Foreclosure on non-reaffirmed 1st & 2nd after discharge - what happens to my credit?

[hendrick]

I apologize in advance if this has been definitively answered somewhere else, but I have read so many forums both here and elsewhere and still don't have a clear understanding... I filed for Chapter 7 in December of 2010 and have my 341 meeting next week - mid January 2011. I have a house with a 1st and 2nd mortgage that my wife (we are in the process of separating now) is staying in currently. No payments have been made on that 1st or 2nd there since September. No foreclosure process was started prior to my BK filing. I also have an investment property that I have since moved in to (November 2010 - prior to filing). In my petition, I have included the 1st and 2nd mortgage on the house my wife is staying in with the intention of surrendering that property - I do not intend on reaffirming either of those debts. I am staying in what was once the rental property, am current and always have been on that mortgage. That has been listed as something I intended to reaffirm and keep. My question comes form the house my wife is staying in.... if all goes well I should have a discharge in late March. At that time I'm guessing the 1st or 2nd mortgage holder will start some sort of FC process on that property. Since it's been listed on my CH 7 petition as a property I'm surrendering and discharging the debt, then will there be a 2nd hit to my credit (the first being the BK filing of course) for the foreclosure when it eventually happens 12 months from now, or will the 1st and 2nd simply be listed as IIB (included in bankruptcy) and the foreclosure not hit my credit at that point? I've read posts stating both... it it matters I'm in the norther dist of IL...

[DebtEnder]

Look up any post i've made regarding foreclosure in the past year for more detail, to late to post more.

To answer your question of "will the 1st and 2nd simply be listed as IIB (included in bankruptcy) and the foreclosure not hit my credit at that point?"

Yes.

[cory1848]

Once the sale goes through it might be listed under the public records section of your credit reports. IMO, that is just as bad as it being on your credit.

[debee]

That's my understanding as well. The tradelines for the loans included in bankruptcy have to be zeroed out and should read $0 IIB, but the foreclosure appears in the "public records" section.

[hendrick]

okay - interesting. The 1st and 2nd were in my name only, but the deed is in both my and my wife's name. If I were to do a quit-claim deed removing myself from the deed and giving my interest to her after my discharge, would it then NOT appear on my credit report? Along those same lines, if I do nothing and we are both on title, will that somehow show up on her credit report that a house she owned (but was not on the mortgage) was foreclosed on?

[debee]

My understanding is that the public record will be for whoever was on the mortgage/deed of trust. It's not possible to remove yourself from that instrument via quit claim so you will be named no matter what. I don't think your wife will be named at all.

[Amy26]

Foreclosure should not appear on your credit report. If you have surrendered the property in bankruptcy the only thing on your report should be your IIB accounts for mortgages and 1 public record for your bankruptcy. That is also consistent with my experience. My bankruptcy is the only public record on my account and my foreclosure is no where mentioned nor was my credit updated when the foreclosure happened a year after my bankrutpcy was discharged.

[cory1848]

Foreclosure should not appear on your credit report. If you have surrendered the property in bankruptcy the only thing on your report should be your IIB accounts for mortgages and 1 public record for your bankruptcy. That is also consistent with my experience. My bankruptcy is the only public record on my account and my foreclosure is no where mentioned nor was my credit updated when the foreclosure happened a year after my bankrutpcy was discharged.

Amy - That is good to know from your end. I have, however, heard the opposite and it may depend on how the bank wishes to report it. Technically it is a public record. I am hoping my outcome is as yours was. Thanks for your input.

[debee]

I always thought it was not the bank that reported the foreclosure (post bk) but the county. That's why I thought it would get in the report. I thought the lender was prevented from reporting anything on the discharged loan post-bankruptcy.

[cory1848]

I always thought it was not the bank that reported the foreclosure (post bk) but the county. That's why I thought it would get in the report. I thought the lender was prevented from reporting anything on the discharged loan post-bankruptcy.

Banks report whatever they want how ever they want. My experience they dont care about violations. I have 6 credit cards and 2 mortgages that were discharged that are all showing late reporting during my open bankruptcy case. Currently fighting them. I have disputed and the CRA's verify it. I am not sure what exactly triggers a public record from showing up on the reports but I can only assume the county/state doesn't really care and it would be picked up by someone else reporting it. The county is not a creditor in this case so I am not even sure if they are even allowed to report that. Could be wrong though.

[debee]

Banks report whatever they want how ever they want. My experience they dont care about violations. I have 6 credit cards and 2 mortgages that were discharged that are all showing late reporting during my open bankruptcy case. Currently fighting them. I have disputed and the CRA's verify it. I am not sure what exactly triggers a public record from showing up on the reports but I can only assume the county/state doesn't really care and it would be picked up by someone else reporting it. The county is not a creditor in this case so I am not even sure if they are even allowed to report that. Could be wrong though.

I had read that the public records - tax liens, judgments, NOD, foreclosure, etc - are all picked up by the credit reporting agencies via some setup with the county. It's not the county reporting the debtor so much as allowing the credit reporting agencies access to public records in a way that makes their job of reporting easier.

I've been thinking exactly the same as you (in terms of post-bk foreclosure in the public records section) right up until this morning, but now I am beginning to question it. There's another member reporting the same as Amy above that their foreclosure post-bk did not appear in the public records section. I copied it and it's here: http://www.bkforum.com/showthread.ph...included-in-BK

As for the misreporting in your credit report, have you read any of the posts about demanding the trade-line be removed after verified misinformation? I was reading about that yesterday. Someone here was able to do it. Might be worthwhile for you to track down the thread and see if you could do the same.

edit to add: I just found this thread which presents the other side of the argument. It's definitely an interesting topic. http://www.bkforum.com/showthread.ph...r-deed-in-lieu

[cory1848]

I had read that the public records - tax liens, judgments, NOD, foreclosure, etc - are all picked up by the credit reporting agencies via some setup with the county. It's not the county reporting the debtor so much as allowing the credit reporting agencies access to public records in a way that makes their job of reporting easier.

I've been thinking exactly the same as you (in terms of post-bk foreclosure in the public records section) right up until this morning, but now I am beginning to question it. There's another member reporting the same as Amy above that their foreclosure post-bk did not appear in the public records section. I copied it and it's here: http://www.bkforum.com/showthread.ph...included-in-BK

As for the misreporting in your credit report, have you read any of the posts about demanding the trade-line be removed after verified misinformation? I was reading about that yesterday. Someone here was able to do it. Might be worthwhile for you to track down the thread and see if you could do the same.

I am hoping it doesn't report. If it doesn't report, how are future mortgage applications processed? Most say there is a 3 year waiting period for FHA to be eligible to apply, how would they know if its not on your reports? I get lost on all that info.

I need to brush up on the tradeline reporting. I put it off cause of the holidays so need to jump back in on that. Thanks for the tip, I will hunt down that thread.

[debee]

I just edited my last post to add another link I found. HHM carries the thread (last link in my last post) and the position that the foreclosure will report to the public records section after a BK filing, and further, that since public records account for 15% of the credit score, credit takes a hit.

So now I am leaning that way again. That is the argument that seems most logical to me (with what I know at this point). I get that the lender can't report the foreclosure on the trade-line, but still not convinced that the credit reporting agency can't report the public record. Also, I do believe that in some cases the public record may not end up there (as in Amy's case, and the guy from the other thread), maybe it depends on the county set-up. I'm a weeble on this issue.

I read FCRA 1681c, Subsection 605 a few minutes ago looking for more info to support that the public record post-bk could not be added but there was nothing there to that effect.

[Amy26]

As far as I was aware, the whole point of including your home in your bankruptcy negates the effects of a foreclosure (from a credit standpoint). The bankruptcy is supposed to trump the foreclosure. So, I'm not sure why you would be getting smacked with a bankruptcy and a foreclosure on your credit report. The public record does of course exist and if a mortgage company did an investigation they would still find the foreclosure even if it wasn't listed on your credit. But, I was always under the impression that if you filed for BK and included your home you would be under the BK umbrella of protection from all foreclosure activities including the reporting to your credit.

There are TONS of people on this forum who have included homes in their bankruptcies... would be nice to know from many of them how many were slapped with 2 public records on their credit. If I somehow dodged a bullet then I guess I'm a lucky one... but I really thought that it was standard to only receive one record on the credit report.

[cory1848]

As far as I was aware, the whole point of including your home in your bankruptcy negates the effects of a foreclosure (from a credit standpoint). The bankruptcy is supposed to trump the foreclosure. So, I'm not sure why you would be getting smacked with a bankruptcy and a foreclosure on your credit report. The public record does of course exist and if a mortgage company did an investigation they would still find the foreclosure even if it wasn't listed on your credit. But, I was always under the impression that if you filed for BK and included your home you would be under the BK umbrella of protection from all foreclosure activities including the reporting to your credit.

There are TONS of people on this forum who have included homes in their bankruptcies... would be nice to know from many of them how many were slapped with 2 public records on their credit. If I somehow dodged a bullet then I guess I'm a lucky one... but I really thought that it was standard to only receive one record on the credit report.

This is what I originally thought as well but it seems it is not so clearly defined. My lawyer advised me that it may or may not show up. All the BK does is wipe out the debt. You are still tied to the house via the title which is why the foreclosure needs to happen. Once the collateral is collected via the sale, that becomes public record which appears on your reports. I would LOVE to hear from others that have gone through this and see whats reporting. Can anyone help?