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

[hendrick]

Agree - anyone else able to provide any 'real world' experience?

[debee]

My lawyer advised me that it may or may not show up.

I read this on a credit forum too. The explanation was it could and is allowed, but there's no guarantee that it will. Still, I'm with the rest of you. We need some more post-bk foreclosure people to check their credit reports and post!

[DebtEnder]

I had 3 houses, 1 with Chase former Wamu, 1 with BOA former Countrywide, and another with Citi. All of them are IIb with no other info regarding foreclosure anywhere on my or the wife's credit. Last house was taken back in July of last year.

[justbroke]

Another real world experience. Of my two investment properties, one foreclosed in October 2009 after being included in my Chapter 13 Bankruptcy (July 2008). It only shows as IIB on my credit report. There is absolutely no public record.

[debee]

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 think lenders access databases like Choicepoint.

[HHM]

First, let's bring some perspective. This issue ONLY relates to credit scoring. Keep in mind that when you apply for a future mortgage, the foreclosure WILL BE DISCOVERED regardless if it is on your credit report as part of the underwriting process. So, there is no true way to "negate" the affects of foreclosure vis-a-vis future mortgages.

Two areas of your CR report are at issue with regard to foreclosure and BK.

To clarify the facts, let's assume the debtor received their discharge BEFORE the home foreclosed.

Trade Lines: This is the section that reports the mortgage loan. In this section, the loan should be zero'd out and the comment should say Included in Bankruptcy (or some variation).
Public Records: I go back and forth on this one, but it appears that a post discharge foreclosure SHOULD NOT appear on a credit report.

If the foreclosure occurred before discharge but after filing. (this may occur with a timely filed Motion for Relief from Stay and the foreclosure process was practically complete so the lender need only reset the sale date).
Trade Lines: should be reported as zero'd, IIB
Public Records: Jury is out on this one. Ultimately, it is the discharge that alleviates the responsibility for the loan, but my sense is the bank cannot efficiently draw this distinction and will not report the foreclosure.

If foreclosure occurred before filing BK, but BK is eventually filed and discharged.
Trade Lines: Zero'd out after discharge, but comment may still reflect foreclosure.
Public Record: the foreclosure can fairly be reported on the credit report.

The other STICKY issue: foreclosure is a long process. The "official" foreclosure notice goes out months in advance of the actual foreclosure. If you file BK anytime after the "start" of the foreclosure process, the creditor can fairly report foreclosure on your credit report, although in reality, they might not.

[cory1848]

Lots of Should and Should nots.... Is there law on this somewhere? My BK7 discharge was before I was served my LP. So from what is being said, my future foreclosure should NOT appear on my reports. But what if it does? Any recourse to fight that? From what I am seeing, there isn't.

[HHM]

Lots of Should and Should nots.... Is there law on this somewhere? My BK7 discharge was before I was served my LP. So from what is being said, my future foreclosure should NOT appear on my reports. But what if it does? Any recourse to fight that? From what I am seeing, there isn't.

You would dispute the entry with the credit reporting agencies under FCRA. However, there is no case law that explicitly says that it should not appear that I am aware of, (but at the same time, I haven't researched the issue extensively). I am relying on the real world, practical outcomes that people are experiencing post BK with foreclosure.

Here is the thing, information on a CR Report must be "accurate" and "not obsolete." Is it inaccurate to report that a foreclosure took place when in fact it did, regardless of the bankruptcy. I must say, I think it is okay to report, at least in the public records sections of the report. The practical reality is that it is not being reported when the mortgage was previously discharged in BK. I don't have an explanation.