Selling House - Non Reaffirmed

[winterheart]

Hello,

We are 4 years post chapter 7. We did not reaffirm our mortgage, however we have continued to make payments and are current. The lender does not record on our credit report but we have been able to rebuild our credit. We are looking to sell our home and we are wondering if there will be any issues selling it since we did not reaffirm. Anyone have any experience with doing this? One hand I would assume it should all be fine, the lender gets paid off and we go from there. Am I missing anything or any pitfalls to be aware of?

[justbroke]

There are no issues at all. This is no different than selling your home had you reaffirmed or had you never filed bankruptcy. There are no pitfalls unless you are selling short. Selling short would require an approval by the bank to accept a lower amount, even though your bankruptcy discharged your liability to pay. Otherwise, if you have enough equity to payoff the mortgage and pay the commission(s) and any other closing costs, then this sale will happen just like any other sale.

[winterheart]

Awesome! Thank you for the insight, that's what I thought, glad to hear/read some assurance that confirms it!

[Drazil65]

Same situation and sold short, it actually turned out better for us to short sell (we were ready to leave the last remnant of the chp 7 and so ready to be renters and free of mortgages) . We told the bank we had an offer and it was lower than the mortgage payoff by about $13k, first they said no and we said ok. Then we told them to go ahead and start foreclose proceedings as we had not reaffirmed and we were done paying a mortgage that was higher than the appraisal. They had a change of heart pretty quickly and approved the short sale, guess they knew this offer better than no offer or foreclosure. We were able to move and did not have to pay any of the closing fee's and our discharge protected us against a deficiency note for the balance.

So if you think you may be ready to just move ahead and stop paying the mortgage it will free up all that money for moving expenses and then some. You will probably get 6 months to a year of saved payments, that can be significant. No matter what you do with your payments you will still have the bankruptcy on your credit report and your good payments to the mortgage company will not negate that fact any way you look at it especially since you did not reaffirm.

As long as you have enough equity as a previous poster stated to pay everything if you do a regular sale then you will be just like anyone else and if you sell short then you are free to start saving those payments (you would have paid to the bank) for your own future. Good Luck either way!

[chrisdfw]

No issues, but keep a copy of the closing docs, to prove in the future it was sold and not foreclosed, a future lender may want it for underwriting. Mine did, but there was no issue at all since I had it.

[brokehmowner]

I would just stop paying the mortgage and just pay the insurance and the HOA fees, if any. You can look at it as doing the bank a favor by keeping it up and preventing vandalism while they go through all the legal hoops of foreclosing. It will stash up some nice cash for you and won't affect you credit either way.

I know that sounds callous but you really would be doing the bank a favor because otherwise they would have to pay someone to deal with it until it is ultimately sold. You would also be doing your neighborhood a favor. If you are squeamish you could move once they give you a sale date, although they will probably postpone the sale a few times. Unless you have equity I couldn't see wasting my time dealing with selling the house.

[thereshope]

Thanks posting this question winter heart.

I'm in a similar situation. I am 5 years discharged from bk. I've stayed and paid, but I'm still underwater as the property value sunk, hasn't come back and doesn't look they it's coming back to what was paid for the property anytime soon. I have a first, second (down payment assistance, lien only) and third (HELOC). The down payment assistance restricts the property from being rented as part of the agreement. My husband and I would like to move and purchase a home together.

I see some advise on here say to stop paying the mortgage, pay the insurance and hoa. [QUOTE=brokehmowner;624556]I would just stop paying the mortgage and just pay the insurance and the HOA fees, if any. You can look at it as doing the bank a favor by keeping it up and preventing vandalism while they go through all the legal hoops of foreclosing. It will stash up some nice cash for you and won't affect you credit either way.
How long would you have to stay and not pay before foreclosure? (I'm in MN).

Also, if we purchase another home (plan on putting down a significant down payment 10-20%), how does that affect getting another loan after bk discharge and foreclosure?