More questions on a foreclosure on a IIB home

[Sweetpea3829]

I know I started a thread already concerning this, but I have a few additional questions.

A home that was IIB four years ago...when it forecloses at some point this year, will there be a judgement entered?

I know that we won't be liable for the shortage as the loan was discharged. But will it show up as a judgement on my husband's credit report?

Any experience on exactly how a foreclosure for a IIB property will appear on a credit report?

[Freddy03]

I may be wrong but there will not be a judgment b/c you can't be sued for the dificiency.

The foreclosure whould show up on your credit reports.

[debee]

That's exactly what I used to think too. Makes sense since foreclosure is a public record, you'd expect it to appear in the public records section, but there was a thread awhile back where forum members were reporting whether their foreclosures had actually shown up on their credit reports and none had! None!

[Sweetpea3829]

Debee, that's what I had read here before. But I need a definite. It's actually OK if it does show up in the public records section, but it can't show as a judgement.

Our home that we're purchasing is on the brink of falling through due to seller issues. We can either push through and try to work something out, or we can back out of the deal and look elsewhere. But...looking elsewhere means more time. And if our IIB property does not have a modification in place soon and forecloses, we *might* be in jeopardy to close.

But...if it doesn't show up at all, or just shows up as a foreclosure but no judgement, we can take as much time as we want in looking for a suitable property.

[debee]

As Freddy points out, you can't be sued for the mortgage debt since it was IIB, so noone can get a judgment against you for it.

[tobee43]

although deficiency judgments are permitted in Rhode Island where i see you are from, if you listed on your bk, which it appears you did, and surrendered the property they cannot go after you for any deficiency.

if you didn't file and affirmed they can, however, from what you said it's IIB so there should be no issue if they attempt to collection, they are in violation of the court order of your discharge.

[Sweetpea3829]

So it *shouldn't* show up on our credit report as a judgement? Just a foreclosure sale.

[debee]

It won't show up as a judgment. They can't get a judgment. If they sued you, they would be in violation of the permanent injunction. Not allowed. To get the judgment, they'd have to sue you. So, not possible.

It could show up as a public record because technically speaking, the credit bureaus are allowed to report true things and the foreclosure as public record will happen post-bk. They can report it. But so far, they haven't reported anyone on this forum's. And some of the members who weighed in on the relevant threads were two years post-foreclosure and still nothing.

[Sweetpea3829]

I think then, Debee, we have some room to breathe. We've been in panic to get this transaction closed since mid-April (USDA is ridiculous on how long they take...really) because we've been under the assumption that, if our IIB multifamily in RI forecloses, we'd be sunk and not able to close the loan.

I spoke with the supervisor over there that I've been talking back and forth with since January and she wasn't able to give me a definitive answer other than, if it shows up as a judgement, the deal would be dead. If it shows up in the public records section just as a foreclosure, as long as the credit score is above 640 (and it was when we applied, but just barely), we'd be fine.

Today, the septic engineer guy will be visiting the property to determine why it failed the septic dye-test. Based on what he says and how much it will cost to fix the problem (I think the well and septic are too close together), we will have to make a decision to move forward or back out.

Backing out isn't an easy task though...there have been fees incurred for services rendered that would have been closing costs and were supposed to have been paid by the seller at closing. If we back out, I assume we'd have to pay fees incurred on our behalf, like the appraisal and the title search that is underway. Plus we've already dropped almost $500 for the inspection.

Not to mention we've been living in limbo since February and REALLY want to get settled. My kids are driving me batty and every day we stay here at the rental, they damage something else. Not that their little hoodlums, but they ARE only 2, 3, 4, and 5.

Hopefully it all works out and soon. We need a home. :-)

[tobee43]

and sweetpea, although difficult to find see if you can find a broker willing to work with you on a land contract. or owner financing. with so many trying to move or get out of their home. (like people getting ready to retire from the cold and buy in the warm when the prices are so good), those type of people may hold a mortgage for you.

best of luck on your house hunt!