Don't make the same mistake I did.....advice after your BK

[LSUTiger32]

I am some 3 1/4 years out of BK, discharged November 2009. We have been trying to re-fi the home we are living in for nearly two years now. First we were told we had to be two years of our BK. We waiting until November 2011 and applied. We were then told that since we included two properties that we surrendered that we had to wait until November 2012 (3 years) because they were treated like a foreclosure.

Here is the bad news. That's not how it works. After you get discharged, if you surrendered property you need to stay on the bank to FORECLOSURE or do whatever you need to do to get the title out of your name! These two properties have never been foreclosed on and therefore I will NEVER be eligible for an FHA loan. You must wait three years from the date the title is transferred out of your name. Since the properties, as I have now found, are still in my name......no clock has started for me. My only hope now is a credit union that will look at our stable (5 and 20) year work history, six figure income, less than 10% DTI and the fact that the re-fi saves us money over what we are already paying to give us a portfolio loan. No loan can occur for us that would need to be sold to FNMA or Freddie. We are pretty much screwed.

Moral of the story.....get the properties out of your name as soon as you possibly can. Banks are stalling on purpose, you need to hound them until they take the title back on the property.

[tobee43]

LSUTiger, this is beginning almost be a daily subject matter on the forum nowadays, as people are slowly hitting those FHA guidelines to attempt to get a new mortgage. for people like me, who live in a state where the statue of limitations is 20 years the bank may never foreclose, in my case it's over 5 years and chase will not budge. you can't force them, even tho i filed a complaint with the OCC, chase can do what they want and they don't want to foreclose, and they don't wait to do a DIL....all of this making absolutely NO sense, as we had PMI and an FHA that was covered and they can get paid if they filed a claim. when i spoke to the FHA they said there is a process chase must go through to put in a claim, which i was also told your mortgage would be a 100% payback of any remaining amount AFTER chase forecloses on the property. but, that is the key, the FHA has a process prior to them paying out a claim and that is step one, the lender MUST foreclose. also think of other ways and means other than the FHA. if we buy again it will hopefully be conventional financing with hopefully over 1/2 down. we did want to start looking for a another home sometime in the near future, i was just waiting to pay this one off first. but the more i'm thinking about it, the more i'm thinking just keep this house and rent a place at the second location, that way i don't have so much responsibility, other than hand someone a check at the first of the month. (this had me really thinking after i dished out over 1k worth of this and that expenses this past month on work that needed to get done around here).

many states are not like nj where the statue of limitations for deed exchange is 20 years, some are 3 or 5....so then one would have a right to go after the bank to push them to move. i will not be so lucky.

lenders are refusing at their own discretion. frankly, i can count on one hand how many mortgages i have seen go through on this forum in the past 3 years. i was really thinking or hopeful thinking within the next 2 years we would really begin to see some movement from the lenders to get people back in all these empty homes. we have a TON of them here in florida.

[Pandora]

Hey LSU - long time no see - good to see ya!

Sorry you're having to endure such a PITA situation....

[LSUTiger32]

LSUTiger, this is beginning almost be a daily subject matter on the forum nowadays, as people are slowly hitting those FHA guidelines to attempt to get a new mortgage. for people like me, who live in a state where the statue of limitations is 20 years the bank may never foreclose, in my case it's over 5 years and chase will not budge. you can't force them, even tho i filed a complaint with the OCC, chase can do what they want and they don't want to foreclose, and they don't wait to do a DIL....all of this making absolutely NO sense, as we had PMI and an FHA that was covered and they can get paid if they filed a claim. when i spoke to the FHA they said there is a process chase must go through to put in a claim, which i was also told your mortgage would be a 100% payback of any remaining amount AFTER chase forecloses on the property. but, that is the key, the FHA has a process prior to them paying out a claim and that is step one, the lender MUST foreclose. also think of other ways and means other than the FHA. if we buy again it will hopefully be conventional financing with hopefully over 1/2 down. we did want to start looking for a another home sometime in the near future, i was just waiting to pay this one off first. but the more i'm thinking about it, the more i'm thinking just keep this house and rent a place at the second location, that way i don't have so much responsibility, other than hand someone a check at the first of the month. (this had me really thinking after i dished out over 1k worth of this and that expenses this past month on work that needed to get done around here).

many states are not like nj where the statue of limitations for deed exchange is 20 years, some are 3 or 5....so then one would have a right to go after the bank to push them to move. i will not be so lucky.

lenders are refusing at their own discretion. frankly, i can count on one hand how many mortgages i have seen go through on this forum in the past 3 years. i was really thinking or hopeful thinking within the next 2 years we would really begin to see some movement from the lenders to get people back in all these empty homes. we have a TON of them here in florida.

It really is a mess. We did what we were supposed to do and we are screwed anyway. It sucks but it is what it is. Have you tried a credit union. I am being told that it is the way to go. You have to find someone who will hold the loan in house.

[LSUTiger32]

Hey LSU - long time no see - good to see ya!

Sorry you're having to endure such a PITA situation....

Hey! You too! Yeah, it sucks and there really isn't anything you can do about it. I would strongly encourage short sales to people before filing BK. Surrendering the property should be your last resort because of this.

[NoMoreCards]

Since the bank isn't foreclosing, wouldn't that allow you to live there and save money? I understand if you have already vacated the house, however for those that have not, they could save up a nice chunk of change. Just a thought for those considering.

[LSUTiger32]

Since the bank isn't foreclosing, wouldn't that allow you to live there and save money? I understand if you have already vacated the house, however for those that have not, they could save up a nice chunk of change. Just a thought for those considering.

No doubt but to me it comes down to an ethical thing. For a while it might not be a big deal but I don't know. Then again, when you consider you are still liable if something happens to someone on the property you might as well be there. We moved out of the house well before the BK, we were renting it out. I made my renter leave because of that. She could still be renting there and I would have $36,000 to give the mortgage company. They might have let me have the house for that amount!

[tobee43]

It really is a mess. We did what we were supposed to do and we are screwed anyway. It sucks but it is what it is. Have you tried a credit union. I am being told that it is the way to go. You have to find someone who will hold the loan in house.

oh, we did. we own a home now, actually it should be paid off within the next 6-7 months. we did owner financing, bypassing the banks completely. we rented with an option to buy, exercised the option early, offer the owner more than asking price and came up with just about half down. he held the balance @ 5% for 30 years, but we will have it paid off soon, it's been 2 years this month. (have been putting almost every dime into paying off this mortgage). we were just looking to buy another home in another state, but after giving it really a ton of thought, we are going to rent in the other state, not for any other reason other than i don't want taxes, insurance, maintenance costs, etc. on two houses. if we change our mind i will most likely go conventional with 2/3 or so down if i have to. i just want this house paid off first.

[LSUTiger32]

oh, we did. we own a home now, actually it should be paid off within the next 6-7 months. we did owner financing, bypassing the banks completely. we rented with an option to buy, exercised the option early, offer the owner more than asking price and came up with just about half down. he held the balance @ 5% for 30 years, but we will have it paid off soon, it's been 2 years this month. (have been putting almost every dime into paying off this mortgage). we were just looking to buy another home in another state, but after giving it really a ton of thought, we are going to rent in the other state, not for any other reason other than i don't want taxes, insurance, maintenance costs, etc. on two houses. if we change our mind i will most likely go conventional with 2/3 or so down if i have to. i just want this house paid off first.

Wow!!!! Awesome job!!!!

[tobee43]

Wow!!!! Awesome job!!!!

thanks!!! i can't wait! i just got the statement from the owners rep and my balance is like 26k!!!! like a car! so much better than the 500k plus (it wasn't that much when we surrendered the house, that's just what the latest collection atty said we owned now), on our old surrendered NOT foreclosed and most like never will be house

[Logan]

I am some 3 1/4 years out of BK, discharged November 2009. We have been trying to re-fi the home we are living in for nearly two years now. First we were told we had to be two years of our BK. We waiting until November 2011 and applied. We were then told that since we included two properties that we surrendered that we had to wait until November 2012 (3 years) because they were treated like a foreclosure.

Here is the bad news. That's not how it works. After you get discharged, if you surrendered property you need to stay on the bank to FORECLOSURE or do whatever you need to do to get the title out of your name! These two properties have never been foreclosed on and therefore I will NEVER be eligible for an FHA loan. You must wait three years from the date the title is transferred out of your name. Since the properties, as I have now found, are still in my name......no clock has started for me. My only hope now is a credit union that will look at our stable (5 and 20) year work history, six figure income, less than 10% DTI and the fact that the re-fi saves us money over what we are already paying to give us a portfolio loan. No loan can occur for us that would need to be sold to FNMA or Freddie. We are pretty much screwed.

Moral of the story.....get the properties out of your name as soon as you possibly can. Banks are stalling on purpose, you need to hound them until they take the title back on the property.

Since you have good income and a low DTI how about doubling down on your payments?

[LadyInTheRed]

No doubt but to me it comes down to an ethical thing. For a while it might not be a big deal but I don't know. Then again, when you consider you are still liable if something happens to someone on the property you might as well be there. We moved out of the house well before the BK, we were renting it out. I made my renter leave because of that. She could still be renting there and I would have $36,000 to give the mortgage company. They might have let me have the house for that amount!

I don't understand what your ethical issue is. The bank could foreclose, but has elected not to. Until they do, you own the house. What is unethical about living in or renting out property that you own?

[downsized]

I've been seeing things lately about quit claim deeding the property back to the bank. Maybe that's an option for you. I listen to Bob Massie, a real estate attorney and fox news contributor now and then and that's his advice to people to get out from under what he calls "zombie mortgages". Quit claim deed with the help/advice of an attorney, have it recorded, and move on. Maybe google that.

[justbroke]

Unless the bank wants the title through a QC (quitclaim) action, also known as a deed-in-lieu, I don't see how it would work. The other part of QC'ing a deed, is that the other party must accept it. Another problem could be in non title-theory States where you don't hold title; a Trustee does. Even if that all worked out, you were able to slide in a QC, you would still need to wait at least 3 years from the QC action. Any half-way educated underwriter will quickly see a QC and then ask how the property changed hands to the bank. You would have no documentation to support the QC action.

Additionally, the Bank could, if it came to some sort of liability issue, file a lawsuit to rescind the QC since they never "accepted" the title. Certainly see an experienced Real Estate Attorney with Bankruptcy experience before you QC any surrendered or discharged property back to the lender.

I would definitely like to see a handful of references where this was successful in a post-discharge case where the lender did not move to foreclose, did not entertain a deed-in-lieu (QC), and the debtor QC'd it back to the lender and the lender accepted the title. I have only read anecdotal information and not one single case where this has worked. It is something that has been talked about for years (since 2008), but it is all speculative.

[Sammie]

thanks!!! i can't wait! i just got the statement from the owners rep and my balance is like 26k!!!! like a car! so much better than the 500k plus (it wasn't that much when we surrendered the house, that's just what the latest collection atty said we owned now), on our old surrendered NOT foreclosed and most like never will be house

That is fantastic Tobee & in NJ to boot! Come on & rent in E. NC, you can get a nice rental home starting at $600.00 mo. & we could be neighbors & go back to NJ to see the kids at the Holidays---maybe!