Faster Foreclosure?

[kingfisher]

We have a ride through mortgage with Chase and are 2 years post BK7 with it. I was late with 2 payments and they sent a letter saying we have to refinance or they foreclose.

Is a foreclosure any faster in this case? We're in Michigan?
Is it better on the credit to let it foreclose or to give them a deed in lieu?
Will I have any notice as to when they take the house so I know how to time my move?

Thanks

[HHM]

If they are willing to accept a DIL, that would be faster.

The benefit to you of foreclosure is that it takes many months, and you will have PLENTY of notice of the actual sale date, so it allows you to live in the house, rent free, while the foreclosure is pending. However, as for credit recovery, the longer it takes to foreclose, the longer it will take for your credit to recover. So, if they don't foreclose for the next year (not an unrealistic timeline for Michigan), then your credit will take the hit a year from now and you will have to rebuild, again, from there.

[Amy26]

Wouldn't his credit not be affected since he surrendered the house in the BK and they just did a ride through? The loans should be on his credit as IIB and zero balance already shouldn't they?

[justbroke]

The IIB -- included in bankruptcy -- does actually affect your credit. You will always take a hit for foreclosure inside a bankruptcy. The nice thing is that in the Bankruptcy it gets listed as IIB and I think has less impact than the (estimated) 100-point hit a "recent" foreclosure will do to your credit.

Besides, the GSE-backed loans have some specific requirements when it comes to foreclosures, dead in lieu and even short sales. Most of the GSEs treat those events the same and require distance between the actual event and any new loan. (GSE is a government-sponsored enterprise like Fannie, Freddie and FHA.) Your credit may recover in 1 year, but the GSEs won't be so quick to sign any new mortgage.

[Amy26]

Well what I meant was... his bankruptcy is 2 years old... so, the mortgage stuff should have already affected his credit in the past...and no more (additionally) in the future.

The only thing it would affect with the foreclosure is the date for which he could buy another home in the future will start when the foreclosure actually happens, right?

[justbroke]

It will affect credit when the IIB hits the credit report. As a matter of fact, the Creditor will probably report it as a foreclosure, and you'd have to get it changed to IIB. (This happened to me. They took 18 months to foreclose on one of my investment properties and recorded it as a "foreclosure" on my credit report instead of IIB. I just filed a dispute on it. I had surrendered it in my Chapter 13 almost 2 years ago.)

[HHM]

Well what I meant was... his bankruptcy is 2 years old... so, the mortgage stuff should have already affected his credit in the past...and no more (additionally) in the future.

The only thing it would affect with the foreclosure is the date for which he could buy another home in the future will start when the foreclosure actually happens, right?

He is going to get a NEW public record for the foreclosure. You are correct, the notes on the mortgage in the "trade line" section of the credit report probably won't change, but there will be a new public record entry.

[Amy26]

Hmm really? I didn't get a new public record for my foreclosure. Unless it just takes a really long time... I was discharged back in September and my 2 mortgages were IIB right away and zero balance and my property just foreclosed in April and everything is still reporting correctly with no additional public record (at least on my credit report).

[HHM]

Cool, consider yourself lucky.

Ultimately, the foreclosure comes back to haunt you if you apply for a new mortgage in the next 3-5 years.

[Amy26]

Most things I do eventually come back and haunt me.

[kingfisher]

So, my main purpose is to see if they will foreclose faster that than the usual 8-10 months since we don't actually have a mortgage with them due to the ride through. I'm afraid it'll be within a month or two but don't want to do a panic move if I don't need to.

I don't want to come home with my 3 year old and see all our stuff on the lawn! And, I don't want to be faced with moving in the winter if I can help it! We're in Michigan

A lucky twist, the house is in my husbands name and I only have until next year to be 3 years post foreclosure and BK7. Our hope is to get him finished with school [he graduates March 2011 and hopes to have a job at that point.], and then buy our next house on my income and credit history.

[Amy26]

Well no I don't think you can make them do it faster. I did a ride through on my property as well and I was already about 3 months past due when I filed. It still took them over a year to foreclose.