Conflicting advice on foreclosure after CH7

[peterpan123]

My wife and I went through Chapter7 2.5 years ago and did not re-affirm the house. We have continued to live here and make payments; however, the property values are continuing to drop and we are 50k underwater.

We are looking to move to Raleigh (we live in NC now) and purchase a different house; however, I am receiving conflicting advice on what happens in this situation:

(1) If we stop making payments, how long before foreclosure proceedings start. Really, how long before they kick us out?

(2) If we do go into foreclosure, will this "ding" our credit report - or - since it was not re-affirmed, will it not show up?

(3) Is it better to purchase another house (less expensive) in Raleigh and then just leave this one.

I am not looking to scam the system and I have paid plenty in interest in this house over the last 7 years, but I need to do what is best for my family at this point. Any helpful advice would be appreciated.

[justbroke]

(1) If we stop making payments, how long before foreclosure proceedings start. Really, how long before they kick us out?

North Carolina is a non-judicial sale State where they use the Power of Sale clause in the Deed of Trust. You still need to default and then 90 days after default, they can set a sale date about 20 days out. It's pretty fast, but the default must occur first!

(2) If we do go into foreclosure, will this "ding" our credit report - or - since it was not re-affirmed, will it not show up?

No it should already be on your credit report as IIB (included in bankruptcy) or discharged in Chapter 7. However, the lender may still report it incorrectly and you'll need to dispute it after the fact.

(3) Is it better to purchase another house (less expensive) in Raleigh and then just leave this one.

That's a personal question and you will need to decide what will work for you financially. Since you're about to have a home go into foreclosure, you may have issues with financing, as I'm sure the new potential lender will be asking questions about the home that you are in now.

[Tom_Mi]

Be careful....
-Ding your credit report: No.
-Affect your ability to get another mortage: **YES**.

A new lender will look at how your current house "went away", and if they find a foreclosure will probably stick you with the 3yr waiting period...despite your credit score not showing it.

So if you want to buy, finding a way before foreclosure happens might be a good idea.

[mynameainttracy]

We just moved to Raleigh from one of the outlying towns, we are 2 years into our 13 and just left our house for numerous reasons, including the ones you mentioned . After speaking with our attorney several times we decided that leaving the house was in our best financial interest. Imagine the situation we would be in if we needed to move and couldn't sell our house in this market, had to sell it at a loss or had to go to the table with money we don't have. This was an opportunity that we had to take while it was an option.

We have chosen to rent and didn't have any issues getting approved with our credit. We were approved into a very nice complex with 1/2 months rent as a deposit and then given 2 months free rent for signing the lease. We have missed 3 payments and just got a letter this week showing that the mortgage company requested to lift the stay and start the foreclosure proceedings.

Good luck with whatever you do. Foreclosure certainly isn't anything I thought I would ever do, but this forum has been a great help to me in dealing with it.

[mrskal]

Can you really qualify to finance another house after 2.5 years of bankruptcy?

[killinstinct]

justbroke, i'm curious because you and HHM seem to be in direct conflict over this...

If you surrender a house in Ch7, then they foreclose later, what will your credit report show?

BK and Foreclosure in Public Records section? Or just BK?
In the account history, can they show foreclosure, or just IIB?

[justbroke]

justbroke, i'm curious because you and HHM seem to be in direct conflict over this...

If you surrender a house in Ch7, then they foreclose later, what will your credit report show?

BK and Foreclosure in Public Records section? Or just BK?
In the account history, can they show foreclosure, or just IIB?

What conflict? What should happen and what usually happens are two different things. I actually have a foreclosure on my credit report on the tradeline (actual credit account) for an investment property I included in my Chapter 13 bankruptcy. I'm trying to fix that now. It should read IIB. I have NO public record of foreclosure, which is the correct thing.

If you had a foreclosure before filing, then it can be accurately reported as a foreclosure, even though your personal liability for a deficiency is discharged.

So what's the conflict?

[killinstinct]

I guess the conflict is that you're saying there should not be a foreclosure in the public records section if you surrendered a property in BK. HHM is saying there WILL be.

I surrendered my home in BK, and it goes to auction in September. So I'm wondering if my CR will take another nose-dive then. If so, that sucks as I filed BK over a year ago now.

[justbroke]

I had a foreclosure due to an investment property that was included in Bankruptcy and that foreclosed last October. It is not on my public records section on any of the 3 major credit bureaus.

So, I'm going by my experience. I should have another foreclosure next year on the other investment property. I'm not expecting a public record on that one either. Of course, they are reporting it wrong on my credit report, and my contention is/was that it should not be reported.

[Tom_Mi]

I had a foreclosure due to an investment property that was included in Bankruptcy and that foreclosed last October. It is not on my public records section on any of the 3 major credit bureaus.

So, I'm going by my experience. I should have another foreclosure next year on the other investment property. I'm not expecting a public record on that one either. Of course, they are reporting it wrong on my credit report, and my contention is/was that it should not be reported.

So if the apartments aren't your primary residence, no underwriter will track it down and hit you with a 3yr waiting period? Everything I've seen says they will.


To the original poster: I didn't reaffirm either, and just had a meeting with my lender. They're going to do a modification of my loan, and they're thinking I don't need to reaffirm to get it. I'll be able to keep paying until I'm ready to leave on my own. I have another lender who has told me that as long as my home is listed for sale, he can do a loan for the next house... So our plan is to stay put, save money and move when we can buy what we want.

[NoMoreCards]

To the original poster: I didn't reaffirm either, and just had a meeting with my lender. They're going to do a modification of my loan, and they're thinking I don't need to reaffirm to get it. I'll be able to keep paying until I'm ready to leave on my own. I have another lender who has told me that as long as my home is listed for sale, he can do a loan for the next house... So our plan is to stay put, save money and move when we can buy what we want.

Tom, I am wondering when you were discharged, and if this would require the 2 year wait after BK discharge. Because this would be a great to get financed for a mortgage by placing the current home for sale and then stopping payments on the current home once the new mortgage and move has happened. I am thinking ahead, planning my next moves carefully.

[limage]

Lenders are ahead of you on that plan. It might have been something you could get away with before, but trust me, you're not getting a mortgage on a new home while your current has 0 equity. The underwriter has the final say.

[justbroke]

So if the apartments aren't your primary residence, no underwriter will track it down and hit you with a 3yr waiting period? Everything I've seen says they will.

Yes, they will find it. I was only stating what was reported to the Credit Bureau.