Mortgage problem

[reynold975]

My ex husband and I filed bankruptcy back in March of 2011 and discharged in July 2011. We did not reaffirm the house in the chapter 7. We divorced and he stayed in the house and continued to "pay and stay". I moved out and lived in an apartment. I just saved the 3 1/2 percent down for an FHA loan and applied. After two month and three inches of paperwork submitted the mortgage company says im denyed due to the payment history on the house after the bankruptcy. I said the debt was erased in the bankruptcy. They said it don't matter that the house was still in my name. I said but the debt was erased so how can you count that against me when I no longer owe the debt. Well they said that was my most current mortgage history and that in the divorce it says we will be jointly responsbile for the house. The house was sold in Febraury 2014. and the bank was paid in full. Any help would be appreicated.

[tobee43]

you have no mortgage, i called the bank, and they are now closed for good. please pass the word!!!! they are not coming to your home. just keep living there and save save save until they come i promise you it will ok

[suek]

Hello Mortgage Problem,
These days the banks don't want to take risks and don't really understand chap 7 in a lot of cases. You need to find a way to PROVE that the debt was dismissed. First thing would be to give them a FULL set of the BK papers. If you don't have them you can find them on PACER.
AND you can ask your previous mortgage holder to give you a document showing the debt was discharged in Chapter 7 bankruptcy.
IF that doesn't work, you can ask the BK trustee to write a letter specifying that your home and its debt was included/discharged in Chap 7 BK.

Sue

[lostinnola]

I am confused about your situation. You did not reaffirm the mortgage, so while the debt was erased the house was still in your name. When you say it was sold in 2014 and the bank was paid in full. When you didn't reaffirm, you can't erase the debt and then sell the property and profit off of it. Even if you did, you would not be entitled to any of the money you made off the property because it would have gone to your creditors.

Now if the bank sold the property in 2014, then you will have to wait until 3 years after the house was transferred out of your name regardless of the bankruptcy. I would look up the property on your counties website and see when it was transferred out of your name. There are two separate things here bankruptcy relieves you of the debt and foreclosure (which is probably what happened) is getting the property legally out of your name. I don't think you can file bankruptcy on a house and then sell it yourself.

[LadyInTheRed]

I am confused about your situation. You did not reaffirm the mortgage, so while the debt was erased the house was still in your name. When you say it was sold in 2014 and the bank was paid in full. When you didn't reaffirm, you can't erase the debt and then sell the property and profit off of it. Even if you did, you would not be entitled to any of the money you made off the property because it would have gone to your creditors.

Either the OP and her ex had no equity in the home at the time they filed BK, the equity was exempted or the trustee abandoned any non exempt equity. Having the debt discharged does not prevent selling the house and paying off the debt to clear the lien. You can in fact make a profit off of selling property even if the debt securing the property was discharged in BK. The only creditor that has a right to the proceeds of sale is the holder of a lien perfected against the property.

Now if the bank sold the property in 2014, then you will have to wait until 3 years after the house was transferred out of your name regardless of the bankruptcy. I would look up the property on your counties website and see when it was transferred out of your name. There are two separate things here bankruptcy relieves you of the debt and foreclosure (which is probably what happened) is getting the property legally out of your name.

The OP doesn't say there was a foreclosure. It's true that if there was a foreclosure, FHA will not approve a mortgage until 3 years after foreclosure. If there is no foreclosure, FHA allows a loan 2 years from discharge. Also, if the house is still an a borrower's name, the borrower does have to show they can make payments on both the existing house and the one they propose to buy, even if the mortgage on the existing house is discharged. Even though FHA will allow a mortgage 2 years after BK discharge, a lender can impose whatever restrictions they want. The mortgage may have been discharged, but before the sale the OP's name was still on title and still on the mortgage. If the history of that mortgage shows delinquencies, the lender will take that into account.

I don't think you can file bankruptcy on a house and then sell it yourself.

You don't file BK on a house. You file BK on debt. If the trustee doesn't take the house to pay off debt, then there is no reason the house can't be sold later as long as the lien is paid off or assumed by the buyer.

[justbroke]

There's not much to say after LITR's excellent review of this topic. I would only add that Banks are finicky when it comes to FHA loans. The FHA guidelines are... well... guidelines and the banks are authorized to add additional seasoning requirements.

When you want an FHA loan, you really need to shop more than one bank. That means submitting applications to underwriting at 3 and maybe 4 different banks and providing an explanation upfront before it gets to manual underwriting. They will see any foreclosure and will know your payment history because they will look for it. As LITR writes, you discharge the debt, not the lien or the property itself. The Banks care about what happened to the prior property.

I would shop that loan some more! You may be able to find a sympathetic bank that allows you to use the FHA's "second chance" (Back to Work or other) program.

[reynold975]

The house was not forclosed on. In our orginal petition we ask that both mortgages be reaffirmed. But the banks BOA and Citi did not reaffirm the debt, the loans were current at the time of the bankruptcy. . My husband and I separated and he continued to live there. In the last six months he fell behind in the mortgage. Our divorce went through right before the house was sold and paid in full for what was owed/no short sale or forclosure. Because our divorce says we would be equally responsible for any debt from the house. The mortgage company is holding the mortgage history against me up until the house was sold saying the divorce made me responsible for the debt even tho it was discharged in bankruptcy

[justbroke]

Are you aware that most banks treat a discharge mortgage as a foreclosure? So, for all practical purposes, the same seasoning traditionally applies to discharged mortgages (from a bankruptcy). I would like to repeat that you need to find several different FHA lender banks and shop your loan. You may also want to reach out to a "broker" that specializes in post-bankruptcy FHA loan approvals. I was looking at the Lending Tree brokers earlier (for FHA loans). You could start there.