Question about mortgage being included in bk

[klsy57]

By Chapt 7 BK was discharged on May 1, 2011. My mortgage was included. I don't Want the house and am moving out soon. Does it matter if the lender forecloses or is it better to sign over the deed in lieu of foreclosure? Does it make a difference on future credit. Also, does the actual foreclosure put yet another ding in your credit, or should it only show up from the actual d/c date?

[iv65536]

If there is a second mortgage in this case I would simply stop paying on your house and let it go to foreclosure if you have not already; use the remaining time in your house to save up for moving expenses and the deposit on a new home. Your personal obligation on the mortgage has been discharged. The damage is already done; the mortgage is marked as IIB on your credit report.

The bank is under no obligation to accept a deed in lieu of foreclosure, and if my experience is any indication, the banks' handling of people who want to work out arrangements after discharge is just plain dumb.

The second mortgage was offered about a penny on the dollar to release its lien; they refused and got nothing.

The first mortgage was offered a resumption of payments if they agreed to turn a 5/1 interest-only ARM to a fixed-rate loan at a reduced interest rate from the status quo ante, and bought out the second mortgage and released that lien. They were also offered a promise to pay the property taxes and HOA dues through the end of 2011 if they agreed not to conduct the sheriff's sale in 2011. Both offers would have allowed me to walk away without any liability to the bank. They wanted me to fill out forms; I refused to fill them out, since I stated they had all the information they needed to make their decision. They declined my proposals.

Instead, the first has listed the condo for about $25k less than the principal on that loan at the time I stopped paying. NYCB is so dumb.

[dspii]

If you can get the deed in lieu.....go for it, transferring the deed is quicker. The pain is, for a new mortgage, you have 3 years from the deed transfer out of your name. As you may have heard, a foreclosure could take a year or so before your name is removed. A deed in lieu is 3 years from that date, which might shave a year or so off the wait time. But banks are pretty much idiots and its unlikely they would agree.......although if that is your plan, pursue a DIL with them....stranger things have happened.

A F/C might show up on your CR, but by law, it must be removed, just challenge it.....it should be IIB and $0 and nothing the the public records section except your BK.

[tobee43]

i'm with dspii on this..grab that deed and lieu and run for those hills!!!

if you included your house in your bankruptcy then the foreclosure is not technically suppose to show up on your credit report in the future. however, i have heard that sometimes they do. a foreclosure stays on your report for 7 years whereas a bk for 10. if the foreclosure takes place within that 3 year period of reporting, it really wouldn't matter anyway.

it's really people like me, going on four years and chase has not foreclosed, they will not accept a deed in lieu, the mortgage did have PMI, however they have never filed a claim with the FHA...and must foreclosure first, since that is the procedure to collect on a mortgage with PMI. in the state which i own, or did own the property the statue of limitation is 20 years for a deed transfer. if after 10 years a foreclosure showed up on my credit report i would fight it tooth and nail.

by the way, the mortgage shows up as IIB and balance zero as of now.

[btbeme]

In my opinion, getting this off your record ASAP is the important part, which could mean a deed in lieu. However, you might explore your short sale options. A short sale can be about as fast as a deed in lieu, and can also have financial rewards.

Case in point - Chase is writing me a check for almost 20 grand to short sale a house I have occupied and not paid on for a year and a half. It was purchase money, and one of those "toxic" loans, but... a few hours research might allow you an escape with cash, instead of just an escape. Even if is is only a $3000 HAFA check, it is worth a little research.

In the AZ market, many investment companies have sprung up, offering cash for homes (the banks like cash) and offering the owner a nice percentage of the proceeds, up to 3% of the sale.