Why disclose my home when it was IIB

[tobee43]

sweetpea has an excellent example...i think this was the thread of the the journey to get your mortgage? http://www.bkforum.com/showthread.ph...age!-Our-story.

upward:How does the quit claim process work? How long does it take?

a quitcalim is deed is essentially a piece of paper that transfers interest in land from one person, called the grantor, to another, called the grantee. It's essentially a real estate contract. to be legally effective, it must be signed by the grantor and describe the land being conveyed. a quitclaim deed, sometimes erroneously referred to as a "quick claim deed" or "quit claim deed," is one type of deed. i have think i have another thread or two about the differences of the types of deeds. (normally a warranted deed is used with the actual tranfer of property from owner to owner or bank to owner).

there is an important limitation to the quitclaim deed. because it only transfers the rights that the grantor has in the property, it does not guarantee that the property is the grantee's outright. If others with an interest in the property have not signed the deed, then their rights are unaffected by this document — they still retain their ownership. in most cases, the signed quitclaim deed is a simple and effective way to give up all interest in a property.

when we filed ours it was just a basic deed doc and then it needs to be filed by the county the property is in. it usually doesn't take long at all. i think ours took about 6-8 weeks in total.

[Sweetpea3829]

You know what tobee? Our quitclaim was done in days. Actually...it can all be done in a single day. We called the attorney, asked her to write it up, she did...we went to her office, both of us signed it, she notarized it...we took it to town hall and it was filed and effective that same day. Done. :-D

But...the only purpose of our quitclaim was to remove my husband from the title so that he could fall under the rules established by USDA to qualify for a Rural Development Loan. Because we knew that we wouldn't be "free" of our RI home anytime soon, and because we knew that the foreclosure, or short sale or deed in lieu would start a seasoning period before we could get a home loan, we used the quit claim to free my husband from the title so that he could apply.

So basically...a quit claim is only beneficial if you are looking to purchase a home now, before a foreclosure. Otherwise...there's no need for it because even if one of you is quit-claimed off the title...the foreclosure or short sale or DIL will still start that seasoning period for both parties on the loan.

[tobee43]

You know what tobee? Our quitclaim was done in days. Actually...it can all be done in a single day. We called the attorney, asked her to write it up, she did...we went to her office, both of us signed it, she notarized it...we took it to town hall and it was filed and effective that same day. Done. :-D

But...the only purpose of our quitclaim was to remove my husband from the title so that he could fall under the rules established by USDA to qualify for a Rural Development Loan. Because we knew that we wouldn't be "free" of our RI home anytime soon, and because we knew that the foreclosure, or short sale or deed in lieu would start a seasoning period before we could get a home loan, we used the quit claim to free my husband from the title so that he could apply.

So basically...a quit claim is only beneficial if you are looking to purchase a home now, before a foreclosure. Otherwise...there's no need for it because even if one of you is quit-claimed off the title...the foreclosure or short sale or DIL will still start that seasoning period for both parties on the loan.

yes, it surely can, our problem was we had the other property in another state. so we had to get someone there to file it. it was a pain and it still only took that long, only because of the filing with the county.

Sweetpea:So basically...a quit claim is only beneficial if you are looking to purchase a home now, before a foreclosure. Otherwise...there's no need for it because even if one of you is quit-claimed off the title...the foreclosure or short sale or DIL will still start that seasoning period for both parties on the loan

.

exactly!! it doesn't get your name off that mortgage. we were just concerned because we CO-owned the property with someone else and were very concerned about their interest.

shoot with us, we had to have one of the partners of the co-owned property to buy out the mortgage first, (which was only in OUR names not theirs), then quitclaim the deed over to them. we also knew, since our situation dealt with co-ownerships, that that party, would have, most likely been able to at some point buy back our share from the trustee. we didn't want that complication, so the other owner bought out the existing mortgage in our names, and actually, they lost money due to the fact the amount WE owned exceeded our share since the property dropped so much in value.

our trustee did ask about it since the quitclaim deed was done within 2 years of our filing. but, since we were able to produce the orginal docs showing we ALL had been on that property for over 15 years, the trustee had the proof that we just didn't quickly quitclaim the property over just to protect our interest in it. we lost the property, but it was to the other owners...(there were 2 others).

[debee]

In the end...when our first property does foreclose (if we decide to let it go), I'm the one left holding the bag and it'll mosty damage me. Because my husband's name isn't on the title anymore, and because the loan was discharged...I don't think he'll have any damage from the foreclosure. Lucky dog...;-)

Just to clarify, the quit-claim doesn't take your husband's name off the original mortgage document (or deed of trust) so when the lender forecloses, they will name whoever is listed there.

If you guys bought that property joint, you will both be named in the foreclosure. If he bought it in his name only, he will be the only person named in the foreclosure.

He's off the deed (which is not the same as the "deed of trust" or "mortgage") but he will still have a foreclosure on his record when they get around to it.

Also, FHA regards the practice of walking away from one home to buy another as "unscrupulous". They have specific policies in place to decrease the risk of that happening. They don't want to enable anyone.

If you google " FHA Mortgagee Letter 2008-25" you can read the first such change in policy. There's more info in their handbook.

Link to the first memo in which their policy is specifically opposed to enabling "Buy and Bail" is here.

[tobee43]

there is an important limitation to the quitclaim deed. because it only transfers the rights that the grantor has in the property, it does not guarantee that the property is the grantee's outright. If others with an interest in the property have not signed the deed, then their rights are unaffected by this document — they still retain their ownership. in most cases, the signed quitclaim deed is a simple and effective way to give up all interest in a property.

Just to clarify, the quit-claim doesn't take your husband's name off the original mortgage document (or deed of trust) so when the lender forecloses, they will name whoever is listed there.

If you guys bought that property joint, you will both be named in the foreclosure. If he bought it in his name only, he will be the only person named in the foreclosure.

He's off the deed (which is not the same as the "deed of trust" or "mortgage") but he will still have a foreclosure on his record when they get around to it.

Also, FHA regards the practice of walking away from one home to buy another as "unscrupulous". They have specific policies in place to decrease the risk of that happening. They don't want to enable anyone.

If you google " FHA Mortgagee Letter 2008-25" you can read the first such change in policy. There's more info in their handbook.

Link to the first memo in which their policy is specifically opposed to enabling "Buy and Bail" is here.

there is an important limitation to the quitclaim deed. because it only transfers the rights that the grantor has in the property, it does not guarantee that the property is the grantee's outright. If others with an interest in the property have not signed the deed, then their rights are unaffected by this document — they still retain their ownership. in most cases, the signed quitclaim deed is a simple and effective way to give up all interest in a property

i hope that says it all. many people think because they quitclaim the deed they are some how released from the mortgage.

[Sweetpea3829]

The above is very true...although the mortgage was discharged and not reaffirmed, and although my husband's name is off the title...the foreclosure will still show up as a public record.

For us...the quitclaim was essential because we were applying for a mortgage loan right now...before the discharged IIB home forecloses. The type of loan we were applying for, USDA, is not for persons who already have another property. If you are planning on selling your first property, you are eligible for a USDA loan, but you cannot obtain a USDA loan if you intend to keep your first property.

With our first home...the IIB rental property we left behind when we moved...we've gone back and forth on whether to keep it...and honestly, we're still not really sure what we want to do with the property. We're still in modification negotiations with the bank and should they come back with a really great property...we'll keep it and continue to maintain it and rent it out.

If they come back with some lame modification, we will refuse and allow the house to go.

As far as FHA and most lenders' views concerning "buy and bail." Well...of course they'd be opposed. It makes sense that, in their view, they'd oppose a practice that basically means dumping an expensive, toxic asset for one that is just as good quality but costs considerably less. Why? Well because they make less money that way.

And the situation is even more sticky for those folks whose mortgages were IIB and not reaffirmed. What incentive do such homeowners have to continue paying? Especially folks like us...our IIB home was worth 150k less than what we owed. Morally...morally we say, "You don't take out debts that you cannot repay" and "you always repay your obligations." But financially...it made zero sense to continue to pay a mortgage for a house that will never be worth what we are ultimately paying for it in the end.

And knowing how lenders contributed to this mess...well...I think it's fair to say that the blame falls on the shoulders of all involved...Americans that bought homes they shouldn't have bought (and we really didn't fall into that category, just kind of got stuck), banks that had some really awful and just plain stupid lending practices, etc. It's funny to me to see lenders sitting there playing the morality card and talking about how buy and bail scenarios are "unscrupulous." Didn't banks contribute to this by funding risky loans and then quickly dumping them? If it's good for the goose, it's good for the gander.

The market was way overinflated for a long time...it HAS to reset itself. What's going on with "buy and bail" and voluntary short sales, DILs, etc is just part of that process. Such practices as buy and bail, voluntary short sale, etc are and will continue to contribute to the declining value of homes across the nation until they get to a level that is more attainable by a greater majority of folks looking to buy. Only then will such practices cease and the market level off.

Is it right? Eh...

Is it a necessity? You betcha.

[screentest]

The above is very true...although the mortgage was discharged and not reaffirmed, and although my husband's name is off the title...the foreclosure will still show up as a public record.

For us...the quitclaim was essential because we were applying for a mortgage loan right now...before the discharged IIB home forecloses. The type of loan we were applying for, USDA, is not for persons who already have another property. If you are planning on selling your first property, you are eligible for a USDA loan, but you cannot obtain a USDA loan if you intend to keep your first property.

With our first home...the IIB rental property we left behind when we moved...we've gone back and forth on whether to keep it...and honestly, we're still not really sure what we want to do with the property. We're still in modification negotiations with the bank and should they come back with a really great property...we'll keep it and continue to maintain it and rent it out.

If they come back with some lame modification, we will refuse and allow the house to go.

As far as FHA and most lenders' views concerning "buy and bail." Well...of course they'd be opposed. It makes sense that, in their view, they'd oppose a practice that basically means dumping an expensive, toxic asset for one that is just as good quality but costs considerably less. Why? Well because they make less money that way.

And the situation is even more sticky for those folks whose mortgages were IIB and not reaffirmed. What incentive do such homeowners have to continue paying? Especially folks like us...our IIB home was worth 150k less than what we owed. Morally...morally we say, "You don't take out debts that you cannot repay" and "you always repay your obligations." But financially...it made zero sense to continue to pay a mortgage for a house that will never be worth what we are ultimately paying for it in the end.

And knowing how lenders contributed to this mess...well...I think it's fair to say that the blame falls on the shoulders of all involved...Americans that bought homes they shouldn't have bought (and we really didn't fall into that category, just kind of got stuck), banks that had some really awful and just plain stupid lending practices, etc. It's funny to me to see lenders sitting there playing the morality card and talking about how buy and bail scenarios are "unscrupulous." Didn't banks contribute to this by funding risky loans and then quickly dumping them? If it's good for the goose, it's good for the gander.

The market was way overinflated for a long time...it HAS to reset itself. What's going on with "buy and bail" and voluntary short sales, DILs, etc is just part of that process. Such practices as buy and bail, voluntary short sale, etc are and will continue to contribute to the declining value of homes across the nation until they get to a level that is more attainable by a greater majority of folks looking to buy. Only then will such practices cease and the market level off.

Is it right? Eh...

Is it a necessity? You betcha.

Sweetpea,

If you and others have not seen it yet, go see the HBO documovie on the financial crisis "Too Big to Fail." It hammers home how this mess was created and how we all got here. Very informational.

Screentest

[tobee43]

all i can say is history usually repeats itself, or at least that's the old saying.....in this case there is NO history to compare to. this situation is truly historical.

screentest, i'll be checking out that movie, although, i don't know if i want to get anymore depressed.