underwater by quite a bit now. It says our home has depreciated over 26% over the past year. D'oh!

[want2save]

There are services available to lenders which show if you hold title to any real estate anywhere in the United States. I was a title/escrow officer for 40 years and the lenders know all the tricks! Sorry.

[suzieq]

I am confused now regarding our mortgage. We should be discharged this month with a chapter 7, we have retained our home but it was included IIB and we did not reaffirm. We are upside down with two mortages by at least 100k most likely more and we have been tossing around the idea of saving money and trying to purchase another home at some point that would be much nicer than what we have for the same price. There have been conflicting posts regarding walking away and foreclosure. I thought I understood that once the bankruptcy is discharged if we walked away it could not be shown as a foreclosure on our credit report. Is that wrong? Any help would be greatly appreciated as we are in a great school district, our kids don't want to leave, but we look around at all of these houses for sale at a much better price than what we owe and we would love to start over. Is that impossible?

[awayalways]

My situation is a little different in that I received a USDA mortgage instead of FHA because they apparently have no 2 year ruling like FHA. I didnt qualify for FHA, but I was able to get a USDA mortgage 10 months after my BK7 with IIB on my credit report and no reaffirmation or payments. My lender said no problem with 660 plus fico and all debts canceled.

[suzieq]

So did you have a mortgage prior to the new one and you walked away from it? Can you explain where you received a "usda" mortage? Thanks for your reply.

[awayalways]

So did you have a mortgage prior to the new one and you walked away from it? Can you explain where you received a "usda" mortage? Thanks for your reply.

Yes, I had a mortgage and I still have the house too (although I surrendered it IIB in my BK7. I have a post titled "USDA mortgage - 10 months after BK7 Discharge!" with all the details in the mortgage forum.

[Tom_Mi]

Yes, I had a mortgage and I still have the house too (although I surrendered it IIB in my BK7. I have a post titled "USDA mortgage - 10 months after BK7 Discharge!" with all the details in the mortgage forum.

alwaysalways, thanks for posting this. This subforum *needs* a sticky list of lenders willing to look past the FHA waiting periods.

[yeahdischarged]

Our real life details: We were discharged chapter 7 (new laws) 3 years ago. However, we did a ride-thru on our home and continued making payments. When we had a job transfer and home was upside down, we walked away (as we legally could).

At that point, the bank started foreclosure proceedings as that is the only way to get the property back in their name. We legally owed no money on it.

The home did not change hands back to the bank until a year ago.

We could have gotten a new mortgage 2 years after discharge (one year ago) EXCEPT -

We have a foreclosure, and now have to wait 3 years from THAT. So it will be 5 years post-discharge before we qualify for a mortgage.

We are not happy, but it is what it is.

The way to fix this is to secure a new home BEFORE you let the current home go into foreclosure, if possible. If you have the income to carry 2 mortgages, or something.

Our credit is back up to almost 700 and the lenders wanted to give us a mortgage (as our credit report does not show foreclosures at all.) But we were honest (one of us having been in the real estate industry prior) and we knew the underwriters could find it - then mortgage fraud if we lied. We need to sleep at night, so we told the truth. Had we not, we would have had to wait until literally closing day to find out if someone "caught" the foreclosure issue. That would SUCK - could have been DOA at day of closing or anytime before. I recommend honesty.

So to recap:

Chapter 7 Discharge - mortgage in 2 years

Foreclosure - 3 years from date home changed hands back to bank (irregardless of discharge date), whether that is shortly after discharge or months or years later because your rode-thru and eventually walked. It took our bank 8 months to foreclosure after we stopped making payments, knowing we were moving. That drags out the start date for the 3 years.

Hope this makes sense. No lender will touch a foreclosure until it has been 3 years. It didn't matter that the bankruptcy was a mitigating factor. And even though we have 700 credit, no debt (except minor amounts to rebuild credit, including a small car loan for rebuilding purposes only), and make 6 figures, NO mortgage in our near future. Almost unbelievable.

[want2save]

If your bank had been willing to accept a Deed In Lieu of Foreclosure would that have started the waiting period immediately? This saves the lender all the expense of the foreclosure process. Do lenders look at the Deed in Lieu of the same way they do an actual foreclosure? I would think so.

(Title/Escrow Officer for 40 years)

[yeahdischarged]

We offered a DIL to our lender and they would have none of it. Both the lawyer and the lender told us the PMI company was calling the shots, and the PMI company would not allow it. The PMI company (in CA, which further befuddled me, with the market crashing out there) believed our home could be purchased at sheriff's sale by them, and sold to make a profit. They were totally stupid and the joke was on them.

Lawyer said DIL leaves the lender open to liability, where the foreclosure process ensures the home is free and clear?

I just remember wanting to scream.........we had an offer that was excellent and they still turned it down!! In the end, they lost over $50,000. Had they taken the offer/short sale, they would have lost less then $10,000 but the 2nd mortgage holder wouldn't play ball. First mortgage didn't fight it because they believed they would get their full investment in the sale. NOPE! lol

[want2save]

With the foreclosure and Trustee's Sale, the lender gets a title insurance policy. However, a title search can be done just before the DIL. It does not take a rocket scientist to figure out if there are no liens and judgements or unpaid taxes, etc. Banks (the individuals that make the decisions) are DUMB. Sometimes I think they LIKE to lose money!!! LOL