Mortgage Discharged in Bankruptcy is NOT Free and Clear?

August 2014 UPDATE:  Fannie Mae has made a significant change is how it views mortgage debt included in Bankruptcy.

Now, if you had a foreclosure, short sale or deed in lieu of foreclosure after the Bankruptcy, the waiting period to buy again begins from the Bankruptcy discharge date, not the subsequent removal of your name from title! – Read More Here >> Fannie Mae Waives Waiting Period After Bankruptcy


Mortgage Discharged Through Bankruptcy

Much of this conversation has taken place in the comments sections of two articles from a few months back – Buy Again After Bankruptcy, Foreclosure and Buy Again One Day Out of Short Sale.

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All of the conversations I have had around this subject are very similar in that:

  • I discharged my mortgage through bankruptcy
  • The home is upside down but I didn’t want to lose it
  • Now I want to buy a new home with a more affordable payment

What it boils down to is that when mortgage debt is discharged through BK, it does not mean that you own the home free and clear, and it doesn’t mean that you’re off the hook for the mortgage.

When mortgage debt is discharged, you are protected against any personal liability should the home foreclose through or after the BK – this essentially means the lender cannot come after you for their losses.

Many times the mortgage debt will show up on the credit report as “included in bankruptcy” with is slightly deceiving because it implies that the debt is no longer owed…which is not the case.

The challenge is that if you decide you do not want to be shackled by  your upside down mortgage at any time in the future, you are still facing either foreclosure or short sale to rid yourself of the home.

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To buy again after bankruptcy you have to wait for 24 months before you can use a FHA loan for the purchase of a new owner occupied home.

Once the bankruptcy is complete, homeowners are still faced with the fact that refinancing into today’s lower rates is not possible due to the fact that the home is upside down.

Renting the home out to buy again after the 24 month bankruptcy wait is also a challenge, as I have detailed in this article: Can I Rent Out My Upside Down Home and Buy Again?

I am keeping a close eye on this, I think that many home owners are in this situation now after filing for bankruptcy a couple of years ago.

I think this is an important conversation to have as there are many families trying to get back on their feet after tough times.his topic?

Do you have any experience or questions around this topic?  Please leave comments and questions below if you have a specific situation you would like to discuss.

 

870 comments
Newmexicon1
Newmexicon1

Hi Scott

I was told that there may be a possibility of getting some kind of credit or limited reimbursement for having paid into the mortgage for 12 years.

Also, how do I go about asking

for that consideration as well as moving costs?

One of my mortgages insisted on sending me papers to apply for modification loan. I told him I had tried last last year but didn't qualify. He insisted.....isn't this a waist of time?

Thankyou.

ScottSchang
ScottSchang moderator

@Newmexicon1 You would only do a modification if your intention is to stay in the home.  I have never heard of a credit or limited reimbursement for having paid into the mortgage for 12 years.  That doesn't mean that it's not true, I just haven't hear of it, now would I have heard of it.

If you're asking the bank to take a loss on the home (it's worth less than what you owe), you can always ask for consideration, but it's completely at their discretion...they certainly are not obligated to pay for your closing costs or credit you for past mortgage payments.  It definitely will not hurt to ask the account person that is handling your deed in lieu of foreclosure!

nlb73
nlb73

Hi!  

My husband and I filed Chapter 7 in 2009.  We were advised the reaffirm our mortgages, as that would be the only way to stay in our house.  I realized later (as I was ignorant to this process) that the first mortgage was not reaffirmed, but the second one was. The second mortgage also is a 30 due in 15 year mortgage with an 9% interest rate (due in 5 years and we are getting nowhere in paying it down).  We have outgrown this house, but owe about $90,000.  Home is only valued at $75,000 and could use some work.  Homes in our neighborhood have not been selling well. We would love to move to a larger home, but do not know if we have any options at this time.  We can afford both mortgages with our incomes, we just need a bigger home.  Are we stuck?  

viking68
viking68

Chapter 7 discharge 10/13.  Staying in home.  Mortgage NOT re-affirmed.  Mortgage was modified about 2 months prior to the unexpected filing.  Means test dictated filing.


Current Lien of $406K on value of ~ $330K.  Of the $406K, $124K is "unpaid second principal balance".  Which is another way of saying that's what the unnamed national bank crammed down for a couple years of not paying during the financial crisis.  


At the point of modification, we had made trial payments, accepted into the 40 year loan and were NOT going to file BK..  Too many things hit too fast and it was inevitable.


Question:  Is there any route to getting a national bank, well you might well know which one, to negotiate a settlement for cash?  We've paid on time and up to date for over 3-1/2 years now.


I think it's despicable they were allowed to and I accepted the $124K cram down my throat, which, was basically interest they didn't earn because we couldn't pay, that now, we are paying interest on interest.


Am I crazy?  Is there a way out?  We're in our 60's and want to stay, but, I'm not paying 25% more than the property is worth.


Help?

ScottSchang
ScottSchang moderator

@viking68  I have a few questions:  Did you originally take out 2 loans, or is the $124k a lien they tacked on the to property to cover what they consider to be paid unpaid interest?  I am assuming that this is a balloon loan at the end of the first loan?  You said you're paying on-time for 3.5 years, is that on the modified first mortgage only? Are your intentions to stay in this home?

I'm not sure I understand your question.  When you ask if a national bank will negotiate a settlement for cash, are you suggesting that you will pay in cash an amount less than what is owed between the $406k and the $124?

viking68
viking68

@ScottSchang @viking68  Guess I could have been more clear.  The loan was modified prior to BK filing.  I accepted the mod -  40 year note with the (now) original $281K principal balance PLUS an additional second principal balance ($124K now) that was "tacked on" was for 37 missed payments, taxes and insurance.  A lot, I know.  It was the times.  So, mortgage lien is in the $406K neighborhood.  Foreclosure was staved off until we could afford the last-ditch mod attempt in February/March 2013.

My annoyance is banks in general being allowed to collect interest on interest.  Of that $124K, a substantial portion is interest.  

My question - what is likelihood they would accept a FMV cash offer on the house?  Is it even worth trying?  We intend to stay in the home and have not missed a payment from the initial trial (March, April, May 2013) to today - even going through Chapter 7, we always paid.  On time.  Bankruptcy was filed June 2013 and discharged October 2013, this mortgage (the mod) was NOT re-affirmed and was discharged.

ScottSchang
ScottSchang moderator

@viking68 Thank you, there are always a lot of moving parts in these situations.  What you are describing is called a "short refinance", which essentially means that your current lender allows you to refinance your current loans for a new loan that is less than what is owed.

As much as it sickens me to say this, the fact that you've been responsible, and made your payment on-time, there is little to no chance that your current lender will consider anything.  At least that's been my experience talking to hundreds, if not thousands of folks in difficult situations.

You're in a tough spot because your good payment history works in your favor now, and if you miss any payments, you lose any benefit you could have received from the payment history.

If you have cash, and you go to the lender and ask them to accept less than what's owed, it's possible that they would talk to you, but finding a lender to offer you a refinance is probably going to be pretty tough.

Now, here's kind of a crazy thing for you to consider.  Should you decide to leave this home, and either default (resulting in foreclosure), short sale (sell to someone else for less than what you owe) or do a deed in lieu of foreclosure, you would be eligible to buy a new home in 4 years from the discharge date of your BK using a conventional mortgage.

If you plan is to stay in the home, you're probably going to be held hostage by your current lender.

I really wish I had more ideas on what options you might have, but I just don't see anything else.

Hope this helps?

viking68
viking68

@ScottSchang @viking68 Thanks for letting me know my suspicions were correct.  Thing is, I want to "do" a lot of stuff to the house, new AC, resurface pool, new lawn, more insulation in attic, etc.  BUT.  If I throw $20K  into improvements, that would just be "lost" money if something catastrophic happens again and I just walk away as the mortgage was discharged.  Lousy position and I do feel held hostage.

AmyB1278
AmyB1278

Hi Scott,


I filed chapter 7 bk in 2012 and did not reaffirm my "mortgage" I was misinformed by my bankrupcy attorney and was not aware that I could continue making payments on the loan. I assumed  (my mistake) that I owned the home free and clear. The debt was discharged. I recently applied for a loan to renovate and add on to the house and was then informed of the deed of trust through Citifinancial.  I called them and after hours of them trying to find my account info was sent to the most unpleasant woman I have ever spoken with. She wouldn't let me get a word in and told me she was going to have to talk with her manager to determine if we could  even reach a settlement agreement. I haven't heard from her since. I called again today and talked with two nice young ladies who gave me an account number and told me that the amount had been "charged off" and sent to a third party who I assume (again) is the lovely Nora. The(the nice one) didn't have my deed of trust in their data bank and requested me to send a copy of my discharge papers and copy of the deed I personally went and got from the chancery. She said she would send this to the 3rd party and request a release of deed. She also asked me multiple times if the deed had citifinancial on the front page The office that I dealt with in 2007 changed names after I filed bk. I requested this information in writing and sent the info after talking to a personal friend (who is also an attorney). My question is am I entitled to the deed free and clear since Citifinancial "charged off" the debt and sent it to a third party?

ScottSchang
ScottSchang moderator

@AmyB1278 Hi Amy, this question is way above my pay grade, and sounds more like a legal question for an attorney that specializes in real estate law.  The only thing I can tell you, is that in most cases, once the debt is discharged through bankruptcy, it is illegal for the lender to pursue you in an attempt to collect, or report any losses by the bank to the IRS as a taxable event for you.  However, all that said, the lien always survives a "discharge".

Your State may have different laws than California, and it is for that reason that I recommend you find an attorney that can offer an informed answer.

I suspect that the lien still exists against the home.  The "mortgage" may belong to a different company than Citifinancial.  It is very common for banks to sell off large bulks of defaulted/discharged debt to companies that just lie in wait until there is either enough equity to foreclose, or until you reach out an try to settle.

I hope this is helpful?

sjp68
sjp68

Hi Scott, 

We are upside down about $50,000 on our mortgage that we've lived in for 12 years. We want to relocate as I just finished graduate school and have a new job and my salary has doubled, but we obviously can not sell this property and it needs so much work that we will never catch up. We have modified the payments a couple times while I was in college and was having a hard time keeping up with the payments. We accumulated $6,000 in credit card debt as well. We have contacted a short sale specialist who has listed it. Nobody has come to view the home in the 3 weeks it's been listed. We have been lowering the price by $10,000 a week. The short sale specialist talked to me today to prepare me in case the lender does not approve the short sale. He has a copy of our debt/income (before my salary doubled). He said it may be best to file bankruptcy if the short sale is not successful.  My question is, that now my salary is doubled, if we file bankruptcy, will it not be approved due to my salary being so much higher now? I am hoping the home sells soon! Thanks so much!

ScottSchang
ScottSchang moderator

@sjp68 It's not a bad idea to speak to a bankruptcy attorney to at least explore your options.  If you lose the home to default, or short sale, the tax liability might be too much for you to afford even with your higher salary.

Also, a bankruptcy attorney would be able to tell you if you would qualify.

Are you current on your mortgage now?  If so, how long have you been current? You may be able to rent out the current home, and buy a new home using a conventional mortgage with as little as 5% down.

There are a lot of possible options, and a lot to consider.  

I'm not sure if this helps?  What State are you trying to buy in?  I might be able to recommend people that can also help.

Newmexicon1
Newmexicon1

Ffmb

My mortgage was included in my bankruptcy about 5 years ago.

It's my understanding that I can walk away and owe nothing. First of all, is that correct? I'm upside side down and no equity to speak of. It's a condo with home owners dues of 198.00 a month. I am behind on these payments by about 1,000.00 . I believe it is part of the mortgage package. Will I have to pay that back? Or will that affect my future credit?

I have not missed a Mortgage payment .

Please advise. Thankyou.

ScottSchang
ScottSchang moderator

@Newmexicon1 Yes, essentially that is true that you can not be held liable for the mortgage in the event of default, because it was discharged through your bankruptcy.

Homeowner's association dues is not part of your mortgage, and will be paid at some point by either the bank, or new buyer of the home.  I have not heard of a homeowners association suing a homeowner for past due association dues, but I think it's possible they could.

Hope this helps?

Newmexicon1
Newmexicon1

Thankyou you so much!

How do I go about starting the foreclosure process?

Do I just call up the bank and tell them I can't pay anymore? How soon do you think I would have to be out of my unit? Could I stay july, and not make any payment? . .....or even longer?

I guess I'm asking how long I could occupy the unit without paying anything?....or what would be the consequences of that?

ScottSchang
ScottSchang moderator

@Newmexicon1 You cannot start the foreclosure process, the bank will foreclose if you stop making your payments and default on the loan.

If you are in a situation where you feel you can no longer keep up with the payments, definitely contact the lender and explain to them your situation.  They may offer you a deed in lieu of foreclosure, which is essentially the same thing, except you cooperate, and they may even give you money to help you move - it's called a "cash for keys" program.

Finally, you still own the condo, you can sell it.  If it sells for less than what you owe, then it is considered a short sale, and the "less than owed" offer would need to be approved by the bank.

Newmexicon1
Newmexicon1

What would be the advantage of doing a short sale?...instead of walking away?

I would then need a real estate agent that costs more money, ect.....would the bank be happier? Would it be better for my credit? I can't keep up with the payments.....im making considerably less money than last year.

I'm just tired of worrying about where the money is going to come from.

ScottSchang
ScottSchang moderator

@Newmexicon1 in the whole scheme of things, there is no difference as far as your credit goes.  It's illegal for a creditor to report something on your credit that has already been discharged. 

A short sale is the best way for you to make sure that you get the lien removed from your name quickly.  Doing a short sale will not cost you money, the bank pays the real estate agent, and they don't get paid until it sells.

What I have seen many times is that someone will "walk away", assuming the bank will just take back the property...but they don't.  The bank keeps the home in your name for years.  And somewhere down the road, maybe 2 to 3 years from now , you decide to buy a smaller home that fits your budget better, because technically you qualify for a new mortgage now.

You may find that the bank never foreclosed.  The bank doesn't have to foreclose, only if they want to sell the home and try to recuperate some of their money.  If you simply walk away, it could be months, or years before the bank forecloses and removes your name from title.  Until your name is removed from title, you own the home, and it will prevent you from buying again in the future.

It's very complicated, I know.  But the best option is to work with the bank to make sure that your name is removed from title quickly and efficiently.

That's my two cents :)

ScottSchang
ScottSchang moderator

You can live in the home as long as you own it.

Newmexicon1
Newmexicon1

Thankyou again.....you are soooo helpful.

If I foreclose....and the bank doesn't remove my name on the title for let's say 6 months.....technically I still own it.. ...is it possible to stay in my unit during that time?. Without paying anymore?

Newmexicon1
Newmexicon1

And I won't be forced out if I don't pay anything?

So, potentially I wouldn't have to worry about getting out immediately. ...and maybe even stayed a coup l e more months without owing anymore?

Happy Father's Day.....if you are a Dad to anyone!

ScottSchang
ScottSchang moderator

@Newmexicon1   You will most certainly be forced out at some point if you default on your mortgage.  I don't like this approach because you put 100% of the control in the hands of the bank.

If you are certain that default is eminent, you would be in much better shape staying in the home, and working with the bank to negotiate a "cash for keys" deed in lieu of foreclosure, or a short sale.  Either of these two options will allow you to accomplish what you are trying to do, and control the timelines for when you will have to move.

Hope this helps?

Newmexicon1
Newmexicon1

Yes, very helpful. Thankyou Scott.

May I contact you after speaking with the bank if things are not clear?

4TAllen
4TAllen

Hi Scott, In 2011 I quit claimed my house to my ex-husband shortly after our divorce. Unfortunately he couldn't refinance it to get my name off the loan and has since let the loan go into default. The house has been vacant all this time, and the bank has refused to do anything with it.

As a result I filed Chapter 7 bankruptcy to be cleared of this debt so I can eventually buy another home. Debt will be discharged July 25, 2016. Can you tell me when I will be eligible for a mortgage loan? To complicate matters, the bank has filed a motion to lift the automatic stay in my bankruptcy so they can continue the foreclosure process which has been going on for five years.
Since I am not on the deed will I be affected if they do actually foreclose before my debt is discharged?
Will I have to wait longer to get a mortgage? Thank you so much.



ScottSchang
ScottSchang moderator

@4TAllen I am not sure if I answered this question through and email, or over the phone, but I want to make sure if anyone has a similar situation that hopefully they can learn from your experience.

Depending on what the divorce decree states, you may not have even file bankruptcy.  If you quit claimed off title in 2011, and your divorce decree clearly stated that you are not responsible for the mortgage, or the home, I have had success financing folks in this situation.  I am not a bankruptcy attorney, so I would trust your attorney's advice, but I would fight lifting the stay, and make them foreclose after the debt has been discharged.

Since you have the Chapter 7 being discharged on July 25th, you will have a waiting period before you are able to qualify for financing again.  The waiting period is determined by the type of financing you are applying for.

If you are trying to buy using a FHA loan, you would be eligible in 2 years from the discharge of the bankruptcy.  VA financing is also 2 years from the BK.  USDA is a 3 year wait, and conventional financing requires a 4 year wait from the discharge.

Hope this helps!



Juju121597
Juju121597

Do all liens and judgements have to be satisfied before a loan modification is approved? I had a 1st loan and a HELOC with State Farm the he lock was discharged in a bankruptcy in 2010 and then went through loan modification process in 2012 but now I'm showing a lien from my HELOC that was discharged

Juju121597
Juju121597

I need to know does all leins and judgements need to be satisfied before a loan mod can be approved ?

ScottSchang
ScottSchang moderator

@Juju121597 Hi there, I am so sorry, it doesn't look like I answered this right away, and I don't recall if you emailed or called me, and we discussed it somewhere other than here.

Unfortunately, I do not know the answer to this question.  A loan modification being offered by your lender is going to follow that lender's guidelines.  If you filed a bankruptcy, you should not have judgements or liens, unless they are tax related?

Were you able to get your question answered already?

Lumirayne
Lumirayne

We filed chapter 7 bankruptcy and were discharged back in 2004.  The house went through foreclosure just after, but we were able to make modified payments and keep the house.  We have been paying on it since then.  We moved out of state two years ago and had a friend that wanted to buy the house from us and has been living there (without paying...), so we continued making payments on it (and our new home) for the past two years.  We can no longer afford them both, he doesn't seem to have any intention of buying, so we stopped making the payments.  The mortgage company sent us paperwork to either do a short sale or a died in lieu on the house.  Should we do either of those or just let it go into foreclosure at this point?  Can they deny us either of the other two options if they think we CAN afford both payments?  Will any of it hurt our credit now?  Thanks!

ScottSchang
ScottSchang moderator

@Lumirayne A short sale or deed in lieu will get you to the same finish line as a foreclosure, except maybe faster.  To default on your mortgage should not be reported to the credit bureaus because the debt is already discharged through the BK.

When you say you were going to sell it to your friend, is there equity in the home?  If there is, you can sell it to anyone, and that would probably be the best of all 3 options.

As far as you, or your credit is concerned, there is no wrong answer.  You just want to get your name off title.

Hope this helps?

heather060984
heather060984

I am hoping to get some help. I have tried every avenue with no luck or guidance. I file bankruptcy in December 2013 and it was discharged in April 2014. I did not reaffirm the mortgage as I was advised not to. Prior to bankruptcy the mortgage was going into foreclosure. Long story!!! Well after my bankruptcy discharge I was able to modify my mortgage and made all the trial payments and entered into the agreement. Well recently I have looked at refinancing, the one and only reason is to remove my ex husband name. That is the only reason and since I didn't assume the mortgage the only option was to refinance to remove his name. So I was just about done with the refinance when I learned that the modification I did almost two years ago was to bring my account current and I owe an additional 40k to HUD that must be paid off when the first mortgage is paid off. So I owe 150k and the house was just appraised with a value of 141k so I owe more than what it's worth. I am not struggling to make my payments or anything solely just to remove his name. What options are available to me. I cannot reopen my bankruptcy case I have already called them. My current lender bank or america is no help either. Please if anyone has any insight let me know. I don't want to short sale my home again looking over their requirements I am not struggling. Just want my ex husbands name removed. Thank you for your time.

ScottSchang
ScottSchang moderator

@heather060984 a couple of things come to mind right away that I want to run by you.  First and foremost, are you trying to just remove his name from the mortgage (liability), or title (ownership)?  Were you awarded the home through the divorce?  Taking him off title to the home is very simple, it's called a quit claim deed.  You can get a Quit Claim deed online, but I would recommend you go to a title company, escrow company, or the County Recorder's office, you'll need a Notary Public.

A second option might be if you can qualify for a mortgage of $150,000 - do you know if you can?  If so, you may be able to do a FHA streamline refinance - did you try that?  It turns into a full documentation loan when you remove a borrower, but I think you can overcome the loan to value issue as long as you can lower your interest rate by .50%.

Disclaimer:  I have not looked this up as I respond to your question.  I will look it up to make sure that the loan to value is ok.  I thought it was more important to get back to you quickly, so that you know that you actually have options.

What State are you trying to refinance in?  I may be able to point you in the right direction if I know of a lender in your State

Hope this helps?

heather060984
heather060984

Thank you! I have his name off the title already that was taken care of. I am solely just trying to get him off the mortgage. I live in Minnesota and I have looked at the streamline refinance but again I don't even know where to turn. Thank you

MN2AZ2MN
MN2AZ2MN

Question Scott: We went through a bankruptcy in Feb. 2011 and opted to remain in our home, without reassuming the mortgage, making the required payments. Because of work changes roughly 2 years later, we relocated out of state. In doing this, we contacted my home mortgage company informing them of what would be happening and that we would be turning the keys over to the property. We have recently begun to consider purchasing a home again, since it has been 5 years since the bankruptcy and almost 3 years since we turned the keys over to the mortgage company.


Beginning the pre-approval process we began running the numbers. In running the financials, we found out that the foreclosure process did not actually happen until this last December. (27 months after contacting the mortgage company and turning over the keys). With that I am being told that this date supersedes everything else and that we will have to wait 3 years from this Dec. 2015 date to qualify for a loan. Is this the case? Do we have an recourse or options to get this removed and reverted back to the date we turned the house over?

ScottSchang
ScottSchang moderator

@MN2AZ2MN You are being give the guidelines for buying using a FHA loan, and yes, it's 3 years from the date your name has been removed from title (foreclosure, short sale, deed in lieu).

The good news is, Conventional financing will use the BK discharge date, and you are eligible to buy in 4 years from that date.  As long as your name is removed from title, you may be able to use Conventional financing with as little as 5% down.

What State are you buying in?  I may be able to recommend someone that can help.  If you would like me to try to help, shoot me an email to scott@findmywayhome.com

Hope this helps?

Shortcake21738
Shortcake21738

Question Scott. My mortgage was discharged in chapter 7, eight years ago. I then divorced and did a quit claim deed on property to my ex husband. My ex continued to reside at property. The property is now in foreclosure and I've been listed on the civil suit and receiving notices. How is that when I'm not liable?

ScottSchang
ScottSchang moderator

@Shortcake21738 It sounds like that is a mistake.  I would ask either your BK, or divorce attorney.  You should not be liable for anything

Shortcake21738
Shortcake21738

Thanks. I called the attorney for the lender and they stated that they are required to include me in the case because I'm on the original note but that I'm not liable. Still doesn't seem right.

concern59
concern59

Hello Scott:  My parents and I bought our house in 1988 (joint in tenancy).  We refinance a few times, so  I still have 19 yrs to pay it off.  There is a a home equity loan under my name only.  I filed BK, discharged in November 2014.  I was taking care of them for 3 yrs. Both my parents passed away in 2015.  

The house is listed as discharged in the BK.  Although, unemployed, I been making payments on the first (only late once).  And on the second only paying the interest up to January due to lack of funds.  Second will mature in August 2017.   I want to keep my house and continue living in it.  

Do you see any chances to refinance at a lower rate now?  Or, should I wait until next year before August 2017.  the first mortgage is with Wells Fargo and the second with Bank of America.   Can BofA foreclose due to lack of payments?  There is equity in the home.  I live in California.

Thank you 

ScottSchang
ScottSchang moderator

@concern59 If you stopped making payments on the second mortgage with BofA, you are in default on that mortgage, and would not be able to refinance.  Even though you discharged the mortgages in the BK, you are still responsible for making the payments if your intention is to live in the home.  

Yes, BofA can foreclose on you, and they most likely will at some point if they believe there is enough equity to pay back what's owed to them.

If you do not have the ability to make the payment on the second mortgage, and you have equity, I would seriously consider selling the home, and taking the equity out.  Both Wells Fargo and BofA will have to be paid off, but at least you will still have some money left over.  

If BofA forecloses, they are going to pack so many penalties, legal fees and interest onto their claim that you would be left with much less, if any of the equity you have in the home.

Where in California are you located?  I would consult a real estate agent and at least begin by understanding what your options are.  If you do not have an agent you trust, I may be able to recommend someone.

I know this is kind of a sensitive subject, if you would like to continue this conversation by email, you can reach me at scott@findmywayhome.com

Hope this helps?

concern59
concern59

@ScottSchang @concern59 Thank you for the prompt reply.  I was afraid of the foreclose possibility.  I live in So CA.  And, yes a friend of mine is a Real Estate agent. I will consult him.

bbmeter
bbmeter

I have a home that was discharged in a bankruptcy and foreclosed on in 2008.  It was sold back to the bank in November 2015 and now has been sold to an investor, who is willing to sell it back to me.  I am on the title but not on the mortgage.  My credit is fine since this all happened so long ago.  I have been told by my current loan officer that I am not able to get a mortgage on my former house, but can buy and am approved through his underwriter for any other house.  Does this sound right?  I have been getting different info on this from different mortgage people.

Foznsis
Foznsis

it is a manufactured home so i have been upside down since i bought it i am currently 1 month behind but do not want to get a bill for the amount left on loan. i am going to do a refianace on the home i currently live in but the manufactured home does not ever show up on my credit?

ScottSchang
ScottSchang moderator

@Foznsis If your are 1 month behind, it will affect your ability to refinance, or get financing in the future.  Just because the mortgage does not show up on your credit, does not mean that it does not exist.  If you plan to let the home go, you need to try to do the refinance immediately.  I am a lender in California, and may be able to help.  

The lender has to do a verification of mortgage and will count your payment history against you when you try to refinance your current home.  An inexperienced lender will miss this, and could cause you money and heartache in the future.

Is the loan you are trying to refinance a FHA or Conventional mortgage?  The reason I ask, is that if it is a FHA, you will be automatically downgraded to a manual underwrite, which will cause additional restrictions on your ability to refinance.

You need to fully understand the layers of complication that can occur in your specific situation.  If you miss one more mortgage payment, that may prevent you from getting financing, or refinancing for years to come.

If you would like me to review everything in greater detail, I am happy to do so.  Shoot me an email to scott@findmywayhome.com and we can go from there.

Foznsis
Foznsis

i live in california filed chapter 7 in 1999 and lived in the house for 10 yrs. making payments but does not show up on my credit.  the last 7 yrs. house has been vacant for that time and want to walk away from it. it still doesn't show up on my credit the lender asks everytime i talk to them this is not a bill do you want to keep house? can i walk away and not be responsible for rest of debt and will it have a negative effect on my credit? 

ScottSchang
ScottSchang moderator

@Foznsis No, it will not have a negative impact on your credit.  Are you still current on the home?  Do you have any intentions of buying another home, or refinancing a current home?  "Walking away" could affect your ability to get a mortgage in the future.

The last, and probably the most important question is, do you have equity in the home?  If so, you DO NOT want to walk away.  You are still the owner of the home, and are entitled to any equity in the home, unless you walk away and let the bank take the property.  

You must realize that just because the mortgage was discharged, does not mean that you are not the owner, and entitled to the equity in the home.

kswen
kswen

This absolutely helped! Your site and advice is a blessing for consumers! Thank you so much! That's great news! Thank you again for your assistance!

kswen
kswen

Absolutely!! Thank you so much! That is wonderful news!! I am so thankful I found your site! What a blessing you are to consumers!!

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