Chapter 7-Current Home Discharged-Want to Leave Property-Need Advice Please!

[Ugh07]

If an applicant lies about the disposition of their current property on a loan application, that is fraud. It doesnt matter if they dont technically owe the money. The application is asking what you intend to do with your current property, if you intend to let it go back to bank and you dont disclose that, you are committing a federal crime. One that would likely never get you punished, but lets not pretend its no big deal.

[petiteprof]

I have no intention of lying about anything! Everyone needs to settle down. The property is discharged and it shows that on my credit report so there is nothing to "make up".

[Ugh07]

I think everyone is settled down. I was answering a question as to why what was being proposed could be considered fraud. It doesnt matter if a loan is discharged, an applicant still has to be truthful about the disposition of their current property. The problem with that is once they let the new bank know they are just "letting it go" their loan will likely be denied. That leads people to sometimes make the claim they are "renting it out" when in fact they have no intention of doing that. It's a cautionary tale, nothing more.

[lillaimof2kids]

I hope this thread continues! I want to see the outcome!

We are considering doing the same thing. August was 2 years since our BK7 was discharged. Our house with our 2nd mortgage is probably pretty close to what the house is valued at. Neither loan was reaffirmed. Only difference is our mortgage payment shows on our credit report as being paid. But when you look at total debts, it's not included in that ratio. We're talking about moving in the spring. I'd rather have my house foreclosed on and put my housepayment money in my pocket....instead of selling and walking away with no money in my pocket!

We are making our decision this month as to what we are going to do...hopefully!

[LSUTiger32]

What Ugh007 is trying to explain to you is that if the only thing that happens was a credit report that you would probably be fine. The problem is that they also d a title search and will find that you still own a home. When they find out that you are walking away from it, they will decline you. They will simply realize that you are likely to do the same thing to them. What might be an idea, and I am not sure about this.....would be to work out a short sale with the bank and get the home sold. The short sale would not appear on your credit report because the tradeline should already be IIB but this would clear up the issue with the title search. Again, not sure if that would work but maybe someone else has gone that route and could tell us.

[Poorhouse64]

I don't get it.
Technically, she lost the home in Bankruptcy two years ago. In the meantime she's been voluntarily making the payments (renting it) so she can stay. Now she wants to move. How is that WALKING AWAY? Like I said, I don't get it...... why would she need to bother with a short sale? The credit report will remain the same $0 Balance IIB no matter what she does...... right?

[LSUTiger32]

I don't get it.
Technically, she lost the home in Bankruptcy two years ago. In the meantime she's been voluntarily making the payments (renting it) so she can stay. Now she wants to move. How is that WALKING AWAY? Like I said, I don't get it...... why would she need to bother with a short sale? The credit report will remain the same $0 Balance IIB no matter what she does...... right?

This is the problem. Technically in order to take ownership of the home back from the OP the bank will have to foreclose. That is the only way they can get the OP off of the title by law. What happens to the credit report I believe you have correct. The point is that there is more to a home loan than the credit report. They will do a title search and find that the OP either still has a home in his/her name making it harder to get approved or that there is a foreclosure.

Again, this is what I believe.....I could be wrong but this is the way I understand this situation. Many people have gotten screwed (if you ask me) because the file BK and think that in 2 years they can get an FHA loan. Then they find out that it is also three years from the foreclosure which in many cases doesn't happen for a long time after the discharge. Am I stating this right guys?

[CCsAreEvil]

Many people have gotten screwed (if you ask me) because the file BK and think that in 2 years they can get an FHA loan. Then they find out that it is also three years from the foreclosure which in many cases doesn't happen for a long time after the discharge. Am I stating this right guys?

Even with reading past threads, I'm still confused on this issue. If your mortgages on your home were included in the BK, but you continue to "retain and stay" / "ride through" or whatever you want to call it, and then some point in the future, you stop making payments (to let it eventually foreclose) I thought that you can't have a foreclosure on your credit record? I've read that but don't entirely know what that means. Because AFAIK, there's a public records section attached to everyone's credit report. The foreclosure information will show under the "public record" but not show on your actual credit because the loans were IIB?

Basically, does walking away from your home (letting it go into foreclosure) after its loans have been IIB, does that reset the clock for applying for FHA? If anyone who actually knows the answer, would be nice to hear about it.

[curleyp28]

Hope I can help because we just went through this this week when FHA turned down our loan. We discharged in 2007, stayed in the house for almost 2 years, making payments. Walked away from the house in 2009...house foreclosed...never reaffirmed. Our lender said we were turned down for a loan because the house did not come out of our name until 2009(foreclosure) and now have to wait 3 years from the foreclosure date to apply for a FHA loan...not the 2 years after discharge. Foreclosure does not show on your credit report if the house was included in Chapter 7, but lenders do a search and it shows on public records. We even applied for a loan 2 years after discharge and was turned down cause we still lived in the house(deed still in our name). Get the house out of your name is the way our lender made us understand it. Still makes no sense to me, but we were told to wait 3 years and we were down to closing next week and even paid 450 for an appraisal, now we are out $450 and even had our lender send all our info to underwrtting before we started looking for a house to make sure everything was good on the loan end, but obviously it wasn't but were told all is good. Our lender said we should of done a deed in lieu of foreclosure. We tried a short sale...even had an offer, but the mortgage company wanted us to sign a paper saying we were responsible for any loss they incur and we refused to sign it cause the loan was already discharged. They would not work with us to remove that part so we let it foreclose. Hope I was able to help just from my recent experience. Good luck!

[tobee43]

Hope I can help because we just went through this this week when FHA turned down our loan. We discharged in 2007, stayed in the house for almost 2 years, making payments. Walked away from the house in 2009...house foreclosed...never reaffirmed. Our lender said we were turned down for a loan because the house did not come out of our name until 2009(foreclosure) and now have to wait 3 years from the foreclosure date to apply for a FHA loan...not the 2 years after discharge. Foreclosure does not show on your credit report if the house was included in Chapter 7, but lenders do a search and it shows on public records. We even applied for a loan 2 years after discharge and was turned down cause we still lived in the house(deed still in our name). Get the house out of your name is the way our lender made us understand it. Still makes no sense to me, but we were told to wait 3 years and we were down to closing next week and even paid 450 for an appraisal, now we are out $450 and even had our lender send all our info to underwrtting before we started looking for a house to make sure everything was good on the loan end, but obviously it wasn't but were told all is good. Our lender said we should of done a deed in lieu of foreclosure. We tried a short sale...even had an offer, but the mortgage company wanted us to sign a paper saying we were responsible for any loss they incur and we refused to sign it cause the loan was already discharged. They would not work with us to remove that part so we let it foreclose. Hope I was able to help just from my recent experience. Good luck!

this is indeed an extremely confusing and frustrating issue....

we vacated our home over 2 years ago......right after we rec'd our foreclosure summon...

we filed bk....the house was "surrendered" and the mortgage amount was discharged....

yes, our names are STILL On the deed until 1) the bank agrees to a warranty deed and a signs a general release or 2). the foreclosure is completed.

we do NOT live in the house and left it two years prior to our filing. the house STILL has NOT been foreclosed and we have filed numerous complaints against the bank since we would prefer our names off the deed, but are now finding out, we don't care anymore...really the balance shows up as 0 zero and was discharged...end of story.

we do plan to purchase a house within the next 2 years and if there is nothing...including federal agencies that can get the banks to actually foreclose, i do not believe it will effect our ability to get a mortgage. maybe curley's situation being that YOU stayed in the house and didn't pay or did.... had something to do with it...while we handed it right back to the bank....

if the bank does not foreclose soon on our old surrendered home we will go to the Office of Controller of Currency in Washington and they have assured us, they will handle the matter.

also....a deed in lieu is the incorrect document and shows just how uneducated these banks are...its a warranty deed that is required and which clears the title....NOT a deed in lieu...so once again it's round and round we go.....


by the way...just a "special" note....chase contacted us AFTER we have already vacated the house over 2 years ago.....just a couple of weeks ago...asking US if we want to reaffirm???????? now this is AFTER DISCHARGE of the mortgage...are they nuts or what?????

they have no clue...

i urge anyone and everyone to file complaints with the Office of Controller of Currency at 800-613-6743 they are the one's the regulate the banks... i have NO idea why this number is showing up twice and i can't edit it...so sorry!!!

[doudis2]

Yeah I agree; Chase is clueless. Our foreclosure just showed up on the County Recorders site on 10/4/10 as a Trustees Deed Upon Sale document. What did I get two days later dated 10/18/10, about my 5th letter from Chase's home retention office telling me how I could save my house. DuH!

FYI - I made my last payment on 10/31/09. The deed was officially transferred out of my name on 10/4/10. Audios money pit!

[Ugh07]

this is indeed an extremely confusing and frustrating issue....

we vacated our home over 2 years ago......right after we rec'd our foreclosure summon...

we filed bk....the house was "surrendered" and the mortgage amount was discharged....

yes, our names are STILL On the deed until 1) the bank agrees to a warranty deed and a signs a general release or 2). the foreclosure is completed.

we do NOT live in the house and left it two years prior to our filing. the house STILL has NOT been foreclosed and we have filed numerous complaints against the bank since we would prefer our names off the deed, but are now finding out, we don't care anymore...really the balance shows up as 0 zero and was discharged...end of story.

we do plan to purchase a house within the next 2 years and if there is nothing...including federal agencies that can get the banks to actually foreclose, i do not believe it will effect our ability to get a mortgage. maybe curley's situation being that YOU stayed in the house and didn't pay or did.... had something to do with it...while we handed it right back to the bank....

if the bank does not foreclose soon on our old surrendered home we will go to the Office of Controller of Currency in Washington and they have assured us, they will handle the matter.

also....a deed in lieu is the incorrect document and shows just how uneducated these banks are...its a warranty deed that is required and which clears the title....NOT a deed in lieu...so once again it's round and round we go.....


by the way...just a "special" note....chase contacted us AFTER we have already vacated the house over 2 years ago.....just a couple of weeks ago...asking US if we want to reaffirm???????? now this is AFTER DISCHARGE of the mortgage...are they nuts or what?????

they have no clue...

i urge anyone and everyone to file complaints with the Office of Controller of Currency at 800-613-6743 they are the one's the regulate the banks... i have NO idea why this number is showing up twice and i can't edit it...so sorry!!!

Unfortunately curleyp is right. You are most likely going to have to wait 3 years after you get the house out of your name.

A deed in lieu is just what it says, you sign the deed over to the bank in lieu of a foreclosure. Warranty deeds are not used in those transactions, they are almost exclusively quit-claim deeds, though I have seen a bank request a warranty deed from time to time.

A lot of the confusion on this thread seems to come from the fact that people are not seperating the discharge of their debt with their change of ownership in the property.

The BK definitely discharges the note and you no longer owe on it and the bank can no longer try to collect on it. The BK however does not change ownership of the house. That has to be done through the foreclosure process. In the past this was not much of an issue, foreclosures went pretty fast or often times the house could be sold for a profit. That is no the case anymore and it is why we are seeing these problems.

If you have specific questions regarding your situation plese feel free to message me.

[tobee43]

Unfortunately curleyp is right. You are most likely going to have to wait 3 years after you get the house out of your name.

A deed in lieu is just what it says, you sign the deed over to the bank in lieu of a foreclosure. Warranty deeds are not used in those transactions, they are almost exclusively quit-claim deeds, though I have seen a bank request a warranty deed from time to time.

A lot of the confusion on this thread seems to come from the fact that people are not seperating the discharge of their debt with their change of ownership in the property.

The BK definitely discharges the note and you no longer owe on it and the bank can no longer try to collect on it. The BK however does not change ownership of the house. That has to be done through the foreclosure process. In the past this was not much of an issue, foreclosures went pretty fast or often times the house could be sold for a profit. That is no the case anymore and it is why we are seeing these problems.

If you have specific questions regarding your situation plese feel free to message me.

thanks so much for all the info ugh07...much appreciated.....however, i have already done a warranty deed and a general release on one of the properties we owned with our secondary home...and it went perfect. it's just the primary residence i'm having problems with, however, there was a much larger amount owned on that mortgage, although that should have nothing to do with them rejecting my offer.

a deed in lien comes in other forms....the instrument itself ,that of a warranty deed, would mostly assuredly remove our names from the deed as it did with the other property. so i must disagree with you on that point. that bank on our second property stopped foreclosure and accepted my documents...our names have been removed from that deed. i sent them copies of the warranty deed and a general release i had drawn up....for their approval....and with that written verification, sign it all over to them.

while i understand clearly i have no financial obligation to the bank for any reason what so ever, in the state that the property is located...not florida, there is no limit on foreclosure fees. as a result, many times during these proceedings the fees are well known to reach an excess of 50k-100k......that's in FEEs alone. it is also a state where the owner is responsible for any deficiency between the sale and the mortgage. usaually forcing the owner hand into bankruptcy eventually...even if the owner only wanted to foreclose their home.

my contention, as well as the wanting of our names off the deed, it to halt the abuse on the banks behalf by dragging out the foreclosure and incurring more fees to apply to their relief. most if not all people in that particular state either have had to deal with the bank abuse. therefore it's more principle to me...i could care less that that title never clears, as long as the amount was discharge they can do what ever they want.

i do believe the bank in the case is committing what i consider to be fraud by racking up unnecessary fees and hench my complaint...which i intend to continue until there is some relief.

thanks again for the input and the invitation on the pm's...might take you up on it...
i'm not confused about my position as to the ownership of the actual property. until they either sign the warranty deed and release...OR...sell the property via the sheriff's sale...i'm stuck with our names on it.

[Ugh07]

a deed in lien comes in other forms....the instrument itself ,that of a warranty deed, would mostly assuredly remove our names from the deed as it did with the other property. so i must disagree with you on that point.

until they either sign the warranty deed and release...OR...sell the property via the sheriff's sale...i'm stuck with our names on it.

A deed lin lieu is when you deed the property to the bank in lieu of them foreclosing. It could be a warranty deed or a quit claim deed, but thats all a deed in lieu is. The textbook definition is this:

A Deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.


Your second statement, "until they either sign the warranty deed and release". Are you trying to do a deed in lieu and they are refusing to accept the deed? Because it is you that signs the deed over to them, legally speaking they only need to accept it.

[Tom_Mi]

Analysis Paralysis.

I think thie original poster needs to sit down with a local lender (big credit union or small local bank) and ask what they suggest.
Tell them you plan to list the home for sale... but then you should mention the home was discharged and that your debt-to-income should show 0 balance. They will tell you how they'd like the home sold etc. Contrary to some of the above advice, a bank might have SEVERAL requirements depending on the scenario.

I just sat down with a CU in Mich that does portfolio (their money, not Fannie/Freddie) loans and they dont' give a rat's patoot about my house since it's discharged. In 6mo I'm 2yrs and going to get a loan from them. I'll list the house with a realtor-friend as a gift to him. Hope he buys something nice with the commission.