If I could get an answer to this, I could get some sleep.

[debee]

What's stinky is that they still have to certify that they occupied the home at the time of the actual loan. No cash-outs are allowed. So they don't actually incur any new debt (so no new loan for profit motive/business purpose) but they refi an existing loan and certify that it was owner-occupied at the time the loan was granted. To quote our absent but much-beloved TominColo, "clear as mud"?

[ValleYum]

I know... LOL

But my hope was since they didn't have to certify it as owner occupied at the time of the refi - only that they (owners) had occupied it since the original purchase - that it would be allowed as a business expense - and the closing costs for the refi did increase their debt load...

I am just thinking out loud here - I probably sound "dumber than dirt". (mud, dirt - hmmmm do I sense a theme here?)

[StrawberrySu]

I found this about VA IRRRL loans to further cloud things up:

Many veterans may be aware of the streamline refinance, however most don't realize that you do not have to occupy the home to be eligible for this loan. If the veteran purchased the home using his/her VA benefit, occupied the home after purchase and moved but retained the home as a rental, the IRRRL is still available as long as the mortgage is current. This is the rare exception to the VA guidelines that allow a veteran to use his/her VA eligibility on an investment property.

Article Source: http://EzineArticles.com/3920212

ValleyYum, that's exactly what happened. I guess I just don't understand why, if the VA is looking at it as being converted to a rental property, the BK court would not. I get that if we had just stuck with the original loan and rented it, it would not qualify. If we had refinanced through another other method, we would be in trouble for renting it out and not living in it.

[StrawberrySu]

What's stinky is that they still have to certify that they occupied the home at the time of the actual loan. No cash-outs are allowed. So they don't actually incur any new debt (so no new loan for profit motive/business purpose) but they refi an existing loan and certify that it was owner-occupied at the time the loan was granted. To quote our absent but much-beloved TominColo, "clear as mud"?

But Debee, we did take on new debt, the refi costs. Granted, it's not much, but still the amount of the loan changed. And we have tow years tax returns using it as an investment property. But, I know, I get it. I just wish it weren't so.

[StrawberrySu]

I know... LOL

But my hope was since they didn't have to certify it as owner occupied at the time of the refi - only that they (owners) had occupied it since the original purchase - that it would be allowed as a business expense - and the closing costs for the refi did increase their debt load...

I am just thinking out loud here - I probably sound "dumber than dirt". (mud, dirt - hmmmm do I sense a theme here?)

oops VY, we posted almost the same thing. And yeah, this feels like a dirty cloudy muddy hole, lol

[debee]

Well, I don't think either of you guys sound any dumber than me.

Your reasoning makes perfect sense. I know there were fees associated with changing banks & lowering the rate, but the underlying debt is the same as it was when it was incurred as a consumer loan. That's what I was trying to express. Noone acquired a new loan for "profit motive". It's the same old loan consumer loan rolled into a new bank/servicer with a lower rate. But that's just mho.

StrawSu - what makes you think the VA is looking at it as a rental property? Does it specify "rental property" on your refi docs anywhere? Or are you thinking of the certification requirement that it was formerly owner-occupied?

[StrawberrySu]

Well, I don't think either of you guys sound any dumber than me.

Your reasoning makes perfect sense. I know there were fees associated with changing banks & lowering the rate, but the underlying debt is the same as it was when it was incurred as a consumer loan. That's what I was trying to express. Noone acquired a new loan for "profit motive". It's the same old loan consumer loan rolled into a new bank/servicer with a lower rate. But that's just mho.

StrawSu - what makes you think the VA is looking at it as a rental property? Does it specify "rental property" on your refi docs anywhere? Or are you thinking of the certification requirement that it was formerly owner-occupied?

Debee, I guess all I am going by is the certification regarding occupancy. I know the "intent" of the mortgage is what matters, that we obtained a new mortgage, and that our intent was to rent the property and have documentation to prove that. It sound like this information + $1.50 will allow me to buy you a cuppa joe, but not to declare non-consumer chapter 7. Curses! Foiled again!

[StrawberrySu]

In any case, guys, it seems like enough points have been made that I have real concern if I could qualify, even if the attorney said so. As I stated, the last thing I want to do is go into court and get the surprise of my life. Unless I get all the attorneys I interview with to tell me I can go that route, it seems like the safest bet is to go normal chapter 7. That is doable, just going to have to get all my ducks in a row.

[debee]

Meantime, here's hoping you get a good night's sleep.