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.

 

  • kevinjohn

    if my mortgage loan was discharged in bankruptcy, can the bank still buy my house at the judicial sale auction with a credit bid based on that loan?

    • Thank you for your question. I am located in California, and am not familiar with judicial sale auction laws. I can tell you that if you discharged the mortgage through bankruptcy, then subsequently defaulted on the mortgage (stopped making payments), the lender has the right to initiate foreclosure proceedings.

      Your specific question may need to be asked of a local real estate attorney. Sorry I cannot offer a better response to your question, I hope this helps?

  • vaneverygina Did you also file bankruptcy on the mortgage?  Or does it still report on your credit?  If you keep the home, and sell it in the future, only the existing lien will be paid with the proceeds.  If you are responsible for the home, I would definitely try to refinance it into your name.  His bankruptcy doesn’t affect your loan, or ownership at all.  It only prevents the lender from pursuing a deficiency judgement, and prevents multiple dings on his credit.
    I feel like I’m not sure if I did a good job answering your questions, does this make sense?

  • vaneverygina

    My ex husband filed bankruptcy on our home we still own together post the divorce.  I am trying to decide whether to let the home go into foreclosure or try and modify the loan to stay in the home.  If I keep the home and modify the loan, he has to sign a quit claim deed for me to modify the loan to my salary only.  If I decide to sell the house down the road, what happens with his bankruptcy on the home?  If I make a profit on the sell, can the debtors collect it to pay his debts off after his chapter 7 bankruptcy?

  • Sdf0mgb I am really sorry to hear about your hardship, this is a heartbreaking story.  I am not an attorney, so this is only an “educated” guess, but my experience is that if you include a debt in the bankruptcy, and the judge discharges the debt, then the creditor is unable to attempt to collect, or get a deficiency judgement.
    I think you’re protected under the bankruptcy laws, but I would consult your BK attorney for a professional opinion.  Hope this helps?

  • Sdf0mgb

    In our divorce decree 6 yrs ago I agree to refinance house and put in my name and we estimated the value of the house (had no appraisal and likely wouldn’t have passed inspection). We took what our balance showed on our mortgage statement and figured out equity(not sure now if the pay off amt would have been the same as the balance). I was to pay him 1/2 equity in house when youngest turned 18 or if I sold the house. Refinanced back to a 30 yr loan hoping I could afford the house this way. Fast forward several years and several threats of foreclosure and depleting a lot of my retirement to catch up on payments etc. and trying to get a loan modification etc. to finally getting a sale date forcing me to file backruptcy to allow more time for my boys and I to get out as we had been there 19 yrs only home they’d ever known. Listed debt on bankruptcy and added money owed to ex for equity in house as I would not be selling for any gain whatsoever as it was not worth anywhere near what we expected. Ex showed up at hearing of creditors but was told he had to get an atty. 2 months later I get a notification that debts have been discharged. Before foreclosure started again a realtor told me about doing a short sale which I did and got zero equity on a house I paid dearly for 19 years. My ex is now filing a motion saying im in contempt of divorce agreement. I have no home, no car, live with a friend and drive their extra car. What is going to happen to me? If they tell me I owe this how can I pay it if I do not have it and have lost so much out of 401k that I can’t even take anymore out. Keep in mind all of this was on the heels of his child support going up after I had agreed to him paying less than standard guidelines for many years.

  • MichelleThorntonEllis This is a very common misunderstanding, and maybe a lapse in education about what it means to include a mortgage in bankruptcy.  The lien(s) will stay until the loan is paid in full, or lost through foreclosure, short sale, or deed in lieu of foreclosure.  Bankruptcy will only protect you against any taxable event, and prevents a creditor from pursuing you for collection in the event that you should ever default on the loan.  The mortgage does not go away, and the liens remain against the home.
    If you have been current on both mortgages since the bankruptcy, you could have refinanced with no problem.

  • MichelleThorntonEllis

    Hi! I have a situation that seems precarious to most people but it really isn’t in this day and age and need some clarity in it. In 2005, we filed a ch 13 bk and in 2009, it was converted to a ch 7. We never reaffirmed our first or second mortgage. The second mortgage was one of those bait and switcheroos from 2004 by Citifinancial and we stopped paying on it after 2009, when they wouldn’t send us any information about where or whom our payments were going. FF to 2016- all remnants of the bk are off our credit and my husband has about a 650 on his credit score. We tried to refinance our home and there was a lien on it from Shellpoint Mortgage Servicer- actually it’s Carval who owns the lien- SP is servicing it. They sent us a settlement last year and we tried to settle but waited too long and they said it was no longer any good. We want the lien removed. We asked for another settlement and they said we have to send them in all our financial information to see if we can qualify for anything else. Hellooo this was discharged in a BK and all that’s left is the lien that we can technically walk away from if we stop paying the mortgage. We are concerned about what the girl at SP told us today- She said that we will always have the lien. Correct me if I am wrong- WE WALK AWAY WE DONT HAVE A LIEN ANYMORE, right? Please advise! Thank you U0001f60a

  • Meckley

    Hi Scott, my father and I own a duplex together. Three years ago, we were financially struggling and we were able to modify the loan. The modification was a balloon payment through HUD, with terms that states that the owners need to keep this as a primary residence through the term of the loan. 6 months ago, my father moved out. I didn’t rent out his portion because when I called HUD, they said that I can’t. I have recently found out that my father had filed chapter 7 and did not reaffirm his debt. He offered to quit claim the house over to me. I have money in my account that can bring me current but I want to be sure that he can legally quit claim the house over to me and that HUD won’t come after me for the full payment of the loan if my father isn’t living here. Also, if my father can’t legally quit claim or if HUD does not okay my father having moved out, what is the possibility of me being able to short sale over foreclosure? Thanks so much!

  • annasmamma

    Thank you so very much for all of your help over the last few years.

  • annasmamma Hi Annasmamma, the short answer is yes, you would need to adhere to the 4 year waiting period with that product as it is likely being underwritten to Fannie/Freddie guidelines. The exception would be if you could document the short sale was due to extenuating circumstances.
    The BofA 3% loan  “could” be a portfolio loan with different guidelines but it’s pretty unlikely. The only portfolio lending the big banks have been interested in the last few years have been Jumbo loans.
    Going back to FHA, the issue your are running into is that less than 35% of all condominiums nationwide are approved for FHA financing. It’s not any more difficult to qualify for an FHA condo than an SFR it’s just that HUD has not approved over 2/3 of all complexes for FHA financing. This may be improving in the near future as HUD is making changes to the approval process that should entice a few more condos to get approved.

  • annasmamma

    It will be three years since my short sale and I have been prequalified for a FH a loan. My question is this, FHA is very hard to qualify when looking for a condo. I see that bank of America has a low 3% down for a conventional mortgage. Do I still need to adhere to the four year waiting period with the bank of America loan or if I am putting 3% down can I qualify with only three years since my short sale? With all of the products out there and knowing that I have three years since my short sale, is FH a my only option until the four-year.?

  • dmellow

    I just came out of a discharged ch 13 and made my Sept and Oct mortgage payments myself. The mortgage company sent me a letter saying I am $7,500 behind. I had missed some payments while paying thru the ch 13 due to employment. They sent back my Oct payment so I sent in a loan modification application. Should I just bank my mortgage payments until I hear back from them? Will they eventually ask for them back? I didn’t know if this is an excuse to start foreclosure?
    I went into a ch 13 because I fell behind on my mortgage. They wouldn’t work with me and kept trying to foreclose back in 2010. I didn’t realize missed payments and fees had stacked up while they were trying to foreclose. When my mortgage in 2013 was sold to another company, the balance they transferred was increased from $62,000 to $89,000. This seems like robbery to me. I thought those “arrears” would be removed with the ch 13. It seems like putting missed payments on the backend adds to your balance and you are paying twice. They did a modification in 2013 and reduced my interest rate but, I am stuck with this much larger balance.

  • Parfitc

    Hi, I came across your article and hope you can answer my questions. I own 2 homes in RI (one single fam and a 2 fam) and my husband is on both deeds but not the mortgages. I filed bk in 2014 (chap 7?) and included both homes even though I intend to keep the 2 fam (we moved into the 2 and let the single forclose as it was upside down). The single is still not foreclosed (tried to DIL but bank rejected due to liens that are discharged in bk but never removed). My husband and I want to buy a small home in Fl and pay it off in 10 years as a retirement plan since we have no pensions. Can My husband go ahead and purchase a new home before the foreclosure is complete? Would I be able to purchase a new home? How does a new lender even know that I own my 2 family if it’s not on my credit? Do you know if it’s possible a bank would be unable to forclose on my single due to my husband being on the deed? Idk why it’s taking so long and bank won’t tell me anything. Sorry for so many questions

  • ThomasBartram Normally a bankruptcy would wipe that debt out.  I am not a bankruptcy attorney and you should consult an a professional to confirm this.  Many folks were forced into bankruptcy for this exact reason during the really nasty years of 2008-2011.

  • ThomasBartram

    I had a loan on a home that was a HUD loan with fha pmi. This loan went default as I couldn’t rent the home nor get it sold. The bank repo’d the home at that point. Later down the line I end up with a bill in the mail for nearly 20K. A year later I end up loosing my Tax return to help repay that amount. I have since ended up on the down side of the economy and highly considering Bankruptcy to start again. My question about this is will bankruptcy take that debt away as well as the normal cc and med bills? Any insight would be greatly appreciated.

  • Joe Consumer

    Joe Consumer  Thank you for your quick response.  I didn’t file BK myself and continued to pay the HELOC for 4 years since I wasn’t aware my ex had filed.  There is NOT enough equity in the house for the second to merit a foreclosure, this EQUITY loan is no longer on my credit reports and it doesn’t show any balance when I look it up online. An unusual circumstance is that my ex-wife didn’t mention that I was a co-borrower when she filed BK because she didn’t want them to notify me of her BK.  I don’t think that was legal on her part.
    Should I offer a settlement on the HELOC?  I do want to sell my house ASAP.

  • Joe Consumer Great question, and yes, this is a little complicated.  If your ex-wife filed BK, and included the HELOC, then she has bankruptcy protection, but it does not affect your liability, or responsibility for the loan.  Even after being discharged in bankruptcy, the lien remains.  BK is NOT the elimination of debt, it’s only the protection of further damage, in the event of default on your debt.  You are still the owner of the home, you are still responsible for the mortgages.  
    If you stop making payments on the HELOC, the lender has the right to foreclose, but not the obligation.  If there is not enough equity in the home to foreclose, you are going to have a zombie foreclosure on your hands and will be prevented from buying, selling, or refinancing without having to deal with that HELOC eventually.
    Did you also file bankruptcy, and include the mortgages?

  • Joe Consumer

    My ex-wife was on our HELOC and I recently found out she filed BK more than 4 years ago and included the HELOC on her BK.  The house has been upside down since the bubble burst.  I decided to stop paying on the second to see what would happen (since the bank couldn’t collect or charge any fees).  6 months later, my HELOC Principal Balance is Zero (was 297k).  Does this mean the bank wrote off the HELOC?  What about the deed?  My home is worth a little more than my first mortgage and I would like to sell.  Is that an option?  What would my next step be in this situation?
    Thank you in advance.

  • CheriePuckett I am sorry to hear that your financial troubles are still lingering.  I can address some of this, and I think I can answer some of the questions you did not ask, as well.
    First, if you are trying to sell for less than what is owed on the home, that is a “Short Sale”, and must be approved by both the first and second mortgage holders.
    Another alternative is a “Deed in lieu of foreclosure” – which will also require permission from both lenders, and may even help you with moving costs.
    The third option is to stop making your payments on both mortgages, and wait for one of the lien holders to start foreclosure proceedings.
    Now, for the questions you did not ask….None of these options will affect your credit scores, or show up on your credit report.  This does not mean that it did not happen, the loss of the home is a matter of public record, and will be considered when determining the timeline for when you would be eligible to buy again.
    And for the best news, using Conventional financing, you are eligible to buy another home as soon as one day after you get your name off title.  Of course, you need to work your way through your financial challenges now, but once you’re on your feet, there is nothing stopping you from considering homeownership again in the near future.
    Hope this helps?

  • Lmxk2016

    Hi Scott. I was hoping you can me. I filed a chapter 7 bankruptcy 5 years ago and included my mortgage and 2nd mortgage and other debt and it was discharged. At the time of filing, the house was already in the process of being foreclosed on and it has still not foreclosed yet. i was contacted today by a realtor stating the title was still in my name and he had buyers interested in a short sale. I told him to contact the attorneys/bank that has the mortgage. He said he had so many people interested and could sell fast but I would need to sign a listing agreement and I would not be paying him etc. here are my questions
    1) he said if someone were to get hurt on property thenI’m liable. Is this true and how can I protect myself?
    2) this mortgage was discharged, if i try to do a short sale and sign an agreement, does that mean I am agreeing to take responsibility of the loan?
    3)how do I get my name off the title?
    Any insight you can offer would be helpful. Thank you so much!

  • CheriePuckett

    Me and my husband filled bankruptcy 2009. We had two mortgages and neither reaffirmed them. I am in financial  trouble and would like to walk away from them both. We are having trouble refinancing had to put ruff on the home. Spoke to a place today to buy the house they will only give me 65,000 but owe 75,000 for both first and second.  House needs improvements to sell that we can’t afford. What would your advise be?

  • Mrsmac1

    ScottSchang Mrsmac1 Thank you! Sent!

  • Mrsmac1 Thank you for the kind words, I really appreciate it 🙂  Ok, let’s tackle these questions in order:
    1.  Nothing you do will show up on your credit because of the bankruptcy.  The second part is a little trickier. You will not qualify for traditional FHA or Conventional financing as long as he remains on title. There are waiting periods..depending on what type of financing you use.  FHA will require a 3 year waiting period from date his name is removed from title by any means other than the lender(s) being paid in full.  Conventional financing will allow you to buy as soon as that lien is removed.
    2.  No, you cannot do a quit claim.  No a foreclosure will not hurt his credit.
    3.  Cannot do FHA, however, Conventional financing will allow as low as 3% down.
    4.  Where are they showing it as an “open and active mortgage”?  If the mortgage is showing payments on your credit report, it was not included in the bankruptcy, or Fannie Mae is violating bankruptcy law.  I will introduce you to a lender that has expertise with this guideline and can help.  I would make this month’s payment if you are unsure at all.
    5.  I would contact the servicer, and explain your situation.  A deed in lieu of foreclosure may even give you money to help you move.  It will benefit the lender to do a deed in lieu by saving them a lot of money.  Just talk to them.
    Shoot me an email to [email protected] and I will introduce you to a lender friend of mine that can help.

  • Mrsmac1

    ScottSchang Mrsmac1 No Worries at at all! I really appreciate it. I thought the same thing, but I wanted to make sure and I couldn’t get a clear answer from anyone else. I found your amazing website and truthfully it almost brought tears to my eyes knowing that someone could do this for people and really keep up with responses as well as have their best interests at heart without meeting them.  I can’t tell you how much I appreciate it! I do though have a few quick questions more  if you don’t mind.  
    1) Hypothetically, if I didn’t pay and we hadn’t taken his name of the deed yet- could that negatively impact our getting a new house or ding our credit? Would it increase the waiting period with his name on title with FHA or a Conventional loan? 
    2) Would we be able to possibly do a quit claim deed in order to remove his name? Without doing a foreclosure, short sale, or deed in lieu of foreclosure? If not, will the foreclosure hurt his credit again? 
    3) Could we go FHA- and is that a better way to go? I don’t know how much we will have to put down because he just got a new job
    . 4) Because the mortgage was discharged, and you are correct ( the mod didn’t remove the BK because it is referring to the old note or security instrument) why would Fannie Mae have it listed as an open, active mortgage in his name? Wouldn’t they have to have it listed as “included in a bankruptcy”? I only know this because I know someone who used to be an underwriter for them who has friends who checked for us because we had been through so many bank change of hands. 
    5) If we decide it would be best to walk away- would you recommend getting his name off title first? Do we need to worry about any real estate taxes coming to bite us after the fact? We have been paying homeowners insurance as well as PMI and real estate taxes. 
    Sorry for all the loaded questions. I just want to make sure that because we have all of our ducks in a row because we have worked very hard not to get ourselves back into financial trouble as well as keep our credit scores up. Ok, I think that is it. Thanks again!! You really are a life saver! 🙂

  • Mrsmac1 Hi 🙂  I’m so sorry if I missed your question.  It doesn’t happen often, but sometimes I will get too many questions in a day and I’ll miss one…I’m so sorry…ok, let’s look at your situation.
    My first “red flag” is that you “modified” the mortgage.  The fact that it is not reporting to your credit is a positive sign, because sometimes a modification will remove your mortgage from BK protection.  It doesn’t sound that this is the case with you.
    Using a Conventional loan, you could use the bankruptcy discharge date as the waiting period.  And since it’s been more than 4 years, you would be eligible as soon as you are able to remove your husband from title through foreclosure, short sale or deed in lieu of foreclosure.
    If you miss payments on a mortgage that is discharged, it cannot be reported to your credit, and will not affect your credit score.
    Hope this helps?

  • Mrsmac1

    Hi Scott! PLEASE HELP? I didn’t know if you had seen my post as I noticed you happened to reply to the post above mine. Please help!! Need to pay mortgage again tomorrow and it would save me to not do that.  My husband filed chapter 7 on home in Nov 2009. Debt was discharged in chapter 7 in 2009. We never reaffirmed mortgage but did to a re-modification. Loan is not credit reporting but I found out that Fannie Mae still has the loan open and active in his name. My husband just got a job out of state and moved. I am still here and will be moving in 9 months there. If we foreclose then will it negatively impact credit? Also, our credit is back in the 700’s. We have been paying the mortgage to a debt servicer for Fannie Mae. Due to the pending move and being upside down on the house we would like to walk away and stop paying. Will there be a waiting period to buy again? My other question is that I am concerned our credit will be hurt now that we have come back from the BK hit. We reside in Illinois. We are moving to GA. If you have any advice I would greatly appreciate it, as I keep getting different info from lenders &BK attorneys as they never agree with one another.

  • ashleyatkinsrowe Hi Ashley, you can absolutely make arrangements with the ex wife to sell you the home.  She can do a grant deed and sign the property over to you, and you take over payments on the loan.
    If you make the mortgage payments on her mortgage, and do not take title, you’re only renting.  If you’re renting, you may want to make a contract with her to allow you to refinance the loan into your name (in the future), and buy the home at a future date.
    The mortgage company is correct, if you stop making payments, they can initiate foreclosure proceedings, and it will not affect her credit at all.
    The most important thing you want to do is protect yourself.  If she will not sign over the property to you now, make sure you sign a rent with option to buy agreement so you have an opportunity to own the home in the future.
    Hope this helps?

  • ashleyatkinsrowe

    Please help?!?! The house next door is where I grew up. We became close friends with them. Well the wife left the husband, he ended up passing away about a year ago. Since then the wife has filed chapter 7 bankruptcy which included the house. I’ve contacted the mortgage company with a detailed sentimental email explaining I’m i,retested in purchasing the home. The home actually had an auction date but I stopped it due to. Ring interested in the home. The wife put me as an authorized person on the account. The mortgage company says it’s not assumable or transferable…the wife has no objection to me having the home and has said whatever I can do to get it. The home isn’t worth the $90,000 but I’m willing to reinstate it by paying the $13,000 and make the monthly payments,as well as do the work to fix it back up. The mortgage company says anyone can make a payment on the mortgage and I can make the reinstatement amount and pay the monthly payment. But the thing is is that her name will be on the title until its paid or refinanced into our names. Our credit isn’t good at all to do that now. Is there anything I can have between me and the owner stating she is no longer responsible for anything, we take all responsibility of payments work to be done, ect.? The mortgage company states even if it becomes deliquent again the debts been discharged so they can’t go to her to collect. We live in NC. I just want to cover everything?

  • Mrsmac1

    Hi Scott, my husband filed chapter 7 on home in Nov 2009. Debt was discharged in chapter 7 in 2009. We never reaffirmed mortgage but did to a remodification. Loan is not credit reporting but I found out that Fannie Mae still has the loan open and active in his name. My husband just got a job out of state and moved. I am still here and will be moving in 9 months there. If we forclose then will it negatively impact credit? Also, our credit is back in the 700’s. We have been paying the mortgage to a debt servicer for Fannie Mae. Due to the pending move and being upside down on the house we would like to walk away and stop paying. Will there be a waiting period to buy again? My other question is that I am concerned our credit will be hurt now that we have come back from the BK hit. We reside in Illinois. We are moving to GA. If you have any advice I would greatly appreciate it, as I keep getting different info from lenders &BK attorneys as they never agree with one another.

  • cbhomemo

    ScottSchang cbhomemo Yes, this does help.  I have been trying to find a lawyer to re-affirm (prev lawyer was basically incompetent) and not being successful.  I’ll go the route of trying to refinance

  • cbhomemo You would need to re-affirm the mortgage before it will start reporting on the credit report.  Bankruptcy law prevents a creditor from attempting to collect, or pursuing you for payment of any debt discharged through Bankruptcy.  In the event that you stopped making payments on your mortgage, it would not be reported to the credit bureaus.  It’s a bit of a double edged sword.
    I have heard of homeowner’s being so persistent, and insistent with their lender that the lender agreed to start reporting the payments.  It doesn’t hurt to ask.
    The sure way to have your mortgage report on your credit report is to refinance it.  Refinancing your mortgage will reaffirm the debt, and remove the loan from bankruptcy protection.  The new lender should then report those payments.
    Hope this helps?

  • cbhomemo

    I filed chapter 7 in MO in 2011 to stop the foreclosure of our home.  I have been making payments since then and am current on my mortgage.  On my credit report is is showing as included in bankruptcy.  What do i need to do to remove this and have my payments reporting.  We are still in the house and plan on keeping it for several more years.

  • multitwins

    I am currently working with a lender. I called the old mortgage company today who said I needed to request a lien removal in writing. They claim it has been too long and they no longer can find me in their system. Precisely! This is something they failed to do over 3 years ago. Anyway, thank you for the help. I will surely email you if I cant get help through this lender.

  • multitwins The debt being discharged does not affect the lien against the property.  BK does not affect ownership in the home, it only protects you against taxable events in the event of default, and prevents the creditor from attempting to collect on the debt.
    If you would like to shoot me an email to [email protected], I would like to introduce you to a lender friend of mine in Michigan.  He may have more insight, or ideas on how to navigate through this situation.
    Hopefully it’s as simple as asking the original lender to record a full reconveyance and remove the liens from the property.

  • multitwins

    I wish I had a dollar for every time I have heard that. It went to Sheriff sale which is a non judicial foreclosure for $57,600. Michigan has a redemption period where the homeowner can purchase it from the foreclosure/sheriff sale for that price. I had six months after the sheriff sale to do that. I did so. This is where I get confused. There is a lean for the original amount of my loan from when I purchased the home in 2002. This should not be there and I need to know what to do to have it removed. The debt was discharged.

  • multitwins This is an unusual situation.  I am not familiar with the redemption laws in MI.  That said, I don’t understand how you are able to “purchase” it back?  Do you mean that you caught up the payments on the original mortgage to take it out of foreclosure?  Is the original lender from before the sheriff sale the same lender that you make payments to now?

  • multitwins

    I live in Michigan. I filed a Chapter 7 Bankruptcy in 2012. My home was included in the bankruptcy. The bankruptcy was discharged later in 2012. The house went to sheriff sale in October of 2012. I purchased it back, during the redemption period, in January of 2013. I am trying to take out a cash out loan on the home now and the title search came up that there is a lien from the original lender. How do I have that removed? A home equity loan that was also included in the bankruptcy showed up also. Not sure what my next step is. Can you help?

  • mdefran23 Hi Mike, I’m not sure why someone would give advice about something they know nothing about…that perplexes me.
    The “waiting period” is different depending on the type of financing you’re using to purchase the new home.  For conventional financing, you could be eligible 4 years from the discharge of the bankruptcy, and you would either have to have your name removed from title, or have all mortgages current for the 12 months prior to the application.  
    There is no scenario where you can walk away from this  home with no waiting period unless you stay in the current home until August 2018.
    FHA financing will require a 3 year wait from the date your name is removed from title UNLESS both the 1st and 2nd lien holder can be paid in full.  Is there enough equity in the home to sell, and pay off both loans?
    I do have a lender friend in NJ.  If you can shoot me an email to [email protected], I can introduce you.

  • mdefran23

    Scott,
    I have a question that no one can answer.  I filed a chapter 7 and it was discharged in August 2014.  I included my first and second mortgage in the Chapter 7.  Last year I was able to get a loan modification on the first mortgage which I have been paying on time for nearly a year, and I did not re-affirm the mortgage.  The second mortgage I have made no payments in over two years.  I have recently begun looking to buy a new home and move on.  I have been talking with Mortgage reps on a daily basis and they all give me different advice.  Some have told me to stop  paying on the first mortgage, save all that money and buy a new house and move on from the old house with no waiting period.  Others have told me that I would not be able to get a new mortgage for a new property if I stop paying on the first mortgage, because when I apply for the new mortgage they are going to want to see 12 months of payment history, whether a rental or mortgage payments.  I reside in New Jersey.  Also if you have  a knowledgeable mortgage rep in New Jersey that I can talk to, that would be great.   My credit score is about a 675.  I have two unsecured credit cards for over two years and an unsecured loan for 5 months.  I think I covered everything that you may need.  Please get back to me as soon as you can.  Thank you

    Mike

  • Vautbunch Something doesn’t make sense here….the second mortgage holder may have filed a notice of default, but they did not foreclose.  Do you know if your husband is still on title to that home?  The timelines you are being quoted are for Conventional financing, IF the mortgage was not included in a bankruptcy.  Using Conventional financing, you could buy again 4 years from the discharge of the bk, as long as the mortgage was included, discharged, and your name has been removed from title.
    FHA is going to treat the BK and any subsequent default (short sale, deed in lieu or foreclosure) as separate events, with separate waiting periods.
    If you would like, shoot me an email with the address to the home, and I can try to research public records and see what the disposition of the property is.  My email is [email protected]

  • Vautbunch

    Hi Scott! My husband has a home that he owned prior to our marriage. He went through a divorce in 2010 and due to those circumstances, couldn’t afford the house so he opted to a short sale. The bank refused the offers and he received foreclosure documents late in 2010. Around November of 2011, we started getting people showing up at our door wanting to purchase the home. It turned out that the second lien foreclosed on but the first didn’t so in 2013 we filed bankruptcy and included the property, which was discharged. We have been preparing to be able to purchase a home in December of 2016. We decided to build and weren’t approved due to the house still being in the foreclosure process. So now we are being told we not only owe all the fees on the home since the bankruptcy, but also that we will not be able to purchase until seven years after the foreclosure takes place or four years after the closing date of a short sale. Please help! We filed for bankruptcy to have a fresh start as a couple, not paying debts from bad choices of previous spouses. Now hearing all of this leaves us not knowing who to trust or what route to take from here.

  • alikai  The information you are being given is inaccurate.  If the mortgage was discharged through the BK, and you quit claimed off title, then you would be eligible to buy using Conventional financing with as little as 3% to 5% down payment.
    If you shoot me an email to [email protected] I can introduce you to a lender that is familiar with these guidelines and can help.

  • Loanhelpplease

    So when he modified he didn’t refinance and have you taken off the document? That’s too bad. Sounds like exactly the same situation. The government really should take a look at these unfair guidelines when neither of us will every owe a penny on that previous mortgage!

  • alikai

    Loanhelpplease ScottSchang “loanhelpplease” I am in the same situation as you.  Chapter 7 was discharged November 2010 and ex-husband was to live in house until it foreclosed.   I signed a quit claim as well and he has modified the mortgage last year and that is now in foreclosure.  I am told that I can’t buy again until 3 years after that foreclosure goes thru which probably won’t be until some time next year.  Frustrated in NJ>

  • Loanhelpplease

    ScottSchang Thanks- after reading the FHA guidelines I’m not sure I’d come out victorious. We are trying to get my husband approved on his own and in lieu of that my mother is willing to cosign. I Just wish we had known about this hurdle going in before we spent thousands on inspections and thinking everything was going along fine.

  • Loanhelpplease This is definitely a complicated situation.  I still think that it could be done, but it would take a lender that has a lot of experience with these guidelines, and they would have to work closely with the underwriter to make the case.
    This is a tough situation, I think it can be done.  It’s just going to take someone willing to fight for you.

  • Loanhelpplease

    Yes, I forfeited my rights. There was no equity. He’s still living there and in foreclosure with a law day set but he keeps pushing it back. I haven’t set foot on he property in 5 years.

  • Loanhelpplease ok, perhaps I didn’t fully understand your situation.  When you say that you “quit claimed”, you forfeited your rights to the property over to your ex, who’s still living in the home?  Is that accurate?
    What you’ve described is not consistent with any experience that I’ve had.

  • Loanhelpplease

    ScottSchang I’m buying in CT. I spoke with another broker who specializes in mortgages after bankruptcy. FHA requirements (everywhere) are that if there was no re-affirmation of the debt, or foreclosure, or the house was not sold, or my ex didn’t refinance, then technically my name is still out there on an active loan regardless of the discharge. Even though I signed a quitclaim deed, the mortgage pre-dated the quitclaim and so until something definitive happens with that property, I am stuck. If he is able to refinance, I am free and clear to get FHA loan, but if the property gets foreclosed on, I have to wait 3 years from that foreclosure date. Not fair and makes no sense, but there we are. The loan broker went to 5 different underwriters with the situation and I spoke with a different broker as well.

  • concern59 Hi, thank you for sharing your story.  If you’ve been making all of your payments on-time on both the first and second mortgages for at least the past 12 months, then there might be an opportunity to combine the into a single loan using FHA financing, 2 years from the discharge fo the bankruptcy.
    Maybe the bigger concern is going to be that as an independent contractor, you will need 2 years of tax returns as a self employed buyer to qualify for financing.
    The good news is, I am in California, and I’ve got a lot of experience figuring out challenging qualifying scenarios.  If you would like to shoot me an email to [email protected], let’s continue this conversation and dial in your options and timelines.

  • concern59

    Hello Scott: 
    Bankruptcy was final November 2014.  Since then, after years of caring for my parents they both passed away in 2015.  We were all joint in tenancy.   I have a second which is due August 2017.  I am now working as an independent contractor.  I been managing to pay the house and interest only on the LC.  Both of them discharged in BK.  Is there a remote possibility to qualify for a loan to put both the mortgage and LC together?  I am terrify that comes August 2017 and the bank which carries the LC will come to haunt me. I live in California and the house value is higher than what I owe. Thank you.

  • aaamom Unless you specifically signed a reaffirmation agreement with the lenders on the investment homes, the mortgages would be discharged through the bankruptcy.  That’s very strange that you’re being told that this cannot be done now.  
    It sounds to me like the loan officer you are working with may not be familiar with helping people after a BK?
    What State are you in?  If you would like, I can introduce you to a lender that can help.

  • aaamom

    My bankruptcy was discharged in 2009. I have 4 rental houses, that I did not take down…continued to pay and stay current on. I have refinanced 2 of them no problem. I tried to refinance the other 2, but now on my credit one of the 2 houses says included in BK, but no payment history. No lender will touch me now. This house was with GMAC before they went down. They were given notice, but new lender was not, OCWEN is the new lender. I am not sure how to fight this with the credit bureaus? I did not think they could put anything about BK if OCWEN was not the lender at the time of discharge, much less no payment history. Obviously I did not let much go since my median score is 740. What to do?

  • bugsbunny794 a deed in lieu is a great option.  I would speak to the lender and see what they are most comfortable with.  If you are not making payments, they can foreclose. Or you can sell the home.  If you owe more than the home is worth, it’s considered a short sale. 
    Using a conventional loan, you would be eligible to buy again 4 years from the discharge date of the bankruptcy.
    I have a great lender in IL that I can introduce you to if you’re looking at getting back into another home.  If you need an introduction, shoot me an email to [email protected] 
    Hope this helps?

  • bugsbunny794

    My mortgage was discharged in bankruptcy in 2012.  I need to move out of my home.  Can I just do a deed in lieu to give the property back to the bank or is there something else I need to do.  I live in Illinois.

  • Catd19

    My ex husband filed for chapter 7 bankruptcy in 2009.  At that time, I was still in the house and had it on the market to sell.  He lied and said he wasn’t including the house in the proceedings, but did.  We had a buyer, but couldn’t accept the offer due to his discharge pending at the time.  During this time, I contacted the mortgage company and they would not give me information about what was going on.  Being young and stupid, I didn’t question it more.  Come to find out, they paid all taxes, back and current, and charged me thousands in fees to keep the house at the time.  I stayed in the home and have kept making payments.  I did NOT file on this house, yet the mortgage company seems to treat me like I have as well?  Why am I being held to the payment / standards of the bankrupt party when I did not file?   I even tried to refinance the house in 2012 and was told I could not because it had to be 4 years past HIS discharge to refinance?  Again, I didn’t file, why is this affecting my rights?  The mortgage was recently sold to another company, who is now asking for double payments on this, which is not possible.  As a co-borrower, what are my rights here?

  • Sadgirl35

    I see…. Ok thank you so much for your time and for your advice. I’ll shoot you an email when we get this resolved.

  • Sadgirl35 Oh, ok – I may have misunderstood….they are simply starting the foreclosure process.  That’s totally normal.  It should not show up on your credit if it is included in the BK, and you’re still eligible under Conventional guidelines as soon as title is transferred.
    You may also want to call the lender and do a deed in lieu of foreclosure instead of foreclosure.  You may have a little more control over the timelines if you do it that way.

  • Sadgirl35

    Thank you for your reply. I thought a reaffirmation not a remodification is considered a new loan (which we did not do)? Our most recent modification in 2014 has a section that states that the lender acknowledges the debt was discharged in a bankruptcy and that they may not pursue us for liability but that they have the right to foreclose..so I don’t think it is considered a new loan not protected by the bankruptcy .

  • Sadgirl35 You may need an attorney to help you determine whether or not one of those modifications removed your mortgage from bankruptcy protection. It is entirely possible that if you modified the principal balance of the mortgage, that it is considered a new loan, not protected by the bankruptcy.
    If you were served with a judgement, it sounds like you had an opportunity to address this with the lender prior to the judgement.  Do you recall received notices that the lender intended to pursue a judgement against you?  I would probably start by contacting the lender and seeing what they say.
    Hopefully it’s an error.  If it is, then you are correct about the Fannie Mae conventional waiting period guideline, it’s 4 years from the discharge date, as long as you are no longer on title to the current home.
    What State are you buying in?  If you’re successful in getting that judgement removed, you’re going to need an introduction to a lender that understands these guidelines.  Shoot me an email to [email protected] and I will try to make an introduction to someone that can help.

  • Sadgirl35

    My husband and I were discharged from a chapter 7 bankruptcy in 2011 in which our home was included . We continued to live in the home and ended up remodifying it (a couple times). we were under the understanding that we could walk away at any time without any liability. Since then I went back to college, received a degree and we now have a much better financial status. We are upside down in this home and have outgrown it with our 3 children and need some bigger. I called the mortgage company to discuss options and they told me I could walk, do a short sale, forclose , etc. So we stopped making payments just prior to my graduation to save money to buy a new home. Now we have lis pendens filed against us and we were just served with a judgement. I was also told by my broker that no one with finance us. Mind you, the judgement served has copies of an older modification, not the most recent one which clearly states we have zero liability, and the old one does not specify that or state that we were discharged of this debt through bankruptcy. What do we do now? I thought conventional loans will use the BK date + 4 yrs as a waiting period ? can we get the deed transferred over to them and still obtain a new mortgage? Help please!

  • Loanhelpplease

    I left the home 5 years ago and received a ch 7 discharge over 2 years ago. My ex (no marriage) still lives in the house we co-owned. The house was and still is in foreclosure but hasn’t been foreclosed on yet. The mortgage debt was discharged, and a month before my two-year mark my hisband and I consulted a mortgage broker about qualifying for FHA. He said that I should qualify and long story short we found a house, got a contract, got pre-qualified, paid $2500 for the inspections and appraisal. The underwriter then did not approve us, saying it has to be three years from the foreclosure, when and if that even happens. That means potentially, if my ex keeps going back and forth with the foreclosure more (it’s been in foreclosure for 10 years probably because the loan officer involved went to jail so the lending practices were in question), I could potentially never be able to buy again? I was quit claimed off the deed 2 years ago so have no rights to the property. This seems like a very unfair situation. Do I have no recourse other than to see if my husband can some how qualify for the new loan on his own? Thank you.

  • JJMurphosio

    ScottSchang JJMurphosio 
    Thank you for the response and knowledge. I am not in the market and in fact, will not be for a few years yet to come. Even so, I will be purchasing my next living arrangement in cash. I simply didn’t exactly like the blemish on my otherwise unscarred credit report, although it was not unexpected.
    Thanks again!

  • JJMurphosio The letter of forgiveness is evidence of the foreclosure, there’s no way around the public record.  Unless you filed bankruptcy, it will also be on your credit report for a while.  In terms of qualifying for a new loan, it’s simply a waiting period.  It’s not a matter of “if” you can buy again, only “when”.  
    Are you trying to buy a new home? If so, and if you have not met the Conventional or FHA waiting period guidelines, there may be other, “temporary” solutions to get you into the home until you can refinance in the future into a better long term payment.
    What State are you buying in?  I may be able to introduce you to a lender that can help when you’re ready

  • JJMurphosio

    Hello Scott,
    I did a strategic voluntary foreclosure a couple of years back. CitiMortgage sent me a letter of debt forgiveness which I still have and I even received a check from that huge lawsuit a couple of years ago. Before giving the house up, I applied for Deed in Lieu two times of which CitiMortgage was uninterested in. My question: Is there any precedent to take off a foreclosure on my credit report if I have a letter of forgiveness?

  • Emich01

    Thank you Scott, this helps tremendously. Renting my home is an option I am seriously considering. I am now confident on how to approach my situation. Thank you again!

  • Emich01 The mortgage not reporting on your credit report will not cause any challenges for you.  DO NOT “walk away” or you will not be eligible for financing for quite some time.  
    If you can qualify for both payments on the new and old home, that would make things very easy.  You can also rent out your current home, and use 75% of the rents as “qualifying income” for the new loan.
    You should not be declined for financing based solely on the fact that your mortgage payments do not appear on your credit report.  If you cannot qualify, it would be for other reasons.
    Hope this helps?

  • Emich01

    Hi Scott, thank you in advance for your time. I’m in need of advice, but first let me give you a timeline of events that led me to be in the position I am now. In 2005 my wife and I buy our first little starter home together (co-borrowers). By 2009 we end up divorced, I stay in the home and continue to make mortgage payments. By 2011 ex-wife has financial difficulties and files bankruptcy chapter 7. Her intention with the mortgage was to remove her name and any liability to pay back said loan. During that time I was unaware of any ramifications her bankruptcy could affect me. Nor was I concerned and I continue paying mortgage and staying in the house, and continue business per usual. Which leads me to today, I am ready for a bigger home for my now growing family. In the process to get pre approved for a another mortgage I find that my mortgage payments have not been reported to the credit bureau as far back as 2013 and completely stopped reporting as of Jan 2015. The mortgage has been discharged by bankruptcy. I am current in my payments and never in danger of default or foreclosure. My credit is fairly good. I’m a little confused as to how I may now not be liable for repayment of loans because of a bankruptcy I did not file. My question is do you foresee any road bumps in getting approved for a new loan? What would be my best exit strategy on my existing home? Can I consider to stop making payments, and maybe walking away from home? I owe about $90,000 (OCWEN) and because of current market conditions in the area I’d be surprised if the home sells for $100,000. I guess I’m looking for direction or best plan of action to pursue.

  • annasmamma If the collections do not show up on your credit report, then they will not be required to be paid off as part of the qualifying process.  If the collections do show up, you may have to pay them.
    Contacting the collection company and trying to negotiate a reduce payoff is a good plan.  You definitely do not want the thing coming back to bite you later!
    Hope this helps?

  • annasmamma

    Hi Scott, I want to thank you for being available over the last four years, you have been a wonderful resource.  You encouraged me to hang in there and the day would come when I could purchase a home again.  It will be three years since my short sale and I will be purchasing a home again in the state of Arizona.  I have one more road block that I would like to ask your opinion on.  While my short sale will be seasoned for three years, I do have some housing court fines that go back 7 years that have been turned into a collection agency by the City of Buffalo NY.  The judgement does not appear on my credit report so my score is about a 715 which helps me qualify for my loan.  My questions is this, once I go to purchase the home will the judgment appear as an outstanding amount that must be paid before closing on the home?  I understand that I can quite possibly work with the collection agency to pay off the fines, I think I will have a better chance at settling the fines for less than the original amount if I am not backed into a corner and have to pay them off or else lose closing on the home.  I have spoken with a Real estate attorney in Buffalo who has stated that the city is not really going after folks like myself because we had surrendered the home to the bank, filed chapter 7 and the bank never took the home back. Over the course of 4 years that the home sat in limbo, the city inspected and then fined my as the absentee owner. The attorney says don’t pay it because it will fall off in ten years.   What do you think?

  • dobbsgretta there is no obligation for the bank to remove your name from the deed, bankruptcy does not affect your ownership in the property.  If you stopped making your payments, and are currently in default on the mortgage, then the bank has the “right” to foreclose, but not the obligation to do so.
    If the time frame for removing the lien is urgent, I would suggest considering a deed in lieu of foreclosure or short sale.  If you do not take a proactive approach to removing the lien, you will just have to wait for the bank to “get around to it”.
    Hope this helps?

  • dobbsgretta

    ScottSchang Newmexicon1 What do you do if you have filed bankruptcy and received a discharge and the the bank still will not remove your name from the deed

  • ChiPoo

    Thank you for the info. Will see if lender will help any

  • ChiPoo a non judicial state will leave you at the mercy of the efficiency or urgency of the lender.  It can take as little as 90 days.  I’ve seen it take years because the lender just doesn’t prioritize the foreclosure.
    Tough spot to be in, I’m so sorry.  Good luck!

  • ChiPoo

    There is no equity, market is still upside down here. I do know texas is a non judicial state.

  • ChiPoo I’m so sorry to hear about your hardship.  I am not familiar with the process timeline in Texas, I live in California.  Typically, once you miss 3 payments (90 days delinquent), you will receive a notice of default from the lender.  Then, depending on your State, the lender may have the right to pursue the foreclose process.  This process can take an additional 30 to 60 days.
    I would reach out to your lender now and see if there is any way they can work with you.
    Last thought, do you have equity in the home?  If you do, I would sell the home as soon as you can.  If you continue to fall behind on payments, and force the lender to start foreclosure proceedings, they will eat up any equity you may be entitled to with penalties, interest and attorney’s fees.
    If you have equity, and can sell the home, you will walk away with more money, and only have to pay the lender in full.
    Hope this helps?

  • Szwarc What type of financing are you trying to get approved for?  FHA? Conventional?  
    The challenge I see here is that you were never eligible in the first place, and your lender has made a serious mistake by telling you that you are.
    FHA financing would allow you to buy again 3 years from the date your name was removed from title, whether it was a foreclosure, short sale, or deed in lieu of foreclosure – that shouldn’t matter.  Depending on what date your name was removed from title, you would not be eligible for FHA financing until March or May of 2017.
    Using conventional financing, there is a 4 year wait from the discharge of the bankruptcy, and you can ignore any subsequent transfer of title date, as long as the title has been transferred.  Using conventional financing would put you at August 2017.
    The last, and probably the only opportunity to save this transaction, would be if the home is located in a USDA eligible area.  If so, USDA follows similar guidelines to conventional by not counting the subsequent deed in lieu (cash for keys), as a second event.  USDA will allow you to buy 3 years from the discharge of the BK, which would put you right at August 2016.
    Hope this helps?

  • ChiPoo

    Bankruptcy chapter 7 discharged 4 years ago included house, now can’t make payments. My Current loan has a loan modification with Making Home Affordable program.  I am currently 1 payment behind.  My husband lost his job 6 months ago and still can’t find employment.   How long will a foreclosure process take in texas and what is the process to expect.  My husband is a veteran will that help any?

  • AnnaWolfe Are the liens from mortgages that were included in the bankruptcy?  It sounds to me like your lender does not fully understand the guidelines.

  • Szwarc

    Hi Scott, wondering if you have ever heard of this. I filed bankruptcy and discharged august 2013. I included my BOA home loan in the chapter 7. In March of 2014 I did keys for cash. Then in may of 2014 the house sold and deed was changed. I am 9 days out from closing on a new home when the deed came back with foreclosure on it. I called BOA and they confirmed it was not a foreclosure and they claimed they would fix the deed. Unfortunately the target date for this is 30 days out and that doesn’t include anything the recorders office needs to do time wise. My credit and bankruptcy both show the house was included and there is nothing else about foreclosure. Shouldn’t my underwriter be able to get around this seeing it’s an error? I can’t wait because the sellers won’t extend the closing date. Any advice?

  • AnnaWolfe

    My husband and I sold our home, when the other party’s lender found 2 leans against our home that we didnt know about we had to re open our chapter 7 bankruptcy, we r currently putting a offer down on a home. My lender stated to me that we would not be able to buy a house now for 2 yrs 1 day. We just got our discharge form our initial bankruptcy from 2014.
    So again my question is do I have to wait another 2 yrs and 1 day. We live in Indiana

  • megamom6 I would maybe speak to your attorney about doing it again.  That will buy you the time you need to catch up on the payments hopefully.
    Good luck!

  • LaurenMoniqueMarietta

    ScottSchang LaurenMoniqueMarietta Thank you Scott. I owe probably 70-80K more than the house would sell for. SO…Would I have to pay the mortgage company back? There is no mortgage note. The Mers are inactive. My name is on the deed. There is no record of a bankruptcy with the county. Or can I just accept this cash offer and transfer the deed?

  • megamom6

    I actually claimed bankruptcy over 6 years ago the last time I lost my job and fell behind in payments. I am in the state of Wisconsin

  • megamom6 If you haven’t already, I would consult a bankruptcy attorney.  Filing for bankruptcy will suspend any foreclosure proceedings that the lender may be pursuing.  This will probably buy you 3-6 months to find a job and save the money to catch up on your missed payments.
    What State are you in?  If you’re in California, I can introduce you to someone that can help.

  • megamom6

    Some questions…….single mom here, lost job back in December, haven’t been able to pay my mortgage. Tried a modification while collecting unemployment, they took until my unemployment ran out to decide and said no since my income was no just rental income (I own a duplex) The options given to me were deed in lieu or short sale. I really need to stay in my house. I am trying very hard to get a job. I guess papers have been filed in court because I keep getting letters from lawyers saying they will help but I have not been served yet. My furnace just broke, a/c isn’t working and it is going to be over 100 here next few days. I really need some help with this and any ideas on what I can do to save my house. Otherwise how long would the process take for me to have to move? I am hoping to have a job in the next few weeks and then was going to try to modify my loan again. 

    Thank you very much for any help in advance.

  • LaurenMoniqueMarietta You definitely have options.  You would qualify for conventional financing with as little as 3% to 5% down payment as soon as your name is removed from title to the home.
    Do you still owe more than the home is worth?  If you let the home foreclose, do a short sale, or cash for keys, you would be eligible for Conventional financing.  The 3 year waiting period you are hearing about it if you are trying to buy using a FHA loan.
    Hope this helps?

  • LaurenMoniqueMarietta

    Hi Scott!! Maybe a unique situation. I live in St. Clair Shores, MI, discharged chapter 7 in January 2011. Included my mortgage. I still reside in the home and only pay back taxes. I WANT OUT ( I have a family now and the neighborhood/schools are turning to crap)!! I could stop paying taxes, start the foreclosure process and wait three years to hopefully be approved but…1) Can I rent the home out month-to-month 2) I received a cash offer for the deed of the home (in my name as of 2015)…can I do that? 3) Why do I have to wait 3 years from foreclosure if its already been 2 years+ since bankruptcy? 4) Both MERS files are inactive

    Do I have any options?
    Thank you

  • MarnieBentonPaffenroth

    Hi Scott!  We also have a unique situation…  Filed 13 in 2012 to get rid of a very upside down home in Hawaii.  Paid all other debts back 100% and are within two months of completion.  The lenders have not foreclosed and we’ve continued to rent out the home (pay insurance on it, maintain it, and write off expenses and depreciation).  Husband retired from the Air Force and went back to flying for AA – so our income has doubled.  Trying to buy a home again with VA benefits, but we still legally own the old home – which is causing problems!  Have not heard a word about it in over three years (and it takes about two years to foreclose in Hawaii courts, so potentially have a lot more time).  Any thoughts or help you can offer?  We are working with an excellent mortgage broker, but it all seems to be new water to everyone in underwriting, as well as him.

  • 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!

  • 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.

  • 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

    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.

  • 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

    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.

  • 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

    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?

  • 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?

  • 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?

  • 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.

  • 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!

  • Newmexicon1

    Yes, very helpful. Thankyou Scott.
    May I contact you after speaking with the bank if things are not clear?

  • 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

    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!

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

  • 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 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 🙂

  • 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.

  • 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

    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?

  • 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

    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.

  • 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?

  • 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!

  • viking68

    Chapter 7 discharged 10/13.  Suntrust 2nd stipped ($16K).  Current home value~$325K.  Shortly before filing, did a 40 year loan modification with WFHM.   WFHM stacked $125K (past due payments due to economic crisis – mostly interest, fines, fees, etc.) onto $282K Principal Balance.

    Mortgage was never re-affirmed and was discharged, lien remains, as expected.  Lien of $407K on home with value of ~$325K.  We have been making the payments since about 6 months prior to Chapter 7 filing and subsequent discharge.

    Economic situation vastly improved, never been late on a payment since 6 months pre-chapter 7 filing (6/13).

    It’s my understanding the courts have ruled and allow the interest/past due stacking. Which, I think is a ruling that hurt a lot of people; people that would have kept their homes but for this insidious practice.

    Questions:

    1.   In your experience, have you ever heard of someone successfully negotiating a fair market value mortgage with WFHM post chapter 7?  I have heard/read they are HORRIBLE to deal with.

    2.  In lieu to attempting to negotiate with WFHM on a “new” mortgage, would it be wiser to offer a lump sum payment for the original Principal Balance, obtain free title and obtain mortgage elsewhere?

    3.  Or, will WFHM just “sit on their hands” and ignore the situation?  We intend to stay in the home for the duration.

    Our scores are nudging 700 now (were low 800’s prior to economic melt-down)

    I have done numerous searches and cannot find any information about this type situation.  There is tons of info on 2nd’s; that’s not my situation.

    We are in FL.

    Thank you for your time, Scott!

  • 1angell18

    Hey Scott, I constantly read this blog because it has a lot of helpful information, and once again I can really use your advice. 
    I am going to try summarizing few things, in order to ask you few important questions to us. 

    2009 bankruptcy filed – November 2009 Discharged,  
    original Chase 80/20 loan included, never modified – kept making payments until 2013 
    moved out  May – 2013 – loan sold to another company – we tried doing short sale, but the company refused every offer, so we gave up. 
    the house was finally sold sometime in 2014 – we tried finding out when the title was off our name – but not success. 
    Now is 2016 we are ready to buy it again, my husband and my son (currently active duty service-member) will be on the loan. 

    are we considered first time home buyer at this point, since this is one question on the forms we seem on applications?
    with my son as co-signer are we eligible for VA loan?  
    how do we know for sure, when the title was off my husband’s name so we know we are free to apply for a new home loan?

    thanks Scott

  • 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.

  • 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

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

  • 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?

  • 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!

  • 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

  • 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

    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.

  • 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 [email protected]
    Hope this helps?

  • 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?

  • 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.

  • 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

    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?

  • 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.

  • 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 [email protected]
    Hope this helps?

  • 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?  The is equity in the home.  I live in California.
    Thank you

  • 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

    ScottSchang Foznsis i will email you it is complicated Thank you

  • 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 [email protected] and we can go from there.

  • 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?

  • 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.

  • 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?

  • 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

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

  • kswen There is no downside to calling in your payment at all.  There are 2 things you need to be concerned about, first, ownership of the home.  Because your ex signed the title of the house to you, he now has zero ownership in your home, yet, he still has financial responsibility for the mortgage.  Since he included the mortgage in his BK, he’s trying to remove his liability for the mortgage as well.
    This is all “up-side” for you.  The mortgage is still reporting on your credit, you own the home, and your ex is completely out of the picture.  Unless you have a court order to refinance, there is no hurry to do so.  Your ex has no control over anything that happens to the home, and you are in 100% complete control and ownership of your home, and the situation.
    Hope this helps?

  • kswen

    My ex husband filed chapter 13 bankruptcy. I did not and have great credit and a good job. In our divorce he signed the title of the house over to me, so I am the sole owner. Unfortunately, his name was still on our mortgage. Now the mortgage company wont directly debit the mortgage anymore, so I am calling in to pay each month. I am capable of making the payments myself. What ramifications, if any, does this have on me? I am not able to refinance in my name because the bank said I do not have 6 consecutive months of alimony payments yet. Once I have that , I will be able to do so. 
    1) Does this have any affect on my credit, if I continue to pay the mortgage that is in both of our names?
    2) What is the downside of continuing to call in and pay the mortgage that both of our names our on for another 6-8 months until I have the consecutive alimony payments to show the bank so I can refinance and secure my own loan?

    Thank you for your assistance!!!

  • Nikki606 You will need to have your name removed from title if the mortgage is in a default status.  If the mortgage is current, you’re ok.  I would contact the lender and ask them if they will do a deed in lieu of foreclosure?

  • Nikki606

    We are trying to get a home loan. We filed bankruptcy in 07 on a mobile home and land. The bankruptcy was dismissed but they still have our names on the deed. Can this cost us the house we r trying to get?

  • awebbchic

    ScottSchang awebbchic Yes, that is very helpful! We will call the bank and see if they will consider a Deed in Lieu. Thanks so much for your time and help, much appreciated!!

  • Plp This is a tricky question.  When was the foreclosure?  Was there a bankruptcy?  He can be relieved from any responsibility for the mortgage through the divorce decree.  He can also be removed from title through a quit claim deed. As a last resort, she may be able to refinance, and take his name off using a portfolio loan, which will have a higher rate and fees.  What State does your daughter live in?

  • Plp

    My daughter is in process of divorce. Her husband wants his name off mortgage. They have a second mortgage on a foreclosed house. How is it possible to refinance. Any way to do this

  • awebbchic Deed in lieu is very similar to a foreclosure except for the fact that it costs the lender significantly less if you cooperate.  That’s why they are willing to give you “cash for keys” – it’s way less expensive for them.
    You should not have to go through an approval process for the Deed in Lieu, they are going to end up with the property one way or another if you abandon the property.  
    Because you discharged the debt in BK, they are not legally allowed to pursue you for collection.  I would communicate with them about the cash for keys.  You have nothing to lose at this point, I think you should just talk to them.
    I hope this helps?  By the way, you would be able to buy again using conventional financing in 4 years from the discharge of the BK, and ignore the date of the foreclosure, or deed in lieu.

  • awebbchic

    Hi Scott, 

    I don’t know if you can answer my question but I’ll give it a whirl anyway! My husband and I filed Chapter 7 and it was discharged 3/30/14. Long story short, we owned our own company and things went south and bankruptcy was our best option at the time. Initially we were going to reaffirm our home. While in the process of filing bankruptcy we found out some expensive septic work we put into our home 3 years earlier had failed again and it was going to cost us $15-$20K to fix it a second time and it wasn’t a guaranteed fix. Due to already investing $10K into the problem and being upside down in our home by $25,000 our lawyer advised us to not reaffirm our home and include it in the bankruptcy. So, we did not reaffirm our home but we continued to make on time payments on our mortgage until 1/2016. Our mortgage was discharged in our bankruptcy. Our mortgage has sent us applications for loan modifications, short sale and deed in lieu of foreclosure since we stopped making payments. We spoke with a real estate agent about selling our home and they said with our septic problems we’d have a hard time selling and if we did get a buyer the offer would probably be so low that the bank would never approve the short sale. Basically, discouraging us from selling. We don’t think we would approve for a deed in lieu of foreclosure because we both have jobs now and make decent money even though that wasn’t the case when we filed for bankruptcy. So, from where we are standing it looks like foreclosure is our only option…? The bank hasn’t started the foreclosure process yet but has sent us letters saying it will be referred to foreclosure if we don’t pay soon. It also states that if we wish to abandon the property to contact them to discuss alternatives to foreclosure under which we can surrender the property in exchange for compensation. Do you know if they are referring to deed in lieu of foreclosure or cash for keys? Has there ever been a case when you don’t have to qualify for deed in lieu or foreclosure? Does cash for keys help you avoid the foreclosure process? Any advice or thoughts would be appreciated. We’re trying to make the best decision under the circumstances. Thanks in advance!

  • tcles1 It sounds to me that you are not getting the full story from your lender of why you do not qualify.  It certainly is not because of the mortgage that was discharged through the bankruptcy.  Most lenders stop reporting the mortgage once the debt is discharged, so that adds to by belief that there’s something else.  What could be coming up, is if he is still on title to the home.  If he shows up on title, that could cause an issue for an inexperienced loan officer.  Still, I think your attorney nailed it.  A good lender should be able to point you in the right direction.
    If the home was awarded to the ex in the divorce decree, you will want to show that to the lender as part of your application process.  Your husbands bankruptcy petition and discharge should show the lender that the mortgage debt was discharged.  And if for some reason he is still on title, he should do a quit claim and give up all interest in that property.
    What State are you trying to buy in?  I might have someone that I can recommend that can help you figure this all out.  Shoot me an email to [email protected], and I’ll make an introduction if I know someone that I trust in your State.
    Hope this helps?

  • tcles1

    Hi Scott,
    I have a question. My husband bought a home with his now ex.. He left the home 11 yrs ago and went bankrupt on the home 11 yrs ago as well. We are looking to buy a home of our own. We have been denied a mortgage because it shows  up on his credit report. After this many years should that now go away on his credit report. or can we request it to be removed. We contacted the Lawyer that did the bankruptcy, and they said it should go away and if we get a good mortgage broker we should be able to obtain a mortgage. Our only debt is a car loan for 4,000 dollars. We also have the 20% to put down on a home of $120,000.  Any help would be appreciated and Thank you in advance for your time.

  • danbren1 Thank you for your question, unfortunately, I cannot answer your question about the past due property taxes.  That might be a question for a tax or real estate attorney.
    As far as the foreclosure or short sale, the answer is no, it cannot hit your credit if the mortgage debts were discharged in your bankruptcy.  The cleanest option is probably the foreclosure, and it’s unusual that the second lien holder is initiating it.  The property taxes will probably be paid first, the first lien holder will be paid next, and PNC will get whatever is left over.
    Hope this helps?

  • danbren1

    Dear Scott,

    I have two home equity loans totaling approximately 145,000 and back real estate taxes of approximately 11,000.00.  These loans were discharged in bankruptcy in 2013 and I have not paid either one in over a year, since I put my house on the market at $159,000 and have made many reductions since to 129,900 and it still has not sold, so it will be a short sale when sold if we can sell! The first loan is with Bank of America. The second with PNC. PNC is threatening foreclosure, and filed a complaint with the court.  I ignored and now not sure how long it will be before they foreclose.  My attorney said to give the keys to Bank of America and walk away. If I do so, is Bank of America liable for the back taxes?  I don’t want them coming after me for them. That is why I want to sell, in order to get out from under and start fresh.  What are your recommendations? I thought selling would be cleanest, but after 50 showings still not sold.  Will a foreclosure be on my record?

  • Dmh613

    Scott,
    My wife and I used a home equity line of credit to help us buy a business in 2006. We were told by our mortgage rep to come back after 6 months of payments and refinance the loan into the business name. We did all that and the loan was paid off in our name. It shows on my credit report that the loan was paid off. But I know that when the new loan was initiated that our house was used as collateral for the loan.
    Unfortunately in 2009 we were had to close the business and ended up filing bankruptcy. We had a terrible lawyer and he never explained that we could reaffirm our mortgage. Also while we were in the process of filing bankruptcy we ended up having a mortgage modification which reduced our payment. But it made if an adjustable rate after 5 years. We have faithfully paid our mortgage with the exception of the three months that we were told not to pay on so we could qualify for the modification. Now 7 years later I want to see if I can refi my mortgage into a fixed rate. But anytime I tell a mortgage rep that I believe there is a lien on the property, they run the other way. Is there any way to refi my mortgage so I get credit for it and to get a fixed rate again?

  • elizabet33 Hi Elizabeth – I am a lender friend of Scotts.  Wow, this is very interesting!  So did you have plans of moving or selling your home?  I guess my first thought would be  to have a title search done on the property to confirm no straggling liens remain. . . . and as a side note, I would probably never reach out to them again 🙂

  • leezle1971 Hi Lisa, the timeline for being able to buy again will be dictated by the type of financing you are trying to qualify for.  Because yours, and your husband’s events happened independently, you are going to be subject to the most recent event, if both of you need to use your income to qualify for the new home.  
    Let’s start with your timelines – You would be eligible to buy using Conventional financing (with as little as 5% down) 4 years from the discharge of the bankruptcy, this would put you at October 2017.  Using FHA financing, you’re looking at 3 years from the foreclosure – May 2017.
    For your husband, assuming there was no bankruptcy, he is eligible to buy using Conventional financing Aug 2017, 4 years from the short sale, or August 2016 if using FHA.
    If your husband can qualify for an FHA loan using his income alone, I would jump on the August 2016 timeline and get into your home now.  You can always refinance and remove the mortgage insurance next year once you are eligible for Conventional financing.
    Hope this helps?  I have a lender friend in your area that is very familiar with these guidelines.  If you shoot me an email to [email protected], I can make an introduction.

  • leezle1971

    Hello,

    I had a Chapter 7 Bankruptcy that was discharged Oct 1, 2013.  My old home, which the mortgage was included in the Bankruptcy, had subsequently been foreclosed on, deed transfer date of May 24, 2014.  This all happened due to divorce that was final Aug 2013. I am  now remarried, my credit score is around 680 now and going up :).  I am not late with any payments, and have been at my job now for almost four years.  My current husband had a short sale due to his divorce, the short sale happened Aug 2013, I am pretty sure.  His credit score is above 700.  Any options available out there?  We are wanting to look for a house under $150,000 and have the funds to put down 20%.

  • jmt1981

    ScottSchang jmt1981 If you could tell me of a  lender in NJ who you think understands my situation that would be great.

  • jmt1981 ScottSchang If your credit is good and your debt is low, you’re in perfect shape for Conventional financing.  Let me know if you need help finding a lender that understand the guidelines.  With a DIL after a BK, there are not many lenders that know how to do this, even though it’s allowed by Fannie Mae.

  • jmt1981

    ScottSchang jmt1981 I live in NJ and I am  trying to buy in NJ. I kinda feel like i am being punished because the deed and lieu took so long to get after the bankruptcy. I tried really hard to get it done earlier, but bank of america would not work with me , i had to wait until my mortgage was sold to another bank, which took 3 years, My mortgage dept was discharged in my bankruptcy, credit is ready to go and dept is low.

  • jmt1981 FHA guidelines have not been updated, and they will treat the BK and DIL as two separate events unfortunately.  That said, you would be eligible for Conventional financing now, with as little as 5% down payment, as long as the mortgage debt was discharged through the bankruptcy.
    What State are you trying to buy in?

  • jmt1981

    Hey Scott i have been trying to figure out if fha has recently updated any of their guidelines,I am in a situation where i put my home in bankruptcy in 2011 and was able to get a deed in lieu done on the home in October 2014. I have been reading 2 years from bankruptcy  and 3 years from deed in lieu . Does bankruptcy triumph the deed and lieu in this situation?

  • wisteriapx

    Hi Scott – attorneys seem baffled by how to best handle this situation. I would be grateful for any advice!! Thank you in advance.

    1. HOME PURCHASE: Home purchased in Utah by husband/wife in 2007. Key Bank HELOC taken out in 2009 for up to $90K in husband’s hame only; used only $53,000 of it. No payments since 2012 on HELOC and it was charged off /interest froze in Dec 2012. 1st TD held by B of A was refinanced at about $234K for lower interest in March 2012. B of A/Title company failed to record new loan/Deed of Trust with the county, but did have Key Bank sign and record a subordination agreement. Wife stopped making B of A loan payments (unknown to husband) in November 2012. 

    2. MARRIAGE DISSOLVES: Wife abandoned home and husband in early 2013, and husband filed for divorce. Wife bankrupted (Chapter 7) out of B of A home loan in June 2014. Divorce final Dec 2014. Husband awarded home even though it was/is underwater.

    3. HUSBAND TRIES TO KEEP HOME: Husband wants to try to keep it for kids anyway. Wife finally signed and recorded QCD (ordered in divorce) in March 2015. Husband notified B of A of their failure to record the refinance loan, and he applied (twice) for B of A loan modification. Husband made three trial payments (March, April, May of 2015) and B of A denied modification for no good or logical reason. 

    4. HUSBAND GIVES UP ON KEEPING HOME: Home is now empty and Bank of America transferred loan to Seterus. There is now $50K+ due in back payments and penalties, and the home is on fast track for foreclosure. Still no deed of trust recorded by B of A – as of today – although a law firm that handles foreclosures has now recorded some kind of soft motion with the county. Husband no longer lives in the home and needs to move on. He is talking to both realtors and attorneys. Should he short sell? Should he surrender home in Chapter 7 (he has a few other unsecured debts and and would likely qualify)? Should he do both? and how will his choice affect the ex-wife who bankrupted out the B of A loan in 2014? Would a Chapter 7 surrender of home be a “foreclosure” that would go back on ex-wife’s credit?

  • Barbie tarvin Hi Barbie, this is such a difficult situation.  The problem is, there bank is not required to foreclose, and I’ve seen situations similar to this where they are just riding out the market until the home values increase enough for them to recoup more of their losses.
    The only thing you can really do is to contact the lender and try to negotiate a deed in lieu of foreclosure, or hire a local real estate agent and list the home for a short sale (if you owe more than it’s worth?).
    Using conventional financing, you can buy again in November 2016, as long as your name is removed off title by then.
    Hope this helps?

  • Barbie tarvin

    Scott, my ex and I filed chapter 7 and was discharged in Nov 2012. I have now moved across country and have worked very hard to rebuild my financial world. I have managed to get my credit score up to 720! My issue is this: the title of my home in Nevada is still in my name and the bank has yet to foreclose even after over 3 years. How can I qualify to buy a home on my own when the banks just refuse to foreclose?

  • I am doing a LIVE WEBINAR on Tuesday, April 12th at 6pm PST.  I will be discussing the most up to date guidelines, as well as answering the most common questions, correcting the most common mistakes, and empowering you with the exactly how to talk to your lender about buying after a bankruptcy, foreclosure, short sale or DIL. – CLICK HERE to Register – https://buywisemortgage.leadpages.co/boomerang-webinar/

  • Taghster ScottSchang  The guideline for allowing an underwriter to use the BK date when a foreclosure was included in bankruptcy was updated in December 2014.  I am almost positive that this is their hang up, not the BK date, and I’m sure your lender has not seen many of these transactions. 
    If you need supporting documentation, here is a link to the USDA guideline – http://www.rd.usda.gov/files/3555-1chapter10.pdf – you will find the guideline on Page 31, bullet point 4 – hope this helps!

  • Taghster

    ScottSchang Taghster

    Scott, 

    I am applying for a guaranteed as I make way too much money to qualify for direct.  

    My chapter 7 was discharged 1/17/2013 and yes, my mortgage was included.  Ultimately, took the bank a while to foreclose and my name came off the deed in June 2014. 

    I have been at the same job for 18 yrs and have a middle score of 687 with not one late since declaring BK. I owe very little debt, have all the right types of credit and my debt to income is great too.  I don’t understand how the “time frame of the bankruptcy discharge” is wrong when USDA says its right.  They have not given me the hard no yet but if they do, should I call the state rep to investigate? Where do I go from here?

  • Taghster Are you applying for a USDA guaranteed, or USDA direct loan?  I know they are underwritten differently.  I believe you are simply experiencing an inexperienced underwriter that has not encountered this before.  USDA guaranteed guidelines are 3 years.  Was there a mortgage discharged in the BK as well?

  • Taghster

    Scott, 

    I qualify for USDA all day long and 12 times on Sunday.  I have been waiting since 3/1 for a pre-approval.  The first underwriter who reviewed it “didn’t feel comfortable making the call on the file”.  It was sent to the head UW for review who apparently denied it due to “the time frame of the bankruptcy discharge’.  I am three years and two months post Chapter 7 discharge.  USDA is three years….is this a bank overlay?  My LO said she sent it up again for an exception.  Please help me understand….

  • ThisIsUnbelievable You can certainly buy all cash at any time.  Portfolio lenders may at least require that the lien be removed, but that’s completely up to them.  A private lender can institute any requirements they think necessary to protect their investment.  Buy for conventional, FHA or USDA, you’re going to need the bank to cooperate.

  • ThisIsUnbelievable

    Just for clarification – when you said we can’t be in default and buy a home, you are referring only to getting financing, correct? Is there anything blocking us from trying to buy a home without a bank?

  • ThisIsUnbelievable I completely and totally agree.  I’ll bet my last dollar that they have already taken the write off on their corporate tax returns and benefited from the dismissal of debt.

  • ThisIsUnbelievable

    It sucks – I am not sure how it can be legal that they can just hold onto a lien forever to collect a debt that was supposedly dismissed by a court of law. It just seems like a giant loophole that benefits banks at the expense of homeowners.

  • kaj219

    This same situation is happening to me right now. The bank chose not to foreclose on our property. It has no running water, as the pipes busted, and the heath dept kicked us out 6 years ago. I’m in the process of buying the home that I’ve been leasing only to find out that I owe 4 years back city taxes for the old house and the title is in my name. We claimed the house in our bankruptcy…its the reason we filed! I have the income, credit, and down payment, but I’m being blocked from getting a FHA loan….all because the title itself was never taken out of our name. It has been a complete nightmare. We don’t even have a lien on the property. I feel like we’re destined to never own a home again after we bought a little starter house 11 years ago at the age of 19. Who knew it would still be haunting us

  • elizabet33

    We consulted both our Bankruptcy attorney and a Real Estate attorney in our state. They said that yes the mortgage company released the property and the mortgage obligation was removed from the bankruptcy. There is nothing on our part for us to do but sit and wait and see what they come up with to come at us but that they would Love to have this fight with them given the evidence. Also that if they do try to sue we are to counter sue for legal fees because none of this was caused by us.

  • ThisIsUnbelievable

    It helps – it is just extremely discouraging. It is hard to believe they simply hold all the cards and can block us essentially forever by simply doing nothing.

  • ThisIsUnbelievable Oh boy, this is a little bit of a nightmare.  I can definitely offer an opinion here.  First, under the August 2014 Guideline Change, you would be eligible to buy again due to the waiting period, but ONLY after the lien is removed.  Unfortunately, you cannot be currently in default and buy another home.  As you’ve discovered, BK protects you against double dinging your credit, and tax liability, but does not affect your ownership, and the responsibility that comes with that ownership.
    Under bankruptcy protection laws, the lender is not allowed to harass or pursue you in an attempt to collect a debt discharged through the BK, however, they have every right to ask you to “pay them off” to make the lien go away.  I know it sucks, but they are playing hard-ball here, and your options are limited.
    You could hire a real estate attorney to fight the bank, and try to force a resolution, but in the end, I think they have you in a tough spot.  Depending on what they are asking for, you will have to weigh that amount against the cost of hiring an attorney to play a little hard-ball of your own.
    Now, I am not an attorney, I’m just a mortgage lender that spends a lot of time trying to understand the guidelines for qualifying for a home after a financial hardship.  This is only my opinion.  
    I hope this helps?

  • ThisIsUnbelievable

    Scott – thanks for maintaining this thread! We have a zombie title on a rental property that was dismissed in a bankruptcy back in 2011. We brought 4 offers to the bank and they rejected them all. They attempted to foreclose but could not sell the property at auction. Now they have dismissed the foreclosure with prejudice. They still hold the Lein and the county sold some of our taxes to Wood Cove who holds a Lein as well. The property is condemned and will be torn down soon. It has sat there for years – literally.
    As I understand it – we should however still qualify for conventional financing due to the BK and the change in guidelines in 2014 – yet every lender turns us down due to this property. Other than this issue our credit is fine – we get preamp proved quickly only to stall later in this property.
    What can we do? The bank “wants compensation” to release the title. Isn’t that an attempt to collect the BK debt? Since the bank cannot foreclose I see no way out of this. Any ideas?

  • elizabet33 It’s not that the release department cannot talk to you, the creditor is not allowed to pursue you for payment.  All of your payments are voluntary.  This is VERY strange, but it appears you own your home free and clear.  A reconveyance is the removal of the lien that secures the debt against your property.  Without a lien, the lender is unable to foreclose.  The bank has removed all of their rights to securitize the debt with your home.
    Would love an update when you know for sure!

  • elizabet33

    Oh and yes the word Reconveyance and paid in full is on the paperwork.

  • elizabet33

    No we did not pay the mortgage off so I don’t understand how this happened. The release department of the mortgage company is not allowed to talk with me because of the bankruptcy. The bankruptcy department has no answers at all and said this never happens and I need to involve my attorney. My bankruptcy has been discharged already, my attorney is not in until tomorrow and the senior paralegal in charge says this has never happened before. I am not sure where else to turn or what to do next

  • elizabet33 Hi Liz, the release of Deed of Trust means that they removed the lien from the property.  Did you pay your mortgage in full?  It sounds to me like your home is now free and clear.  Is the word “Reconveyance” on the paperwork?  I do not think you are in danger, the exact opposite appears to be true 🙂

  • elizabet33

    Hello,
    We filed for Chapter 7 and received our discharge. We have continued to pay our mortgage on time and we did not reaffirm. Today we received a letter from the bank thankingredients for our loan and Release of Deed of Trust papers filed with the court. What does this mean? Are we in danger?
    Regards,
    Liz S

  • pmcp

    ScottSchang pmcp The mortgage company, the Homeowner Preservation Foundation, and the attorney from Wells Fargo, as well as articles that I found on realtor.com and another similar website, all state that following bankruptcy, a foreclosure will result in an additional hit on your credit report, and that foreclosure is the worst/most damaging, foreclosure with a short sale or deed in lieu are less damaging.  (I’m sorry for not being more organized in my first post.)  I am reluctant to return to the home because my ex escalated the amount of debt, and I do not want to take that on, but I can no longer use my retirement funds to pay for my rent.  My rent is not much less than my mortgage was.  Should I move back in (it is vacant and winterized currently) and live without housing costs until its finally foreclosed?  It is being listed with a realtor as a short sale currently, and the mortgage company is being difficult.  But showing a winterized house is not attractive either.  Here is a scenario that I would like feedback on:  what if I were to move in and begin making payments that I could afford.  What would happen to the foreclosure?  Would they consider modifying the loan?  Would they refinance the loan?  Is there any way for me to make this work for me and my family?  The bankruptcy was not my decision, I never missed a bill payment in my life.  Incidentally, the mortgage company reports (but not in writing) that they will pay all back taxes and insurance because everything was combined into the monthly payment. I am considering different scenarios because my alternative is a two bedroom apartment with three kids and a dog.  We’ve done that and it was terrible.

    • I apologize for the delay, I did not see your follow up question. I can assure you that if you included, and discharged your mortgage through bankruptcy that it is illegal for the mortgage company to ever report late payments, or a foreclosure on your credit report. Yes, the foreclosure is a matter of public record, and will be considered in the future if you try to buy again, but only in terms of how long you must wait to qualify for financing.
      Bad things happen to good people all the time. Bankruptcy, or foreclosure are not a reflection of you personally, but the result of a difficult situation that you found yourself in. It does not sound like you are getting very good advice, or you are asking the wrong questions, which is most likely the case here.
      As far as moving back into the home, the bank will not accept partial payments from you. It is highly unlikely that they will negotiate a modification that you would financially be able to afford, because they would most likely require that the loan be made current. It is possible that they could put the delinquent amount on the end of the loan, making it current, and give you new terms for paying it back. Doing this however, could result in taking the mortgage out of bankruptcy protection and creating an unrealistic financial burden for you in the future. I don’t recommend it.
      I cannot offer advice on whether or not you should live in the home, I can only comment on what my experience has been personally, and what others have experience here on this website. I am not an attorney, I am only a real estate mortgage professional with specific knowledge and experience around the guidelines for buying a home after a financial hardship.
      I wish I could be more helpful, I really hope this helps in some small way.

  • pmcp Ok, there are a lot of things going on here, and there are definitely some misunderstandings about what will affect what.
    First, if you did file BK, and included mortgage, any subsequent short sale, deed in lieu, or foreclosure would not affect your credit report at all.  It will only affect your ability to buy a new home.
    Since you discharged the mortgage in BK, you would not be obligated to make any payments on the mortgage, however, the lender has the right to foreclose on the property as soon as they get around to it.
    If you are on title to the home, you are still the owner of the home.  You can live in the property, and you are still responsible for the property taxes.

  • pmcp

    I am divorced, was a stay at home mom for 20 years, still had four in the house, and a credit rating of 780.  My ex declared bankruptcy, which I never agreed to and my attys insisted I had to as well, and must stop fretting over the payments on the house — could not do them on the support I was receiving.  After three months he then attempted to force me to pay the mortgage through the courts, my atty insisted I move out with the family and the only thing i could afford was a two bedroom.  My ex moved in and changed the locks and lived without making a payment for two years.  Bankruptcy discharged the house debt.  I convinced him, after all this time, of the necessity of a short sale to enable improvement of our credit, which I was informed would take another hit when the foreclosure was final.  The house is now vacant.  I cannot afford the rent I am paying.  Should I moved back in?  I would hate to have to pay the excess of 90K that he neglected for two years.  He has never agreed to give the deed to me either.   But it is still looming that I cannot afford my high rent and I still have three and a dog with me, and am in college with a part time job.  Will there ever be a modification that I can afford?

  • what next it sounds to me like they are trying to secure the property, and prevent any weather damage, or vandals from destroying the property.  They are going to have to try to sell the property to recoup some of their expenses and are attempting to minimize their cost.
    It sounds like they are moving forward with the foreclosure process, it can take time.  You have the option of contacting the lender and trying to negotiate a deed in lieu of foreclosure, or a short sale.  Those are the only other ways  expedite the process.

  • what next

    What would happen if I rented the house out until they foreclose on it?

    Whats next

  • what next

    I do not live in the home now but we do maintain the home.  My husband stays there sometimes. I just don’t understand why they don’t foreclose. Why are they trying to slip through the back door to get the house?

    Whats next

  • what next Are you living in the home still?  The fact is, bankruptcy does not affect your ownership, or responsibility for making your mortgage payments.  If you stop making payments, then the lender that owns the loan, secured by a deed of trust, has the right to foreclose.  If the home was included in the BK, then the creditor (lender) does not have the right to try to collect on the debt (all payments are made voluntarily), and in the event of default, and foreclosure, you will not incur any income taxes as a result of any losses the lender incurs as a result.
    Now the good news.  Using conventional financing, you would be eligible to purchase a new home 4 years from the discharge date of the BK (assuming you meet all other qualifying guidelines).  The criteria for qualifying for conventional financing is that the mortgage must have been discharged through bankruptcy, and your name must be removed from title to the home.
    Hope this helps?

  • what nexet

    In April 2011 my husband and I stopped making payments on
    our FHA home loan because of a devastating illness; we did have mortgage
    insurance on the home. We started procedures for chapter 7
    bankruptcy in June of 2012 and included the home, in which
    stopped the foreclosure that was in process.  The bankruptcy was final in
    September 2012.  Several months after the bankruptcy we were notified that
    the loan had been sold, but that B of A was still servicing the loan.  We
    tried several times before and after the bankruptcy to modify, but the house
    was $125,000 + underwater. The loan has been sold three or four
    times sense the bankruptcy, and now Fay Servicing is servicing
    the loan.  I spoke with them several times regarding the home, they asked
    if the home was vacant  and I told them no, two weeks later they had a
    company come to my house when we were not home and broke into the back door and
    put a lock box on it.  I contacted Fay Servicing the next day and they
    said there must have been a misunderstanding. I received foreclose paper work
    from them a few months later. We contacted them again and said we wanted to try
    to modify the loan. We tried to work with them, but they wanted us to pay them
    $13,000.00 in two weeks and increased the monthly mortgage payments from
    $1800.00 per month to $2300.00 a month. We declined the modification. They
    stated that they would proceed with the foreclosure, I then asked Fay to send
    me proof that they have the right to negotiate our loan and they stated that
    they would, but I never heard from them again. Then, a few months later we
    received a copy of a copy of the first paperwork that they had sent us on the
    foreclosure and we figured that was that.  A few months down the road we
    receive a letter from the courts says that the case has been dismissed. Now we
    just scratched our heads and don’t know what is going on.  In February of
    this year they tried to be sneaky again and when we were not at the house they
    broke into the back door and put a lock box on it.  We contacted the
    company that posted weatherize notification in our window and told them that
    the house was not abandoned; they told us that the mortgage company had
    contacted them and said that it was. We called and left a message with Fay
    Servicing, but have not heard back from them.  Now what?????  Both my
    bankruptcy attorney and our mortgage broker has told us not to sign anything
    just let them foreclose on it. Do you have any suggestions? 
    Thank you,
    What next

  • diesel83 you should be able to contact the servicing company and provide them with the bk discharge papers

  • diesel83

    Hello,
    I was divorced in 2014 my ex wife was awarded the home. I filed bankruptcy several months later and included the home. After the BK discharge everything was reflected correctly on my credit report. The mortgage reported as $0. The bank sold the mortgage to another company and now that shows up on my credit report. My ex is making the payments so that’s fine but I thought after I put the home in my BK I would be free from financial responsibility? How do I go about getting the new bank removed from my credit report?

  • amyturner0816 Hi Amy, I’m sorry to hear about your challenges.  Something doesn’t make sense here.  If the home was foreclosed, then you should not have your name on any deed.  What State are you buying in?

  • amyturner0816

    In June 2010 I was forced to file bankruptcy after my husband left our home filing bankruptcy first. In June 2011 the deed of our home that foreclosed was released under my husbands name only during a sherrif sale. I’m only finding this out now however because over 5 years later after my chapter 7 discharge I’m now trying to purchase a home. My mortgage lender requested the deed via our county recorder. To my surprise my husband even though both of our names were on the mortgage and the deed was the only one listed for the sheriff sale. My first and second mortgage were discharged as of October 2010. The next deed on the house was August 2011 and was sold again in 2014. How do I fix this? Feeling frustrated to ever get another mortgage how do I clear my name on the deed? Thank you. Amy

  • sdenisem I would not stop making your payments, this can only hurt you.  Absolutely contact a local Realtor and explore selling your home, there is a strong possibility that you will actually make money from the sale.  Allstate is not going to be an accurate resource for your home value, the Realtor will be able to give you a much better idea.
    The reason why I say to keep your payments current is so that you have more options after the sale.  If you want to buy again in the future, you will have no barriers preventing you from buying right away.  Who knows, you may clear enough from the sale to put down on a home that is more appropriate for your shrinking household, and still be able to bridge the shortage on your child’s college needs.
    Hope this helps?

  • sdenisem Thank you for your question.  There really isn’t a way to “give back” a home to a bank.  Banks are not set up to do this.  If you stop making payments, they have a right to foreclose, and repossess the property.  If you owe more than it’s worth, you can try to do a short sale, which would require the bank’s permission to accept less than the amount owed.  The last option is to contact the bank and ask them if they would consider a deed in lieu of foreclosure due to the fact that you can no longer financially afford the payments and default is inevitable.
    Depending on how your name is removed from title will determine when you would be eligible to buy again in the future.  If you simply stop making payments, and let the bank foreclose, you are looking at a 7 year wait before being able to buy using Conventional financing. If you do a short sale or deed in lieu of foreclosure, you can buy using Conventional financing in 4 years .  USDA financing will allow you to buy in 3 years from a foreclosure, short sale or deed in lieu, FHA is also 3 years.  VA financing will allow you to buy again in 2 years.
    Bankruptcy is a tax and credit preservation play.  BK will not affect what happens to you home.  Bankruptcy and the subsequent loss of the home is treated as two separate events for FHA or VA financing, Conventional and USDA financing will consider the BK as the starting point for the waiting period, and ignore any subsequent default in terms of starting a new waiting period.
    I know that’s a lot of information and a lot of options.  Does this help?  Or do you have additional clarifying questions?

  • ebscott Hi Elizabeth,  I am so sorry you’re having so many challenges with your mortgage.  I do not believe this falls under RESPA, it sounds to me like your impound account was audited and found to be short, which made your payments increase.  If a less than full payment is made, my experience is that they will not post the payment.  This is pretty normal.  Since Chase is a nationwide bank, my suggestion is to walk into a branch, and ask to speak with a manager, and do not leave until all of this makes sense to you.
    It is not unusual for a lender to not reaffirm a mortgage when you file BK.  The BK actually have no affect on your mortgage if you continue to make your payments on time.  The issue you seem to be having are related to a shortage in your impound account, and nothing to do with the BK.
    I hope this helps?

  • ebscott

    Hello – I have a few questions on my rights under Respa Reg X – 

    I filed bankruptcy a few years back ch 7 had it discharged in April 2014 – I never thought we were including the loan and what I owed the bank because without this loan and debt I would not of qualified to receive a discharge of debt to begin with. So I assumed since the atty made no mention of a reaffirmation on my home even after I made it clear the reason for filing 7 was to be ok and be able to pay my mortgage loan but to have the credit card and other bills those pressures relieved so that I could comfortably make our home loan payments . I will add we were never late on our mortgage in 15 years – 
    We began to have problems w Chase as soon as the ch 7 filed – because then wierd stuff started happening,. Also we missed two tax payments paying by paying to these other bills that I sought freedom from in the 7. chase did catch it up for us and we proceeded again to be current to our taxes and to them. 

    My problem is that they are not applying my payments correctly – or something will go screwy with my bank and they will hold my deposit the elec payment for home goes thru and our bank will send it back or some crap. well I will catch it resend it or they refile it and it is paid – but then Chase will take other payments prior to the one in reference and begin to reverse them as if they are not paid. I am being royally screwed by them and I am on my 5th qwr and I get little resolve or corrections on why they do this or that to my loan history – I will include examples of the errors I am concerned with and have been repeatedly asking them to correct or tell me why they are not incorrect. I get blown off 

    1. Dec 2013 I made my mortgage payment cleared on Dec 13th – they made mention that it was in one of those accounts suspended — why unsure why 
    then a couple months later I phoned in and an employee of chase mentioned it looked like they applied my mortgage loan payment to the escrow account that was opened because of the 5535. they loaned us to repay our taxes. but they agreed in Dec 2013 to allow us 60 months to repay this money to them and this amount would be approximately 98.00 each month for 60 months interest free. But also my husband wanted to have them hold our tax money and see if the stress level would b lifted on this and we agreed to include additional money to add to the upcoming tax payments for the future dates. So intstead of it being now 1438.04 for p/i it was now including additional 524.00 to cover the repayment of 98.00 and the remainder to go into the account to send to assessor twice a year. 
    so I was confused why they have the right to take my mortgage payment for principle and interest and use it toward an escrow account also when I asked for a summary no where is this money logged in and paying toward the escrow balance. nor is this payment reflected in my history of mort payments which results to my mortgage principle being reduced so I know it is not counted where it was supposed to be nor was it in any of the pages of what payments were taken in and absorbed into this escrow balance. 

    2. they will count me late if I send only 1450.00 to cover p i before 15th and then by end of the month send them the additional 100 to cover my repayment of the borrowed 5535.00 from my back tax bill. they told me when we spoke to just make this payment and if it wasnt exactly in by the 15th shouldnbt be an issue since the obligation is to the p i loan we took out for the mortgage loan . 

    so my question is this do I still have rights under respa to have my payments applied properly to repay my loan and eventually become the home owner which is all we have ever had intentions on doing – or does the bank now have rights applied to them to steal my money and do as they please without having to be accountable to us and to properly serve my loan as it should be 
    I hope you can make heads or tails this is so frustrating that I cry alot and nobody wants to really help and I dont know what to do 
    thank you 
    Elizabeth

  • HelpinTX

    ScottSchang HelpinTX Thanks for your prompt response!  It’s crazy-just been asking everyone I can think of about the situation because we’ve gotten such conflicting information…….Our trustee and the title company think that the people at Citi are crazy and don’t know what they are talking about……..just hoping our closing doesn’t somehow fall thru………

  • HelpinTX Thank you for your question.  I have not heard of this, I also have not heard of a Chapter 7 Bankruptcy that is discharged and not closed.
    I am a lender that specializes in helping consumers understand the guidelines and timelines for buying after a financial hardship, I do not have any experience with what you are trying to do.  It almost sounds like your bankruptcy attorney would be the best resource for this question.

  • HelpinTX

    Hi Scott,

    Thanks for all the info you provide here-it’s very helpful!   My husband filed Chapter 7 in early 2014.  It was discharged in August 2014(but the case hasn’t been closed as we just finished our payment plan with the trustee and he states it takes a few months for it to go thru the courts).  Our home was exempt from the bankruptcy-never a part of it.  We are now under contract to sell our home-we we’re given the green light to sell by our Trustee and the first person we spoke to at Citi Mortgage-however-after speaking with Citi Mortgage again-they say that we can’t sell without an order from the judge……..  The title came back clean and title company says all is well and that the title drives everything.  We are getting so many different stories…….  We are set to close this month.  Just wondering if you have ever heard of this?  Can Citi Mortgage do anything to block the sale?

  • nesak2

    Hi Scott – I was in domestic partnership where we both were on a mortgage for a home. 5 years ago we split up and a year or so later we both filed bankruptcy at different times through different bankruptcy attorneys.  I surrendered the mortgage on my bankruptcy, but she kept the home. Today, I checked my credit and the loan popped up back on my credit report and guess what… payments have been consistently late which is now affecting my credit.  Under my credit report the loan says it has been reaffirmed…my question is how can I still be liable for the loan if I had nothing to do with reaffirming the loan? Thanks so much for any help you can provide!

  • zgirl22

    Thank you so much for the quick reply. He is determined to save the money for himself. He should have it in a few months and then we will definitely contact you. Thank you so much for all you do to help everyone understand their options.

  • zgirl22 Thank you so much for the question!  Unfortunately, his income is too high to qualify for down payment assistance, and quite frankly, those programs are very expensive, and should only be used in case of an emergency (no down payment at all).  With $15,000 saved up, he could purchase using FHA up to $625,500 with 3.5% down payment.  As a parent, if you can help him meet that minimum 3.5%, we can cover all of the closing costs through the loan.  Based on today’s rates and market, he could get a rate below 4% and only have to come up with 3.5% down payment total out of pocket.
    I am a lender in Orange County, CA.  I would love an opportunity to further discuss these options with you and your son.  I am out of town until tomorrow, and if you send me an email to [email protected], I would love to pick up this conversation this weekend, or early next week.
    Hope this helps?

  • zgirl22

    Hi Scott,
    I am asking a question for my son.. He is 28 years old with an income of $135,000 a year. He is looking to purchase his first home. He has a 755 fico, and aprox. $1300 monthly debt.(student loans and car payment) He is saving for a down payment and has about $15,000 saved. He is looking to purchase in Orange County CA. Are there any first time home buyers programs he can qualify for? Or due to his income will he not qualify? Can you tell me how much money down he will need to purchase a house in the $500,000 range? Thank you for all the great info you provide 🙂

  • If you on walking away from the home, it’s going to be very difficult to get another loan. Can you rent it out? Or sell it?

  • JayNorton

    Just trying to apply for usda they are telling me I can’t because I’m on the title of the home i plan to walk away from if I get a new mortgage I’m in Pennsylvania

  • Are you being declined because you are on title, or because you have to qualify for both payments? Is your goal to refinance your current home, or buy a new one?
    Last question, what State are you trying to buy in?

  • JayNorton

    So I waited to the 3 year after chapter 7 discharge and still have been paying and staying on my mortgage that was never reaffirmed and all I keep hearing is I’m ineligible to apply for usda due to the deed is in my name??

  • Nelson121

    Good day everybody my name is Nelson Mac am from Sweden but i live in United State San Antonio Texas few years back i was financially strained i rushed to my bank to apply for a loan to start up my business but i was denied by my bank because of my credit score and they could not help and due to my desperation i was scammed by several online lenders who promised to help me but at the end i was scam i lost my money and my hope because i was so frustrated, One day when i was going through the internet again i found one lender call Mr Larry Scott i thought to give it a try one more time to my biggest surprise he was able to lend me a secure loan totally the amount of $200,0000 for the first time in my life i realize that there are few lender who don’t scam people his name is Mr Larry Scott i will advice any body that are in need of loan to contact him with his Email ([email protected]) he can be able to help you because he was a God sent to me this year and i will never forget him for the help he render to me.

    God bless him

    Nelson Mac

  • ALH1 Whether a foreclosure shows on your credit or not will not change the way an underwriter will view it.  Foreclosure is a matter of public record, and disclosed on your loan application (foreclosure in past 7 years) to answer that any less than accurately would be bank fraud.
    I would suggest doing a search at the county recorder’s office for the chain of title for the address to the home.  This is where the UW will get their information.
    That said, you’re eligible to buy now using FHA financing, and unless the mortgage was discharged through a bankruptcy, you would be eligible for Conventional financing 7 years from the date your name was removed from title.
    Hope this helps?

  • ALH1

    I had a foreclosure in 2011, it was on my credit report at one time but for some reason it’s been deleted from all 3 bureaus and there’s no public record of a foreclose on my credit report either, I plan on buying a new home at the end of this year, will it be discovered when I attempt to purchase a new home?
    ( I know a few years back I was sent a check from mortgage company for something related to improper foreclosure practices, which I didn’t cash, so I’m wondering if the deletion had something to do with that)

  • 34leflo I am not an attorney, so I would recommend speaking to one, and an accountant.  It’s possible that your wife could be liable for any deficiency or losses that lender incurs as a result of the default.  If there is equity in the home, sell it.  If not, she may need to consider bankruptcy herself if the taxes on the default are too high.

  • 34leflo

    If my wife and i decide not to keep our house after I have been discharged on bankruptcy how will that affect my wife. We are in Mississippi. Only I filed not my wife. What liability will I have and what if any liabilities will she have.

  • Taghster

    ScottSchang Taghster

    Thank you, Scott!  I am in NH.

  • Taghster ScottSchang sounds like you would be eligible in January 2017, and yes, you need to talk to another bank.  What State are you in?  I may be able to recommend someone that can help.

  • Taghster

    ScottSchang Taghster

    Thank you. The answer is the house was long gone by the time we divorced so there was nothing in the divorce about it.  He wouldn’t pay for half of the divorce so I had to wait until I could afford it on my own, which was 2015.  

    I was looking at Fannie Mae and their guidelines of four years which would be Jan 2017 but the bank is saying June.  Should I try another bank? How does this work?

  • Taghster This is a tough one, because there’s more to it than yes or no.  I do not agree that you because your ex didn’t discharge the debt that you do not qualify for the BK discharge guideline.  Additionally, the terms of the divorce decree may come into play here as well.  If the decree states that your ex is 100% responsible for the home, and you quit claimed off title per the terms of the contract, then the foreclosure would not even come into play for you.
    Either way, using conventional guidelines, you would be eligible 4 years from the bk discharge.  Using FHA financing, if you are still on title to the home, you would have to wait until June 2017.  I think that’s where you are running into your answer, you are talking about 2 different types of loans here.  Using the BK discharge date is a conventional only guideline.  FHA goes from the date of the foreclosure.
    Hope this helps?

  • Taghster

    Hi.  Please help!  So far, its been nothing but bad news.

    06/2011 – Moved out of house I owned with (now) ex-husband because he wouldn’t leave.
    05/2012 – Ex stops paying for the house.
    10/2012 – I file for Chapter 7, included house in the filing.
    01/2013 – Bankruptcy is discharged.
    06/2014 – House is (finally) foreclosed. 

    Mortgage companies are telling me that I am not eligible using the bankruptcy date because he didn’t file for bankruptcy too and that I have to wait until June 2017 to qualify for anything.  Do you agree? 

    Thank you!

  • scott1958 Thank you very much for the question. This sounds like a legal matter and I could not comment on how to approach this other than to lawyer up.  Maybe do research about similar challenges, or law suits against OCWEN 
    https://www.google.com/search?q=law+suits+against+OCWEN&oq=law+suits+against+OCWEN&aqs=chrome..69i57j0l5.5574j0j7&sourceid=chrome&es_sm=91&ie=UTF-8
    It’s possible you can find an attorney that is familiar with the organization, and how to possibly navigate your specific challenges.
    Hope this helps?

  • scott1958

    I was wondering if you have any advice. My husband and I filed chapter 7 in 2009 and was discharged dec 2009. We live in Indiana . Our house shows a first mtg with new century in 2004 and another 1st mtg with household finance in 2006 which is really a 2nd mtg. It states both were discharged in bankruptcy. We tried for 2 years to get a loan modification. The loan was assigned to deutsche/gamp in January 2010.. At the time the loan was with litton then after I received modification it went to Ocwen.. They put all payments and added it to loan. They also put my insurance and taxes on it. This was in 2011 . In 2014 I received a court document where assignment was dismissed. I have been paying Ocwen a huge payment every month. Checking with the title company , they have never recorded my modification. Also at county recorders office they show the assignment but no modification or assignment dismissed. I would love to get household finance off but they seem to not want to settle . Amt is 25,000 give or take a little. With Ocwen , since mod was never recorded , original loan was 110,000 less payments 106,000. Do I pay off modification even if not recorded? Any difference with assignment being dismissed I have court papers? Also any advice would be great as I feel stuck not knowing where to go and Ocwen is no help and I tried several times for mods with them and they said no to lower my payments. Also any suggestions for a real estate attorney to help me negotiate with household finance? Thanks for any help.

  • mst667

    Hi Scott, need your help…  I filed bankruptcy back in 2009.  By the time I filed, I had one remaining mortgage on my home, a small second mortgage for about $11k (the first mortgage was paid prior to the bankruptcy at a reduced amount offered by the mortgage company).  I never included this mortgage in my Ch 7 filing because I intended to keep the home.  I also never re-signed for the loan.  Initially I was paying the mortgage but stopped not too long after as finances would not allow.  When I was in better financial condition I began asking the mortgage company if they would accept a payoff.  Long story short, they never accepted my offer and after several failed attempts to payoff the debt I finally stopped requesting.  Fast forward to today, I just received a discharge notice stating I have to claim $9500 on my tax return as income.  Needless to say Im upset they waited until almost 7 yrs to do so, but wondering how long the discharge will remain as a negative on my credit and prevent me from buying a new home?

    Please advise

    Thanks

  • Kong123

    ScottSchang Kong123 Hi Scott and thanks for reply. Hope you are feeling better and thanks for this service of providing free advice and guidance to those who need it!

    I live in Indiana… Indianapolis to be particular. If you have lenders that would be willing to help in September for us to get started, you can definitely send me their contact information and I will contact them shortly.

    Thanks again.

  • Kong123 I apologize for the delay on answering you – I got hit with that nasty flu last week, and I must have missed your question 🙁
    The challenge that most lenders have, outside of ignorance, is if there is a short sale or deed in lieu of short sale on a mortgage included in BK.  The Fannie Mae guideline specifically addresses foreclosure and BK on the same mortgage.  You will be fine.  Also, the guideline reads that you cannot close on your new loan until after the 4 year mark.  This means you should probably get started around September.
    What State are you in?  I have a pretty good network of lenders that I’ve met that are having success with these scenarios.
    Again, sorry about the delay, hope this helps?

  • Yuni82

    Hi Scott, I filed for ch 13 in 2013. I had a mortgage included in it and the bk was discharged in 2014. I left the house, but my ex stayed and kept making payments. Now, I heard from the bank that she’s doing a loan modification. I had quit claimed the property to her. I applied for a mortgage, but the UW said that I need to prove that this mortgage is current and I’m not the one making payments. I paid a lawyer since I don’t have communication with my ex, but none seems to have an answer to this trouble. What do you recommend or have you on a similar case?
    Thanks.

  • Kong123

    Thoughts?

  • Szwarc  the bank selling your defaulted mortgage would not change the loan terms.  The waiting period before you can buy again will be dictated by the type of loan you are applying for.  FHA considers the BK, and the DIL two separate events, with 2 separate timelines.  If trying to buy using FHA financing, you have a 2 year wait from the discharge of the BK, and a 3 year wait form the deed in lieu of foreclosure (cash for keys).
    Conventional financing would consider the deed in lieu and BK as one event, if the mortgage was included, and discharged through the BK.  The waiting period for the BK will be used to determine your ability to buy again.  Conventional guidelines require a 4 year wait form the discharge of the BK before being eligible.

  • Szwarc

    Hi Scott. I had a fha loan that defaulted. In 2012 they sold the loan to another bank that was conventional. I filed bankruptcy in August 2013 and included this in it. I moved out but the bank didn’t take the property back until March 2014. I did a keys for cash with it. When does my waiting period of 3 years for fha start? Would it be when they sold it to the conventional loan? Or when that bank took the keys? How would I find out?

  • Kong123

    Hello. We had a chapter 7 discharged Oct 31, 2012. It was not foreclosed until April 2015. From what I understand, we will not be eligible for Fannie Mae/Freddie Mac until October 2016. For FHA, we will no be eligible until April 2018.

    Giving that information, how likely are we to actually secure a Fannie Mae conventional loan Nov 1, 2016? I’ve read many things and one of those is that even though we may be eligible by Fannie Mae, many lenders still have their own underwriting guidelines that make borrowers wait much longer? Is this accurate?

    We have re-established various lines of credit (we have no CC debt but open and unsecured CC’s), student loans and car loans to build our credit up. We have FICO scores of 700-720 depending on the agency and no negative activity aside from the chapter 7. We have already saved a chunk of funds for down payment and will continue to save. 

    Is there anything else we need to do or that I am missing that would keep us from qualifying in Nov of 2016? Thanks Scott.

  • Mae Russo Hi Bonnie, I replied to your email also.  I am not an attorney, and am not familiar with the laws in your State.  My educated opinion is no, they cannot attach liens to other properties you own.  I would suggest speaking with a real estate attorney.

  • Mae Russo

    Hi Scott, Need some information please.  I filed for bankruptcy in 2012 and is has been discharged, included was my mortgage to Chase Bank. I did continue to pay on the mortgage until October 2014, when I no longer could  handle the payments.

    Last August my brother died, and left me a large amount of money. With the funds I did purchase a retirement home and a home for investment. My question to you is can Chase put a lien on my properties? Or am I clear of obligation to them if they accept the Short Sale which now is in offer to them?

    Please let me know what your best advise is on how to proceed with this situation.

    Bonnie

  • TDH53855 I would hire a new attorney.  It is illegal for a creditor to attempt to collect a debt that has been discharged through bankruptcy.  Thank you for the update, and I’m sorry you have to go through this.  People break the law all the time, and unless you aggressively follow up, they will get away with it.  It’s disgusting that they can do this to people.

  • TDH53855

    Hi Scott, I wanted to give you an update on my situation with my  bankruptcy. You gave me some info a while ago on what to do. Long story short. I filed bankruptcy back in 2011 and my house was included.It was discharged in July of 2011. I left the home at that time which is almost 5 years ago. During the procedure of bankruptcy the mortgage was transferred from one bank to another. Now it shows up in my credit report as delinquent with payments. I spoke to my lawyer and he told me to report this to all three credit bureaus which I did months ago. He said I would receive a letter in about 30 days from the bureaus which I never did but I received 3 separate letters from the bank with the mortgage reporting that there is no error and they will not change the report. Again spoke to my lawyer and he said I am suppose to receive letters from the bureaus  not the bank. So I went back into all three reports on line and all three stating that it can stay on my credit report until October of 2017. So in the meantime I can’t  buy another home or even a  car with that on my report .So I don’t know what else can be done. I had a real tough time getting a hold of my lawyer and noticed he was not to thrilled when speaking to me so I take it that he is pretty much done helping me. I guess I will have to wait until Oct 2017 to do anything. Thanks for reading.Hopefully this can help others with what may happen if they fall into this situation.

  • krobephi that’s interesting about a Law Firm suggesting you transfer the home to them. I would be extremely cautious about that.  I am not a lawyer, so I have no idea of the legality of this, but it sounds extremely fishy to me.
    Whether you have a foreclosure, short sale, or deed in lieu on your title, it does not really mean anything in terms of qualifying for a new loan.  It’s not a “negative” that is considered in your ability to qualify for a new loan.
    It’s hard enough to get an underwriter to work through one of these deals already, the way you’re proposing, I’m not sure where I would even start, and I do a lot of these types of loans.
    Even if you do get your name removed from title, your timelines would be 4 years from the discharge of the bankruptcy to use conventional financing to buy your next home, or 3 years from the date that your name is removed from title for FHA financing.
    This can all be very confusing, and if you’re not asking the right questions, you’re getting the wrong answers.  My experience is that most people do not ask the right questions.
    What State are you trying to buy in?  If I cannot help you through this, I most likely know someone that can.
    The bottom line is that anything other than the bank foreclosing on your defaulted mortgage is going to be very difficult to find a lender that is willing, or able to get you into a new home.  Many lenders will tell you they can, only to find out later that they cannot.  Trust me, I get several calls a day from folks all over the country that this happens to.

  • krobephi

    I understand the Bank must agree to a Deed in Lieu. I am speaking about a Law Firm that has agree to accept a Quit Claim Deed. They plan to continue my Lawsuit against them. I am simply trying to avoid a Foreclosure of Title. I am not concerned about the deficiency balance as it would be absorbed by BK. I just don’t want my credit to be affected after working so hard to improve and want to be able to buy a new house next month. My home is $350k upside down.

  • krobephi Hi Phillip, you cannot simply quit claim the title back the bank without their permission.  That is actually a deed in lieu of foreclosure.  Your solutions are the same as what I laid out for Clifford86 below – sell it, short sell it, DIL, or wait for lender to foreclose.

  • krobephi

    Scott, I am in a similar situation. Ch 7 was discharged 2/26/14. This month, I will have reached 2 years. However, the bank still has not foreclose nor have I made any payments. I have tried to modify, offered Deed in Lieu and Short Sale. All were denied. I planned to do a Quit Claim Deed to remove my name form title. That said, technically Title has not been in my name fore more than 5 years. It is in my Trust. Because of this, does this meet the 2 years or more removed from title to qualify for FHA. My credit is 700+ and all is good now.

  • Clifford86

    Even though it was included in BK in 2010? So I should do the deed in lieu and get my name off it? Will I then be able to do a conventional. Thanks for help!

  • Clifford86 Yes, that is correct.  If the mortgage is in default, and you do not intend make the mortgage current, then you would not be able to buy until you’ve resolved this.
    There are 4 options for removing your name from title.
    1. If you have equity in the home, sell it.
    2. If you do not have equity, short sell it.
    3. Contact the lender and request a deed in lieu of foreclosure.
    4. Wait for the lender to foreclose on the home.
    The first 3 options will allow you to control the timelines, the 4th option has been in affect since you stopped making payments on the mortgage.  It is not uncommon for the lender to simply let the lien hang out there until values go up so the bank can recuperate more of their losses.

  • Clifford86

    I’m buying in florida. So are you saying because the house title is still in my name I wouldn’t be able to get a loan? How do I get the title out my name?

  • Clifford86 as long as the home is still in your name, the mortgage needs to be current before you could qualify for another mortgage.  If you do a deed in lieu, short sale, or foreclosure, it will not affect your credit, but may affect your timeline for buying in the future.
    Using conventional financing, you would be eligible for financing as soon as your name is removed from title.  Conventional guidelines say that as long as the mortgage was discharged in the BK, that the BK waiting period (4 years) is all that will be applied.
    FHA,VA, and USDA loans require a waiting period from the date your name is removed from title to the home.
    What State are you trying to buy in?  I have a competent network of lenders that understand these guidelines and can help once you’re in a position to buy.

  • Clifford86

    House was included in Chapter 7 bk  and discharged in 2010, I have since divorced remarried and now looking at a new loan and house. My income is back where it was before and credit is around 700. The lender on my house is wanting a deed in leu but I don’t want to hurt my chances of a new loan. Does this hurt or am I good? The house still hasn’t been foreclosed and I haven’t lived in it for 3 years. Never reaffirmed either.

  • JayNorton As long as the sale isn’t a short sale, you should be ok.  If you retain the property through the purchase process, you’re going to have to factor in your payment on the current home, as well as the payment on the new home.  Both payments will be used for determining your debt to income ratio.  Your options are: rent out the current home, sell the current home, retain the current home.  As soon as you close on your new home, you can do whatever you want with the current home.

  • JayNorton

    If there’s equity it isn’t much maybe a few thousand

  • JayNorton

    We are considering the usda at the end of Feb but if we get approved for that we would like to walk away from our current home but I’ve kept current in homes of an approval

  • JayNorton your options will depend on a couple of things, first, is there equity in the home?  If so, it’s possible to buy again 2 years from the BK discharge using FHA financing.  Other options would be VA financing 2 years from discharge, USDA financing 3 years from discharge, or Conventional financing 4 years from Discharge of the BK.
    If your home is upside down, or you go delinquent on the payments, and the result is a short sale or foreclosure, that changes the timelines.  For FHA, VA and USDA, that would start a new waiting period.  If buying using conventional financing, you can still buy in 4 years from the discharge of the BK.
    I know it’s kind of confusing, let me know if you have any other questions?

  • JayNorton

    Hello our bankruptcy will be discharged 3 years on february 26 2016 it was a chapter 7. mortgage was included in bankruptcy we have been paying and staying since then but really want to move on, have had house on the market for a bit with little interest, What options do we have if i cant get it sold for obtaining another mortgage im in pennsylvania, Thank you for your responce

  • lvelfehppy

    ScottSchang lvelfehppy Thank you Scott!  Will email you soon.

  • lvelfehppy You are correct, you would be eligible with both fannie mae, and FHA at this point.  The question that will come up is what are you intentions with the current residence?  Fannie mae will allow you to rent it out, and use 75% of the rents to offset the mortgage payment.  FHA will require that you have at least 25% equity in the home, or you have to qualify for both the new payment, and your current payment.
    I do have a lender that can help.  Can you send my an email to [email protected] and I will make an introduction?

  • lvelfehppy

    I filed Chapter 7 BK in 2009 and discharged in January 2010.  I DID NOT reaffirm my FHA mortgage, but have been living in the home and paying the mortgage on time since the BK.  I am ready to move into another home using a conventional loan.  I am located in Georgia.  From what I’ve read about the new Fannie Mae guidelines, it appears I can qualify for a conventional loan.  Has anyone had experience with the recent Fannie Mae guidelines or know of lenders who are up-to-date on the new guidelines?  I am located in Georgia.  A response would be helpful.  Thank you!

  • msvhernandez315 I have heard of homeowners in your situation having success with getting to a manager, or supervisor that will begin reporting again, but that is going to depend completely on the lender, and what their policy is.
    The sure way to get to start reporting is to refinance it.  I have a question though, why do you need it to report?  It does not reflect negatively on you if it does not appear.  
    The way that credit scores are calculated, mortgage debt is treated the same as any other installment loan.  If it shows up on your credit, and you pay it on time, it will not hurt.  It only matters in terms of an on-time payment, which is a large part of your score, but not having an account on your report will not affect your overall payment history.
    If you are ever in a situation that you need to show that you’ve made your payments on time, for instance if you are trying to refinance, you can very easily order a verification of mortgage payments from the bank and they will provide the payment history to the lender.
    Hope this helps?

  • msvhernandez315

    I filed BK in 2009 and my mortgage debt was discharged through my BK. I was able to save my home by modifying it and now have an affordable payment. I have been making the payments on time for the past six years but my lender is not reporting any payments on my credit report. After contacting them they informed me that I would need to reaffirm my mortgage debt through the BK courts, open up my old BK case and retain an attorney. I wish this was not the process as it can become costly. Has anyone else had any experience on how I can go about having my mortgage reflect on my credit report without having to go through the reaffirmation process?

  • tanametzger

    Yes it states I’m not responsible for either

  • ashleymd84 That means that the mortgage was included, and discharged in the BK.  Which is probably not a bad thing

  • ashleymd84

    We didn’t include the house but after checking our credit report a year later it had the mortgage listed as included in BK. Is that what you mean?

  • tanametzger Well, the late payments might affect your credit, but depending on how the divorce decree is written, you could avoid any challenges from the lender trying to say that you own the property.  Does the divorce decree specifically state that you are not responsible for the home, or the mortgage?

  • tanametzger

    I am in Wisconsin. ..so it’s true that he is saying technically there’s nothing I can do even if he reaffirmed the debt?and also I gave received one notice of him being late.i was hoping to buy a house this year…

  • tanametzger You would have to refinance to have your name removed from the mortgages.  You can record a Quit Claim deed to remove your name from title.  What State are you in?  I might know a lender that can look into this for you.

  • tanametzger

    Hi scott,my ex husband and I filed bankruptcy in 2010,he reaffirmed the house and 2nd mortgage and per our divorce decree he was supposed to remove me from both and he has not.do I have the right to go after him to get my name removed?

  • ashleymd84 That would absolutely be an option.  Both Fannie Mae conventional, and USDA will use the BK discharge date as the waiting period, and ignore the subsequent foreclosure, as long as the mortgage is discharged in the BK.  USDA waiting period is 3 years form the discharge of the BK, conventional is 4 years from the discharge.

  • ashleymd84

    We are in Maryland, but possibly looking into the state of Pennsylvania as well. My mom mentioned to us a about USDA loan. Would that be something we would have to wait longer for? I have never heard of that type of loan till she told me and I did some research. Thank you for responding quickly.

  • ashleymd84 Yes, you would be eligible to apply for conventional financing now.  What State are you in?  There are still many lenders that are not up to speed with these underwriting guidelines, and I have a pretty good network of lenders that can help.

  • ashleymd84

    Hi Scott,  My husband and I filed Chapter in 2010 but it was discharged in Jan 2011. We stayed in our house even though we didnt reaffirm our loan and it said included in BK.  Our house ended up developing major problems and we were upside down so we decided to walk away from it and it was foreclosed in October of 2014.  We have since built our credit up to 660 & 649 and all bills paid on time.  Will we be able to buy again soon? We were hoping to look this year, but nervous to apply. Thank you!

  • MrsAndrews Ok, I’m not even really sure where to start on this one.  You are getting a lot of really bad information from some really misinformed lenders.
    First thing first – I don’t know what any of the dates are for your specific situation, but I can tell you what the guidelines are.  If you are using FHA financing, there are 2 waiting periods.  There is a 2 year waiting period after the BK, then a 3 year waiting period from the date your name was removed from title…in your case, this was the foreclosure.  These waiting periods run concurrently, so you will measure from the longest waiting period.
    If you are using conventional financing, you have to have been off title for 36 months (3 years) before you would be eligible for the 97% conventional, but you can put as little as 5% down if the it’s been less than 3 years since the foreclosure.  Conventional financing updated it’s guidelines in August of 2014 to say that if your mortgage debt was included, and discharged in a BK, then you can use the waiting period for the BK, which is 4 years, and disregard any subsequent events, such as foreclosure.  There is nothing in fannie mae guidelines that says you must put 20% down.
    If your BK was discharged longer than 4 years ago, you would be eligible now.
    I can refer you to someone that understands the guidelines and can lend in Florida.  Shoot me an email to [email protected] and I will try to get you pointed in the right direction.
    Hope this helps?

  • MrsAndrews

    In the state of Florida. My name was on the title, but only because I was his spouse, as that is a requirement in the state of Florida. Lenders keep telling me that shouldn’t be a problem because that is required by state law. I was recently undergoing the pre-approval process with DHI Mortgage. I provided all of my BK paperwork and the note on the first home. I have the income, and my credit score is a 700. Yesterday, the loan officer called to tell me that I could not be approved because the UW said that because my HELOC was a mortgage debt on a home that went into foreclosure I would be required to wait the foreclosure waiting period. I told her that I don’t have a foreclosure on my credit report, and she basically said that even though my debts were discharged through BK it didn’t matter because the HELOC was a mortgage debt that I didn’t pay in full. Days prior to this she told me that I would probably be approved, but that the UW wanted to see the note from my husband’s foreclosure proving that I was not listed or financially responsible. This was for an FHA loan. I’ve been down this road five or six times since my BK was discharged. The last lender I spoke with regarding a conventional told me that I would need to make a 20% down payment. I asked about the Conventional 97, and was told because of my BK I wouldn’t qualify for less than 20% down.

  • MrsAndrews  There would not be a foreclosure on your credit report, because your debts were discharged through the BK 13.  Was your name on title to the home at the time of the foreclosure?  Under Fannie Mae guidelines, you should be eligible to buy using conventional financing two years after the discharge.  If using conventional financing, you can ignore the foreclosure date, and waiting period.
    What State are you trying to buy in?  I may be able to recommend a lender that can help.

  • MrsAndrews

    My husband and I filed Chapter 13 BK in 2010.  We surrendered our home in the BK.  We had a HELOC that became an unsecured debt in the BK.  The primary mortgage was in my husband’s name only.  The HELOC was in both our names.  Our BK was discharged in September 2013.  The home was later foreclosed on in February 2014, but not sold by the bank until July 2014.  I have had several lenders tell me that they could help me obtain a mortgage solely on my own, but I get half way through the process and the underwriter tells me that I have to wait the foreclosure waiting period even though I do not have a foreclosure on my credit report.  

    I am confused as where to go from here.  I have been two weeks out from closing on homes, and then it falls through because I am associated with this foreclosure that was my husband’s and that occurred post-BK.  When can I purchase a home?

  • Mlssrm Great question!  The date that the “clock starts” would depend on the type of financing you are trying to use to refinance your home.  If you are using conventional financing, you could be eligible to refinance in 4 years from the discharge date of the BK.
    If you are trying to use FHA financing to refinance the home, a 3 year waiting period begins from the date that your name came off title through foreclosure or short sale.
    Hope this helps?

  • Mlssrm

    Hi Scott, I files a chapter 7 BK that was discharged in 9/2012. My home was discharged in bankruptcy. I finally sold my home in 11/2014. Which date does the clock start for me to purchase again.

  • Kulitmo

    Filed chapter 7 in 2/2010, discharged 6/2010, included 3 mortgages for my old primary home (short sale in 2009 but we included it in 2/2010 BK 7) & new built primary home (current on my mortgage when BK filed in 2010). We continue to own our brand new home without re-affirming debt. On 9/2010, mortgage went up & not able to pay it due to job loss. We tried to modify & worked with lender for 11 months but was denied modification bec. we did not re-affirm our mortgage. We hired a lawyer in 11/2011 & battled with them. Best decision to short sale the house in 2014 & exit graciously. Though we can walk away bec. it was originally included in our BK in 2010, it was still better for us to short sale the house. We tried to buy another house last year, got pre-approved by 3 lenders (all of them were disclosed about our situation). We were turned down by fha 3 weeks before our closing bec. the underwriter was looking for a re-affirmation letter and I told the loan officer that we did not re-affirm the debt in the first place. Imagine the trouble and pains that cost us, hoping to buy another home because these 3 lenders pre-approved us in spite of disclosing everything to them. Some loan officers or mortgage companies doesn’t fully understand the underwriting process. Some of these underwriters are also confused of interpreting the regulations. We, the buyer are the one whose paying the price for their costly mistake. It was a terrible experience for me and my family. 3 weeks before our closing, we were forced to moved out and look for a new place. Spend money for appraisal and home inspection, wasted time and emotional stressed. Not sure if I’m willing to put us through on this situation again. BK discharged more than 5 yrs ago, house that was short sale almost 2 yrs ago was included in BK7, continued to own the house after BK discharged in 6/2010 & defaulted mortgage starting 9/2010 till sold in 2014. Can we really get a mortgage now? Our lease is up in 4 months & it’s best for us to buy a house.

  • runmake 100 Being on title, and being on the mortgage are two completely different things.  When the foreclosure occurs, it will not be reported on your credit report, because the mortgage was discharged through the BK.  Because you quit claimed off title, you should not have to deal with the Foreclosure waiting period.  Using Conventional financing, you would be eligible to buy in 4 years from the discharge date of the BK.  You might be eligible for FHA now (2 years after BK).

  • runmake 100

    Hi Scott, I filed Chapter 7 and got my
    discharge on back June 2013.My sister and I bought the home together back in
    2006. On Aug 2013 I did a quick claim deed to turn the house solely over to
    her. We both have been living in the home without paying the mortgage for the
    past 2 years.. We finally got a letter from Ocwen with their intention to start
    the process of foreclosure. The letter was addressed to myself and my sister .
    Since I completed the quick claim deed should they still have my name
    listed on the title and am I responsible in any way for this home.. I am
    looking to purchase a home within the next 1-2 years

  • inneedofhelp  Yes, the new loan company has to honor the BK.  BK does not affect ownership at all, it’s really a credit preservation, and tax law.  You are still the owner of the home, you’re just not responsible for the mortgage.
    As long as you’re on title, and if the mortgage payments are behind, it can prevent you from buying or refinancing in the future.  While you are not responsible for the mortgage, you are the owner of a home that is in default, which is the challenge you might encounter if you try to buy in the future.

  • inneedofhelp

    So the new loan company still needs to honor the Bk of the original loan? The divorce papers say we are
    both owners till sold.

  • inneedofhelp If you filed BK, and discharged the mortgage, then the lender cannot come after you, or report the late payments on your credit report.  Depending on how your divorce decree reads, you may still be responsible for the home, just not the mortgage.  Did you quit claim off title to the home through the divorce?

  • inneedofhelp

    after the divorce I filed bankruptcy and the mortgage was discharged. now my ex has not made any payments for 9 months (he lives in the house) the mortgage co has sold the loan to a new mortgage co.  this is my question…what about the discharge in the bankruptcy am I still clear or can the new loan co come after me?

  • daytha22

    Ok so I am asking for a friend.When him and his wife divorced in 2009 she stayed in the home after he left. he filed for ch 13 bankruptcy which was discharged in 2013. There is a 2 yr waiting period to buy a home after bankruptcy so his 2 yrs are up. After doing some research he finds his name is still attached to the home I had with his ex wife, which is now in foreclosure. he was getting foreclosure letters from the bank a couple months ago and called his bankruptcy atty who said he was clear and he can throw those papers away. According to the bank he am not. So he would not be able to buy another home for about another 3-7 years.He says he could do a deed in lieu but then hes still waiting another 2 yrs which is better I guess but  doesn’t trust the bank Or he isnt sure if a quit claim would help at this point

  • LynnWalker1 Hi Ramona, I am not sure what the circumstances are around your situation, I would think that the company sending you your mortgage statements would be the one that has the legal right to demand payment?  This probably isn’t something that I would be able to help with.

  • LynnWalker1

    First American Loss Mitigation Title Services just sent me a property information report….at the end it says that “The Mortgage of Record is not in Your Bank’s Name” What does this mean….Does it mean that when Wells Fargo Bought out World Savings, that it was never recorded that Wells Fargo is the holder of the Deed of Trust or Title? Who has the legal right to demand pmt? Thank you, Ramona Walker

  • FLsurfer

    Hello Scott,

    We filed Chap 7 in 2011 and was discharged November 2011. We included an FHA backed, Chase Bank mortgage in the Chap7. Trustee sale of the home was May, 2012 and property appraiser websites shows home was sold June, 2012. Fast forward 3.5 years we apply for and get approved for another mortgage, fha backed. We are supposed to close next week and the underwriter doing final approval dropped the CAIVRS bomb on us. Apparently Chase, has NEVER filed the FHA insurance claim which has now brought the process to a screeching halt. At the earliest CAIVRS is saying it wouldn’t clear for another 3 years if they paid this month, putting us out 6.5 years to buy another home. 

    Do we have any other options other than waiting until Nov2016 and qualify for a conventional? 

    Thank You for your input!

  • Looking for answers That does not sound accurate to me.  If the foreclosure occurred prior to discharge of the BK, then that would be accurate. Using fannie mae guidelines, you should be eligible to buy.  
    What State are you buying in?

  • Looking for answers

    Scott

    I has a chapter 7 that was discharged in 6/2011 an in the BK I had an investment property included and discharged in the BK.  The property was finally foreclosed on in 6/2013. I  just turned down by a lender for a new purchase loan because they said that even know the property was included and  discharged in the BK that because the foreclosure was initiated before my BK filing that it does not fit under Fannie Mae guidelines???  I have re-established credit (mid 700) and was putting down 20%  does this seem right???

  • Looking for answers

    FYI…I had an investment property included in my chapter 7 BK and discharged on 6/2011. I have re-established credit and scores in mid 700, I was just turned down for a new purchased loan because the lender said that because the foreclosure was initiated before I filed for my BK-even know it was included and discharges that it does not qualify Fannie Mae???? Does this seem right under the Fannie Mae guildelines

  • TDH53855

    ScottSchang TDH53855  Thanks for the quick reply. I appreciate the info. I will be calling the lender Monday. Thanks again,Todd

  • esherry That is absolutely correct – as long as the mortgage was discharged through the BK, and the BK is discharged for 4 years, the lender may use the BK discharge date.  I have found this guideline to cover short sale, or deed in lieu on a mortgage discharged in BK, even though that is not addressed in the Fannie Mae guidelines.

  • esherry

    From what I understand, and from what is printed in the Fannie Mae website, the greater of either the bankruptcy or foreclosure is used when purchasing a new house. In my case- we filed bk 4 years ago Feb 2016. Our home we owned and walked away from is set to be auctioned off Jan 2016. Our lender has concluded that we can close on any home Mar. 2016, 4 years after the bankruptcy. The foreclosure doesn’t matter at this point.
    It says “Foreclosure and Bankruptcy on the same mortgage:
    If a mortgage debt was discharged through a bankruptcy, the bk waiting periods may be applied if the lender obtains the appropriate documentation to verify that the mortgage obligation was discharged in the bk. Otherwise, the greater of the applicable bk or fc waiting periods must be applied”.

  • TDH53855 Hi Todd, it sounds like you’re still on title to that home?  I also assume that you haven’t make payments on the mortgage since the bK? If you are trying to qualify for a new mortgage, you have to get your name off title for that home included in BK.
    The first step would be to call the lender, and try to do a deed in lieu of foreclosure.  If they are uncooperative, the next step would be to list it as a short sale and allow a real estate agent to work with the bank.
    Under conventional guidelines, you would be eligible to buy again 4 years from the discharge of the BK, as long as your name is off title.

  • TDH53855

    Hi Scott, just came across this site while trying to search for help in the situation I’m in. I filed chp. 7 bankruptcy in early 2011 and was discharged July of 2011.My house was included. After 4.5 years I have my credit in fair shape .Would be better but the bank with the mortgage  is still reporting delinquent on my credit report. They still send me a monthly statement. Haven’t been in house since 2011. I’m trying to buy a new home but this issue is holding me back from anyone being able to help me with a loan.Not sure if there is anything I can do about this. Any advice would be greatly appreciated. Thank you , Todd

  • mlcolorado Typically, there is a waiting period required after the discharge of the BK.  Are you saying that your waiting period is up on 12-4-15?  If so, any lender should be able to help.  You would be eligible for Conventional financing 4 years from the discharged date of your BK, with 5% down.

  • mlcolorado

    Hi we filed for chp. 7 bankruptcy and our home was included and foreclosed. We will be at our designated date of discharge on 12-4-15. We are looking to get financed for a loan in colorado hopefully with no more than 5% down. Is this possible and through who?

  • fanelli19 Great question.  The answer is yes if you plan to keep this home.  If you rent your current home, you can use 75% of the rents to offset the current mortgage payments.  If you do not rent, you will have to count 100% of the payment in your debt to income ratios

  • fanelli19

    Question for you.  I had my chapter 7 discharged in 2010.  I did not reaffirm my 1st or 2nd mortgage on my home, but did continue to live in the house and made all payments on time even to this date.  If I want to purchase a new home, will the payments on these 1st and 2nd mortgages be a part of my debt ratios?  They are no longer reporting on my credit report.  Thank you.

  • chr18f

    Good afternoon Scott,

    Question for you, I had my chapter 7 discharged in 2/12.  I did not reaffirm my mortgage but did continue to live in the house and make payments until 2/15.  The house just sold today at auction.  At what point am I eligible to try and get financing on a home either FHA or conventional?

  • stev11x Good morning – This a better question for your BK attorney, and the answer should be NO, they cannot do that.  If the divorce decree clearly states that you are not responsible for the mortgage, that payment would never be included in your DTI.  It definitely should not be reporting though.  Your Attorney may have to send them a letter and have them remove it from your credit.
    Hope this helps?

  • stev11x

    Hello Scott

    So I filed chapter 7 over 3 years ago after divorce I put the deed in my ex wife’s name cause she wanted to keep the house My credit was getting better I am newly married I have just purchased a new home and all of a sudden there is a home loan for that house on my credit now it shows as I own 2 homes my score dropped 45 points cause the history wasn’t good from my ex wife and my debt to income is off the charts can that mortgage company do that after the discharge it seems that bank of America sold the loan after my discharge and this new company is reporting it to the credit bureau please help

  • 4boosh

    hi. my wife and I filed for bankruptcy and it was discharged in 2010. we did not reaffirm our mortgage but have continued to make our payments on time ever since. until now. she lost her job 6 months ago and due to various health issues amongst other things, hasn’t found a decent job yet. a couple months back when it was really starting to hit the fan with money issues, I went to my mortgage company and started the ball rolling on a modification. I was told my best bet to qualify for one of the many programs available was to be current on my loan. so we did that. I did whatever I had to on the right side of the law to make sure I made my last two payments and before they would be considered late. well, I just got a letter from my lender saying I was denied for each and every program they offered and the reason listed for each was that my default didn’t seem imminent due to me never being late with my payments. wtf? I did what I was told and made my payments and know im being penalized for it? so basically they are saying I would have been better off not making my September and October payments and maybe then not only would I have qualified for a modification but id actually have some money in my bank account too. I wrote them a letter to appeal their decision but I don’t expect it to change their verdict, it was more just to give them a piece of my mind. so now im at the point where I cant make Novembers payment and its clear my lender has no interest in helping our family keep our house. its becoming clear that we will lose our home. my question is, because of the bankruptcy, should I still look into a short sale or deed in lieu? I know those would be less of a dent to my credit but my credit is already a mess and to be honest I don’t see us trying to buy a house anytime soon anyway. so if that isn’t a concern to me, would it make sense to just stay in the home without making payments til they kick us out? I kinda feel weird doing that, even saying it kinda bothers me. but after 10 years in this house, the bank made tons of money off me and I could care less about screwing them. im just trying to do the right thing for my wife and son. we are resigned to the fact that we are probably going to go back to apartment living after 10 years of home ownership but as much as that sucks, im kinda looking forward to saving some money there. our mortgage was a difficult nut every month when we had two incomes and know its just impossible. so do you think I should just stay in the house and wait for the bank to throw us out and then we can just move to an apartment in town? and is new jersey still as backed up now with foreclosures as they were years ago? how long would you estimate id have if my first missed payment is this month, November 2015? and is there any legal or financial hurdles that I am missing or that I should be aware of? thank you in advance for any help you can give me with these questions. you do a great service to people like me that don’t have the resources to find the right answers to our problems.

  • yunikk77 Are you sure it was a Chapter 13?  Chapter 13 is typically a structured repayment plan, and is rarely discharged in less than 5 years.  If your name is on the mortgage, you are still responsible for the mortgage, you are just protected against any collection attempts, or negative marks on your credit.  The waiting period for the BK is also going to come into play.  
    Hope this helps?

  • yunikk77

    Hi Scott, I filed for Ch.13 bankruptcy in 2013 and was discharged in 2014.  The main reason for the BK was a joint mortgage/property with my unmarried ex couple.  I left this property in 2011 and quit claimed this property in 2014.  My ex kept on making the mortgage payments and the bank told me they are working on a modification.  My question for them was “how they are still holding me responsible for the loan when I got the discharge through BK? and why is it that I am responsible for it, and I wasn’t consulted for the loan modification after all?  I’ve been told that as long as my name is on this mortgage, I would not be able to qualify to buy another house.   Thanks for your help.

  • ms confused Thank you for your question, however, this is a question for a bankruptcy attorney. I am a mortgage lender that specializes in guidelines pertaining to qualifying for a home mortgage after financial hardship.

  • ms confused

    We filed chapter 13 Dec 2011, which included our mortgage. We thought we had to pay or be in the ch 13 for 60 month (Dec 2016). We just received information that we are ready to be discarded after completed the credit counseling and signing a form. How do we know if our mortgage will be paid off? On our most recent semi-annual statement we receive from the trustee it has ‘Continuing’ in the Unpaid Balance column for our mortgage. After reading the information above and comments below, will our home be in foreclosure when we are discharged? Thanks for your help!

  • Ms Informed You may have to show a hardship to qualify for a short sale or deed in lieu of foreclosure.  If you are already delinquent with your payments, then the hardship is that you do not have the money to bring the loan current, therefore foreclosure is imminent.

  • Ms Informed

    Thank you for thr prompt response!….I guess my follow up question is do i need to provide Chase with any personal income information or even have to “qualify” to do a deed i lieu or short sale?

  • Nicolemh24 Back to work requires that your income dropped more than 20% over a minimum 6 month period due to an event beyond your control.  This is a viable program, and requires a lot of paperwork as evidence of the events leading up to the hardship.  It is quite strict, and paperwork heavy, but it might be an option if you think you meet that criteria?

  • Nicolemh24 There are 3 ways to have the lien removed.  Foreclosure, short sale or deed in lieu of foreclosure.  Short Sale and Deed in Lieu of Foreclosure are the only options that will give you even a little control over the timeline for getting the lien removed.
    I would contact the lender to discuss your options.  If they are unresponsive, contact a local Real Estate agent that specializes in short sales with the lender that holds your mortgage.  The agent has experience negotiation a short sale with the bank.  This will cost you nothing.
    Hope this helps?

  • Nicolemh24

    Also is the back to work program efficient? Wondering if we fit in that category.

  • Nicolemh24

    Ok that’s what I thought. How do I get it removed? Do I have to contact the bank or the credit bureau?

  • Ms Informed If the mortgage was discharged through Bankruptcy, the lender is not legally allowed to report any subsequent default.  However, the short sale, deed in lieu, or foreclosure is a matter of public record, and could prevent you from buying or refinancing until certain time periods have passed.  To answer your question though, no, it is not supposed to report on your credit.

  • Ms Informed

    We filed bankruptcy and were discharged from our mortgage over 10yrs ago. Since then the dept and bankruptcy have fallen off of our credit reports and we have purchased a new home. We stopped paying on the non reaffirmed mortgage in August of 2014 and now want to short sell or do deed in lieu with the old house, however, i do not want to have to fill out forms and submit personal documents to Chase. We have some flippers who are interested in the vacant property. What do you suggest? If they foreclose, are they able to post it to our credit report even though the discharged mortgage and bankruptcy no longer show on our reports? They have not started any foreclosure process as of yet.

  • Nicolemh24 Yes, they can absolutely do this.  Bankruptcy does not remove the lien from the home, it only provides you with taxation protection, and does not allow the creditor to “double ding” you on your credit report for any subsequent default on the mortgage.  The removal of the lien is a public record, not a credit issue.  The waiting period to be able to buy again will depend on the type of financing you are trying to qualify for.
    If you are trying to buy using Conventional financing (as low as 5% down payment) is 4 years from the discharge date on the BK – this would put you at April 2016.  FHA financing requires a 3 year wait from the foreclosure (short sale or deed in lieu as well), which would put you at December 2016.  If you have served in the military, VA financing allows you to buy in as little as 2 years from the foreclosure date.  If you are buying in an area that is eligible for USDA financing, you could be eligible in 3 years form the discharge date of the BK, which puts you at April 2015.
    The bigger crime here is that you have a lender that did not understand the qualifying guidelines.  You never should have been led to believe that you were eligible for financing now, and they wasted your time.  I am sorry there are still unprofessional people out there, I hope you can quickly recover and be in a position to purchase again very soon.

  • Nicolemh24

    We filed for bankruptcy in November of 2011 discharged April of 2012. We were told to move out and they put a lock on our door. It wasn’t until December of 2013 that the home foreclosed. We hadn’t lived there for years and we’re told it was included in our bankruptcy. It appears now on our credit as a zero balance. We are trying to buy another home and have been preapproved but had to stop the pricess because we wete told we can not qualify because of the foreclosure date. I’m utterly confused. Can they do this even if it was shown as zero balance. I had no clue it was in our name still. Please help.

  • esherry

    ScottSchang esherry yes, we have, they sent us paperwork for a deed-in-lieu, we filled it out and they have not responded (sent by email per their instructions 9/07/15)

  • esherry

    ScottSchang esherry LindseyLamb I am getting confused as to who I am talking too…lol.

  • esherry

    ScottSchang esherry LindseyLamb oh- you said you “had gone rounds with them and now SLS…” in your original post, I thought you were referring to the loan company- SLS (specialized loan servicing or services).

  • esherry ScottSchang Deed in lieu of foreclosure, or a short sale are the only options that give you any control over getting your name removed.  I would start by contacting the loss mitigation department of your lender.

  • esherry LindseyLamb I’m sorry, what is SLS?  It is not uncommon for homes to sit years without making any payments.  The only way to really force the issue is to contact the lender, and either negotiate a deed in lieu of foreclosure, or find a local Real Estate Agent that specializes in short sales with your lender.

  • esherry

    ScottSchang esherry how do we get our name removed from the title- the million dollar question!?

  • esherry

    LindseyLamb we have SLS also, we have not made a payment since 2008. We haven’t lived in the property since 2009. It is vacant.

  • esherry You will have to have your name removed from title before being eligible to purchase using any program.  You may also be able to try a short sale?  Using conventional financing, you are eligible to buy 4 years from the discharge of the BK, and you can ignore the subsequent loss of the home through DIL, short sale, or foreclosure.  If using FHA financing, the waiting period is 3 years from the date your name is removed from title.
    Hope this helps?

  • esherry

    We filed bankruptcy in 2011 and it was discharged 02/12. It included our mortgage. Here we are, 3 1/2 years later, the home has not foreclosed (we stopped making payments in 2008) and we are wanting to move on and buy a new home. How does the rules apply to this situation now? One lender told us we had a waiting period of 4 years from the date of FORECLOSURE and that hasn’t EVEN happened yet. We have tried the deed-in-lieu procedure and sent in the paperwork, however they have not responded. How do we find a lender willing to do the work it takes to get us in a home?

  • hebrown2005

    I am going bonkers worrying about my underwriters. Will try to make this short as possible. Basically, in 2009 me and hubby filed BR7, we kept the house. it was not reaffirmed. me and hubby divorced 1.5 years ago. he kept the house. The mortgage does not show up on my credit. He has not been able to refi to get it out of my name. I went ahead and applied for a FHA loan and qualified for the down payment assistance since Im on disability. I did not volunteer this info to the loan officer because frankly, i didnt know until credit was pulled that my mortgage wasnt showing up. I have divorce decree stating he is responsible for that property. I doubt he has been making payments on time, but again, it doesnt show on my credit report. I received preapproval from the automated underwriters, had house inspection last week.. house appraisel is tomorrow. The papers are now in underwriters hands.. I am a basket case because my lease where im renting is up at the end of october. I am scheduled to close October 30th.. This date was given before final papers were sent to underwriters. My credit averages 680-656-670.. The loan at the other house that my hubby has, is a FHA.. please please tell me if ive made it this far, i will make it to close?? I found some info on FHA loans and it does say they are lenient with individuals and will allow a divorcee to obtain a second FHA loan as long as its my primary residence… HELP.. I am stressing so bad i dont get sleep.. If underwriting denies me, im totally screwed and nowhere to go because ive given my lanlord my notice and they have tenants moving.. Please tell me it will be okay??

  • khpisces ScottSchang  I am a mortgage professional familiar with the guidelines for when you can buy a home after a hardship.  I could not provide reliable feedback about your situation.  I know that you cannot just file a quitclaim and be free from the property.  And, if your ex signed a deed in lieu of foreclosure, then the bank should own the home, which means you would not have anything to quit claim from.  
    I think you need to speak with a real estate attorney at this point to try to figure out how to untangle this mess.
    Sorry I can not be of greater help.

  • khpisces

    ScottSchang khpisces  If they are wanting to hold me liable since my name is on the loan then wouldn’t they need my signature to proceed with a deed in lieu of foreclosure?

  • khpisces

    ScottSchang khpisces  No I filed a quitclaim to divest myself of any interest in the property. In order for me to obtain a new FHA loan I could not have any FHA finance properties in my name nor have any FHA loans in order to quality under the FHA rules so I was told.

    My ex signed a deed in lieu of foreclosure with the new lender.

  • khpisces ScottSchang You filed a quitclaim for what?  Are you trying to quitclaim the property back to the lender?  If so, that doesn’t work – it has to be a mutual exchange.

  • khpisces

    ScottSchang khpisces 

    In the state of Georgia. I have spoken with FHA twice and they seem clueless but I have sent them my documentation and waiting a response.

  • khpisces This is a difficult one!  Were you removed from title to the home?  There might be an opportunity to fight FHA on this, you can do this by calling the FHA resource center. Contact number: Toll free: (800) CALL-FHA or (800) 225-5342.  Your lender can also attempt to do this for you.  This is the difficult route – the easy route, is to refinance your home into a conventional mortgage, and eliminate the permanent mortgage insurance feature of your FHA loan.
    What State are you trying to refinance in?

  • khpisces

    Hello Scott. I was divorced in 2006 and my ex-husband was awarded the property (FHA). He never refinanced the property out of my name so I filed a Ch 7 in 2008, purchased a new home under FHA in 2011. Last month I decided to refinance my home and my lender has advised me that an alert came up in the FHA CAIVRS system saying I had defaulted on a government loan (FHA, VA, etc.) and that I would have to wait 3 years from the date an insurance claim was paid to the lender before I could refinance under FHA. Being that my ex-husband never refinanced the house he let the property go in late 2013 early 2014 and apparently the new company that assumed the mortgage reported to FHA that we defaulted on a loan. Are they able to legally report me to FHA since I was not the owner and had filed a CH 7 in bankruptcy?

  • lpolancolopez

    ScottSchang lpolancolopez  oh wow! thanks for the quick response!

    I didn’t know conventional was only 3-5%!! we are in DE.

    So, I must have 25% equity in my current house? Im sure I don’t. I would if I didn’t have the heloc. and yes, the current loan is fha. So if we went conventional, is there as big of an issue? also, I need to stop making payments in order to have the 5% down (or can that come from the seller)?

  • lpolancolopez There are a lot of moving parts to this/these questions!  Let’s start with husband trying to qualify on his own.  If he is using FHA financing, the non-borrowing spouse (you) liabilities must be included in the qualifying debt to income ratios.  However, your credit history cannot be used as a factor for approval, or decline of mortgage.
    As long as your payment have been made on time, you can be on the loan with your husband 2 years from the discharge date of the BK.  However, you must have 25% equity in the home. or you have to qualify for both payments.  If your current home has an FHA loan, and the new home will have an FHA loan, that can cause further challenges.
    Since your mortgage was discharged through BK, a foreclosure is not reported on your credit report.  It is a matter of public record, and will be considered when looking at waiting periods before you are eligible to buy, but it will not “look bad”.
    Down payment requirements are 3.5% for FHA, and as low as 3-5% for Conventional, not 20%.
    Hope this helps?
    P.S. What State are you buying in?

  • lpolancolopez

    Hi Scott! My Ch 7 BK was discharged 07/2013. I’m still in my house, making regular payments – my mortgage & heloc weren’t reaffirmed. My husband was not part of the BK – he has good credit. My BK debt was from a prior marriage and my house is in my name only. When he goes for a mortgage in his name only, what will the lenders ask/want to see regarding me (even though not on the loan)? if I walk away from my house wont that look bad…or if I haven’t been foreclosed on, what will they need to know?

  • rbasiliere63

    Thank you for all your information, Scott! Love your site! Very educational!

  • rbasiliere63 Hi Robin, if you included the mortgage in your BK, you would not get a 1099.  The HUD1 is the closing statement from the escrow company showing the settlement of the short sale.  What State are you trying to buy in?  It sounds like you’re working with someone that might not be familiar with these guidelines.

  • rbasiliere63

    Hi Scott, If a short sale was done would you still receive a 1099A? What if OCWEN lost it during the GMAC buyout they claim? What is a HUD1 form our lender is now asking for? I’m working with OCWEN right now as we speak. We did a Short Sale through our BK attorney back in 4/1/2011. Chapter 7 Discharge 01/03/2011. They report on our credit as a foreclosure not short sale. Our lender will not accept their letter to take off Foreclosure and leave only BK Chapter 7, payment 0 balance accepted in full because it’s still a Foreclosure according to them and therefore we need to wait 7 years instead of the 4 which will soon be 5 yrs to obtain this loan. Thanks, Robin

  • Mark9999

    I”m not a lawyer or CPA but do know the following: If you include rental property in a BK, the IRS will ‘recapture’ your depreciation and, possibly, other rental deductions. The idea is a BK shouldn’t provide a means to avoid paying taxes on the profit earned when selling rental property (either though a short sale or a bank foreclosure sale). What happens is the IRS will add back these recaptured monies to the sale price of the property. In many cases including mine, this didn’t matter because the final bank sales price including the recaptured amount was still less than the mortgage amount owed. FYI, I owned the property for a number of years so the recaptured amount wasn’t small.

  • Mark9999

    I’m not a tax lawyer or CPA but do know that if you declare rental properties in a BK, the IRS will recapture all of your depreciation and, possibly, other deductions on the properties by adding these amounts back to the value of the properties. The idea is that any actual profit you make on sale of the rental property  (either through a short sale or a bank foreclosure sale) should be taxed. In my case, even adding the recaptured monies to the sale price didn’t come close to the amount owed on the mortgages – I was still underwater. Therefore, no tax was due.

    I’m not sure if this applies to you but thought my experience may be of some help.

  • rentalproperetydistress While I appreciate that you trust that I can contribute a meaningful opinion on your situation, I am not an attorney or a CPA, so there is little I can offer in terms of actual advice, or guidance.
    I am happy to offer my educated perspective having dealt with some of these situations myself, and through the process of helping many buyers purchase homes after financial hardship.
    I have 17 years experience in the mortgage and real estate industry, and my expertise lies mostly on the lending side, most recently on the issue of being eligible to buy after a financial hardship.
    I am not sure the question or either short sale or bankruptcy is limited to one or the other.  Short selling all of those properties would cause taxable events, which you already know, by treating the loss as income, and being taxed on it.
    Including these properties in a Chapter 7 bankruptcy would relieve you of that tax liability through the discharge of the mortgage debt, however, you will still retain ownership of all of the homes.  BK will not remove the liens on any of the homes.
    Based on your extensive investment portfolio, I would imagine you would be interested in the cleanest method of dealing with these underwater assets so that you can be in a position to purchase again in the near future?
    While I cannot comment on the tax liability, or legal impact of BK, or short sale on your LLC, I can tell you that you would be eligible to purchase using traditional, Conventional financing in as little as 4 years from the discharge of the bankruptcy, as long the the liens are removed from your name, or the mortgages are current on the discharged mortgages.  You can use FHA financing to purchase a primary residence in as little as 3 years from the date your name is removed from the title on the last property in default.
    Hope this is a little helpful?

  • rentalproperetydistress

    Debating whether to Short Sale all 7 properties or file chapter 7 ???  It appears the biggest hurdle will be getting out from under the 1099-C’s that would come from the lender and therefor increase my income and taxes due by a large portion.  The 2nd big ? is DEPRECIATION….. my CPA has been depreciating these properties for the last 10 years so even if I short sale them I will have these taxes to pay.  So confused.  Do you have any idea which may be the least painful and least expense. 

    My two personal properties, the first one is in the process of a Short Sale, scheduled to close by Oct. 1 that will leave me with the huge 1099-C.  The 2nd, I have about a 10,000 equity but it would take that to pay a realtor and then there is still the issue of the Depreciation thats been taken over the last 10 years.  

    I considered BK chp 7 but 5 of the properties are in an LLC with my Mother and I dont want this to affect her in anyway.  3 of the 5 properties have mortgages in my deceased fathers name.  Actually each one is worth just about what we owe but that leaves no room to pay realtor commissions and the taxes that will result from the depreciated value.  1 property is in my Mom’s name, it is only worth about 10,000 and we owe 40,000.  the last one is in my name only worth about 20,000 but owe 58,000.

    If I  Short Sale all the properties or maybe deed in lieu with lenders do you have any idea if there is any way to reduce the Tax Gains caused by depreciating the rental properties or can I pay it back to the IRS over an extended period of time.  I have never been late on any of mortgages or any debts but I seem to be digging my self a bigger hole with the depreciation that I never knew existed until a month ago when I callled my  to discuss the Short Sale of what use to be my personal home (now have been renting for 7 years).  

    HELP???

  • Lucy1012 Hi Lucy, this is a better question for your bankruptcy attorney.  If you included the 2nd mortgage in your BK, then you should have no legal liability whether the lien was released or not.

  • Lucy1012

    I filed chapter 7 bankruptcy and was granted a discharge in 2009. I have continued to pay my first mortgage, and live in the house, but not a 2nd mortgage home equity loan. I now have a buyer, and was able to get the lien released  on the 2nd mortgage by lien holder, but there was verbiage in the release to the effect that the lien is released, but not the obligation to pay the debt.  Am I still liable for this debt even though it was discharged? After releasing the lien, do they have any legal recourse to collect?

  • LindseyLamb thank you for your question – this is an easy one!  First, your name either has to be off title, or the mortgage needs to be current before you could buy using either program.
    If the bank is not foreclosing, I would attempt a deed in lieu of foreclosure first, or a short sale first, which might lead to a DIL if there are no buyers.
    Your quickest path to homeownership will be using conventional financing.  You would be eligible to buy using conventional financing as soon as your name is removed from title of the current home.  The conventional guideline allows you to use the 4 year waiting period after BK, and ignore any subsequent foreclosure, short sale or DIL.
    FHA would require a 3 year wait from the date your name is removed from title, regardless of the method.
    Hope this helps?

  • LindseyLamb

    Hi Scott,
    We are in Washington state and filed BK in 2009, our mortgage was discharged in that the same year and we did not reaffirm the debt. The debt was sold to BOA and we quit making payments in 2011 and have gone rounds with them and now SLS to get a loan modification to keep the house but now we are so far upside down I would rather walk away. However they still have NOT tried to foreclose on us and it’s been 4 years without a payment!! So we have our credit cleaned up and a down payment stashed, can we buy another house now, do we need our current home, although discharged, out of our name to do so? And if so how long after a short sale or deed in leui of foreclosure do we have to wait if we want to get an FHA loan versus conventional? Thanks!

  • megamom6 ScottSchang You can certainly buy another home, the question is just when.  Using conventional financing, you can buy 4 years from the discharge of the BK, which sounds like you’re eligible now.  
    Only problem is going to be, what do you do with the duplex.  If you let it go into default, you have to wait until your name is off title. If you can rent it out, you have to be able to qualify for the new home, and anything that’s left over that rents on the duplex doesn’t cover.
    Does that make sense?

  • megamom6

    ScottSchang megamom6 State is WI…….I just want out of my duplex and into a single family home but am unsure how the home discharged in bankruptcy affects me trying to get another home loan…..

    If I let this current home go into foreclosure does that hurt me trying to get a new home loan at all? I understand I am still liable for the home and as previously stated I make payments every month and pay the taxes every year. I currently live in the lower half. I was just thinking of renting it out but want to know what would happen if I changed my mind. 

    I am sure I have less than 30% equity in my home since the housing market tanked and my house is not nearly close to what it was worth when I bought it 11 years ago.

  • megamom6 Bankruptcy will relieve you of the mortgage liability, but you are still the owner of the home, and the lien from the mortgage is still against your home.  As long as you are still the owner of the home, you are responsible for either making those payments, or not making the payments, which will cause the Lender to foreclose on the home.

    How you would buy a new home has everything to do with what your options are.

    If you are trying keep your current home, and rent it out, you may do so using conventional financing, 4 years from the discharge of the bankruptcy.

    If you are trying to buy your new home using FHA financing, you have qualify for both payments on both homes, if you have less than 30% equity in the home.

    Hope this helps?

    P.S. What State are you trying to buy in?

  • megamom6

    Claimed bankruptcy and was discharged in June, 2010. I own a duplex bought in 2004, it was discharged through bankruptcy unknown to me til a year or so later, yes I was stupid. I have made payments every month and am always on time. I want to buy a new house. How can I go about doing so with this house loan showing up on my credit report as being included in bankruptcy?

    Thank you for your help in advance.

  • HappyEx Just read over the paperwork carefully.  You have no ownership interest in the home, but you are still on the loan, even though it’s been discharged.  I cannot think of any liability you would incur from helping out here, but you might want to run it by an attorney to determine if it opens you up to any liability.  Hope this helps?

  • HappyEx

    My ex-wife and I have been divorced for 4 years.  I signed off the deed our home to her 5 years ago (before we even divorced).  We both filed chapter 7 this past year and both were discharged.  She is now trying to do a died in lieu to get rid of the property and is asking me to file disclosure to help her move things along.  Since I am not on the deed, why would I need to file the disclosure?  Could this be a bad move?  I understand the BK law protects me; I am just leery of providing any personal information.

  • Stoney59 That’s a good question.  If the mortgage was discharged through BK, then they do not have the right to pursue you to collect the debt.  They do however have the right to approve a short sale, unless they have a court order to remove the lien, or accept fair market value as the value of the home.  Unfortunately, you are at the mercy of the servicer whether or not they want to approve a short sale, begin foreclosure proceedings, or negotiate a deed in lieu of foreclosure.  I apologize that this is not a question I can accurately answer.  I don’t know who would be able to other than Greentree.

  • Stoney59

    hunter11
    Hunter thanks so much for your help.
    Information I just received tells me the mortgage company is requiring the information for a short sale being set up by the court trustee in charge of my BK. Yes I can with hold the disclosures, but it wouldn’t bode well on the BK, since it is discharged, but not closed as yet. Rare cases, the trustee can revoke my BK. Not so much the disclosure that bothered me as much to who was requiring it, Greentree Servicing and since the mortgage was in the BK, the info shouldn’t have any bearing on the sale.

  • hunter11

    Stoney I can tell u from experience that you don’t have disclose Financials. We went thru a bankruptcy and didn’t surrender our home but decided to stop paying 3 years ago. Fast forward I just got both mortgages to approve a shortsale without financial disclosure and no deficiency owed. Going to settlement on August 20th and even walked away with a 12,000 check because that’s what I told the first lien holder Iwanted to keep the house clean and they agreed. Just send them a letter per ur bankruptcy counsel ur not disclosing anything. Hope that helps. Good luck!

  • Stoney59

    filed chapter 7 included mortgage, discharged Dec.2014. Court trustee included home as part of my estate in the bankruptcy and appointed a realtor to sell,(I’m not living in the house, basically walked). Greentree servicing has  requested financial statements and current pay stubs as part of a short sale deal, again. why, what do they need this for if the house is now in the hands of the court trustee?

  • mikell1980 ScottSchang that is normal Mike, they need a copy of your social security card.  Sounds like you’re moving in the right direction!

  • mikell1980

    ScottSchang mikell1980  we are in Alabama hud is telling me to send them proof of Social Security number but wont tell me what kind of proof they neeed

  • mikell1980 ScottSchang Correct, it shouldn’t be there – if you apply for a new loan, your lender will be able to clear it up.  What State are you trying to buy in?

  • mikell1980

    ScottSchang mikell1980  we have contacted that number and they told us to contact BOA, we did that and they say they don’t understand what we are talking about that there should be nothing after 12/2012 and that loan is foreclosed paid in full and no longer on us after 2012

  • mikell1980  I agree with you that this seems quite unusual.  I would recommend that you contact the FHA Resource Center at 1-800-225-5342.  Once the CAIVRS claim was paid, it should have been removed.  Hope this helps!

  • mikell1980

    Hello, ok I filed for chapter 7  discharge date 6-2012 I owed 109,000 when I filed BOA sold the house for 130,413.70 in 12-2012 hud paid BOA 109,000 on 8-2013 and BOA has put a cavirs on me I don’t under stand how and why if they sold the home for more than I owed

  • angelos1986 Hi Angelo, yes, you can quit claim off title to the home as long as the other party agrees.  You would be able to buy relatively quickly after your name has been removed as long your credit, and income are all in good shape.
    Hope this helps?

  • angelos1986

    Hello, So this is my situation. I had a house with someone since 2006. After the housing market crashed the house become underwater. The house is in foreclosure but has not foreclosed. It’s been 6 years! The deed is a joint deed. I filed for Ch 7 BK in 2014 and it was discharged. However, my name is still on the deed along with the other person. My goal is to be able to buy a house in a few years, but I know that since I am still on the deed that this is not possible. My question is if I Quitclaim my interest in the property to the other person who is on the deed then I will no longer have any interest in the home. Therefore, would the combination of the BK and the Quitclaim deed allow me to be eligible for a future mortgage? Thank you, Angelo

  • Stoney58

    ScottSchang Stoney58 The BK was filed and discharged before the servicer could foreclose. I’m guessing the court appointed realtor has a buyer for short sale, but Green Tree servicing is insisting on my documentation to continue as typical short sale? Concerned about giving this company post bankruptcy information. The documents sent to me seem like they are more of a reafirming  application than short sale.

  • Stoney58 if you’ve included the mortgage in a BK, and your intention is to dispose of the property, there are actually 3 different ways this can be done.  You can wait for the lender to foreclose, you can attempt to get approved for a short sale, or you can negotiate a deed in lieu of foreclosure.
    A short sale would give you more control over the timeline.  If you’re still living in the home, you might want control over the timelines so you can better prepare to move when you’re ready to.
    I hope this helps?  If you still have questions, feel free to call me on my cell phone at 714-336-8286.  I will do my best to answer any questions you have.

  • Stoney58 that’s interesting.  Not sure why the servicer is asking for short sale information if the home is in the process of being foreclosed.  It’s possible that you are dealing with two separate “departments”?  If you didn’t initiate the short sale process, then something isn’t being communicated accurately.

  • Stoney58

    ShariGrassoGresham ScottSchang Hearing more on similar situation(mine) Would it be worth while to play mortgage serving company games and provide information on financial, etc. to have the short sale move forward? What can they do with the information provided?Any legal problems providing them with after BK financial info?

    I’m trying to rebuild my life after BK, some meager savings since BK.

  • Stoney58

    ScottSchang MagicAB similar to Magic AB. My mortgage was discharged thru Chapter 7. Vacant, I’ve moved on. Court trustee has his realtor listing house for sale. I’ve been contacted by a Title company stating the mortgage servicer wants all of the ” hurdles” for short sale, hardship letter, income and bank statements from me. If mortgage was discharged and court took over sale of home why do I need to supply all of the information?Shouldn’t the  BK be proof enough?

  • Pami3

    After my husband lost his job in 2008, we ended up filing bankruptcy (chapter 7) in 2010. Our 1st and 2nd mortgages were discharged (we have the 2nd because we added onto the home in 2006) We wanted to stay in the home which was fine as long as we paid the mortgage. Luckily we were able to modify to lower interest rates (first loan 3.5%, second loan 1% for 40 years) and have managed to make all the payments on time ever since. Even so, my credit rating is still bad since the mortgage payments are not reported to credit bureaus,  plus I missed a couple of smaller credit card payments on occasion. We live paycheck to paycheck. My husband is out of work again. I don’t make enough to cover the mortgages on my own. We’d consider selling if we could qualify for a smaller home loan (doubtful), but our home is still upside down by at least 80k. I have one daughter planning to go to college in the fall and another one that needs braces. I don’t know what to do. If I stopped making the 2nd mortgage payment, could they foreclose even if the first mortgage is up to date? The first mortgage is 265k, Second is 165k Home is currently worth about 350k (zillow) In 2006 it was worth about 700k! We lost so much equity after the collapse. Could they personally sue me to repay the second mortgage? I hate not to pay my bills, but I also think it’s unfair they refused to lower the principle at all. It’s not our fault the market crashed. We just invested in our home and never imagined home values would plummet the way they did.
    Also, do they have the right to charge me late fees if the payments are paid after the due date but still paid in the month they’re due? Any advise would be appreciated. I really would just like to stay in my home of 20 years. Any advice would be appreciated.
    Thanks, Pam

  • jimmymacs

    Hi, I have a few questions.

    I walked away from a house 2009 and filed Chapter 7 in 2011 and included the house in the bankruptcy.

    I have been renting since, and would like to buy a home. I was told that I was on the Caivrs list, and that I would not be able to get a USDA loan until 3 years after the forclosure. The only problem, is that the forclosure still hasn’t gone through, despite multiple attempts through BOA.

    1)Is there any way to speed up the foreclosure?

    2)Can I get off the Caivrs list faster due to including the Chapter 7?

    3)If I did a In lieu of Deed, would that affect the Caivrs situation?

    Thanks for the help

  • JenniferVaughnKerr Hi Jennifer, when buying using FHA financing, the foreclosure date, and the BK discharge date create separate timelines.  When you say the house was “deeded over to an investor”, does that mean that it was foreclosed?  If you simply signed the deed over to an investor, but you were still on the lien, I understand the issue.  It might be easier to call me to discuss – 714-336-8286

  • JenniferVaughnKerr

    Hi! My husband and I had our Ch 7 bankruptcy discharge June 26, 2012. The house was deeded over to an investor on June 19, 2012, removing all our interest in the home. We moved and thought nothing of it. Our FHA loan with BOA was dropped from our credit report – it says included in bk. Now we’re applying for new FHA mortgage and the CAIVRS comes up Agency Name: FHA Single Family; Case No.: 093-683208; Case Type: Foreclosure.  BOA has only just started the foreclosure process. What does this mean for us? We’re trying to find our eligibility for getting a new FHA loan but no one will talk to us. I would hate to assume it will be 6/26/15 – 3 years after discharge date. If BOA is only now foreclosing, does that mean no claim was paid? And if that is true, what basis will our eligibility date be made on? Geez this stuff is crazy! Thanks so much for your help!

  • beanwald

    Hi I have a very complicated situation. Our home we purchased in 2006 for 62000 the servicer Nation Star says we owe 140000 now. We filed suit on BOA and Desutche Bank for wrongful foreclosure. In the middle of the law suit BOA sold to Nation Star. Desutche bank is still the note holder. Our case was dismissed without prejudice. Due to neither BOA or Desutche proving they had right to foreclose. The decision was made in September 2013. As of today at the court house in the recorders records shows boa balance zero. In the clerk of courts office they cannot find a lien. I talked to an attorney he says walk away file chap 7. I just want an opinion what should we do. By the way we’re in Ohio. Thanks so much in advance.

  • soccergirl2013

    My husband and I filed chapter 7 and was discharged in 12/2011.  We have remained in the home and have paid the mortgage.  In November of last year, my husband was diagnosed with Stage 3 colon cancer and will be out of work for 12-16 months as he does chemo and regains his strength after chemo before he can go back to work.  We have since fallen two months behind on our house note.  I see the mortgage company offers hardships for long term circumstances such as putting the past due at the end and reducing the notes for that time.  My question is with any hardship we take, if any is offered, and we sign off on anything, does that mean we will be reassuming the loan and will go back on our credit report and then we are liable for the debt again since it was discharged in bankruptcy?  Just trying to figure this out because as of now we are not responsible for the difference if the mortgage company sells the home and there is a loss.  My husbands doctors say his recovery is 75% after chemo and he will be able to go back to work so we truly want to keep our home.  Any thoughts?

  • perplexedbystander I’m not sure I completely understand the question here.  A homeowner does not have the ability to sell his deed.  If the owner of the home is in default on the mortgage (road to foreclosure), and the bank has a lien against the property, the owner’s option are limited to short sale (with bank approval), foreclosure action, or negotiate a deed in lieu of foreclosure with the 1st position lien holder.  
    It almost sounds like you are referring to the note market, which occurs when investors buy bulk portfolios of non-performing notes.  These note can be sold to the investor, which can in turn, renegotiate the terms, to make the note perform (receiving on-time payments) and sell that note at a discount, or foreclose on the home and sell it on the open market.
    Does this shed light on your question?

  • perplexedbystander

    How can a homeowner on the road to foreclosure sell his deed for 10-50k for example and walk away without any mortgage debt/obligation ? And then how can the new deed holder turnaround and quickly sell it at a substantially reduced market rate (for a profit) without saddling the new homeowner with the old debt? 
    The three parties involved benefit but the bank(big time), the RE market and industry suffer.

    Mystified

  • bluecypup This is a tough one.  I think you just need to contact the servicing company and request that they continue to report it on your credit.  They cannot list it as discharged through bankruptcy.

  • bluecypup

    I have a bit of a dilemma. Twenty months ago, a joint owner on my house filed for bankruptcy. The mortgage company apparently has stopped reporting the on time payments for this mortgage (Ocwen Mortgage). The bankruptcy wasn’t mine, I am not removed from the financial responsibility of this home and can be sued if I walk away from the home. I have no bankruptcy protection and yet I also have no benefit of continuing my mortgage payments in a timely fashion. I am wondering if I have any recourse to force them to report my on time payment to the credit agencies. It is frustrating that they can keep me on the hook for the mortgage amount but not show my compliance with the terms of the loan.

  • CathiW  You definitely have options, but I need a little more information before being able to provide you with accurate answers.  As long as your current home is paid on time, and you are not in default on the loan, you can rent it out, or sell it.  It will really depend on how much (if any equity) you have.  There are more options here than I can address in a comment, please feel free to email me your contact information to [email protected], or call me on my cell phone at 714-336-8286

  • CathiW

    Hi there-  I’m so confused. I’m in California. My husband and I had our bankruptcy discharged in October 2010.  We had a home we were renting out and the home we were living in that show up as discharged through the bankruptcy.  The rental ended up being foreclosed the following year.  We would like to move closer to my mom and I’m so confused as to what to do with the house we are in.  I’m not sure we will get what we owe.  Do we have to pay the difference?  Should we rent it out and what do we need to do with applying for a new mortgage loan if we decide to do that?  The home we are in is only in my name as it was mine prior to us getting married.  The home that foreclosed on was only in his name because it was his prior to us getting married.  He is a veteran, and qualifies for VA….is that the best route?  His credit is good, mine is getting better.  We have great jobs, make good money, pay everything on time.

  • Wendy Moore is there any way you can quit claim off title to the home?  Because you included the mortgage in your bankruptcy, the bank cannot ding your credit at all, but the water bill sounds like it needs to be paid.  If the co-owner living in the home is not paying the water bill, you might have to.

  • Wendy Moore

    I co-own a home that’s been in foreclosure since 2010, mortgage was not reaffirmed after Chapter 7 bankruptcy. Everything discharged in 2009. My name remains on deed. Foreclosure being dragged out through NYC court system. Co-owner still lives there, I moved out, now facing prospect of lien being placed on property due to unpaid water bill. Don’t want my fledgling credit rating too be affected. What do I do?

  • paula0401 Hi Paula, there needs to be a clear understanding on exactly what Bankruptcy protection means.  It does not mean that the bank can foreclose on your home at any time – it simply means that IF YOU DEFAULT on the mortgage, they cannot hit your credit again (for late payments), and they cannot come after you for a deficiency judgement if you still owe them money.
    You still own the home, and you will continue to own the home as long as you make your mortgage payments.  The fact that it does not report on your credit is not important, and does not affect you at all.  If it was on your credit, your score would only affected if you make your payments on time, or miss payments, it’s the same as any other installment loan, like a student loan or car loan.  Not having a mortgage on your credit does not hurt, or help you at all.
    Reaffirmation simply means that if you lose the home in the future, you can be sued by the bank.  Since it was included in the BK, you cannot.  
    If you like your home, and want to live there – continue to make your payments and enjoy your home.  You may not know it yet, but you are probably pretty lucky that your mortgage was not reaffirmed.
    Hope this helps?
    If you want your mortgage to show up on your credit, you simply have to refinance it once you’re eligible.

  • paula0401

    I currently have a mortgage with Ocwen that was discharged during my Chapter 7 bankruptcy in December of 2013.  I wanted to reaffirm the loan and in April of 2014 paid 23,000 to reinstate the loan.  I’m now being told that the loan cannot be reaffirmed and that I will not be credited for any monies paid toward the debt.  What is my best course of action at this point?  Sell the home, keep paying?  It doesn’t seem prudent to keep paying on a house that was discharged as part of a Chapter 7 yet I know they can foreclose because there is still a lien on the home.  I have an appointment to meet with a reals estate attorney to discuss best options as I need a place to live and obviously can’t qualify for refinancing or a new loan.

  • 1angell18 title records are public records – you maybe be able to access it online, or worse case scenario is you can go down to the County recorder’s office and get a copy for a small fee.  I would start by contacting a real estate agent in the area and asking them if they can find out.  Industry professionals typically have access to public records.  If you send me the address to the property, I can see if your County puts it’s records online.  My email is [email protected]

  • 1angell18

    I am in this situation however the bank seems to have bought the house bank which i am uncertain of what it means. We saw that the bank has the house up for sale. How do we know if our names are off the title?

  • 2796land I am not an attorney, and I would consult one for an accurate answer.  That being said, here’s my opinion – As long as you are on title to the property, you are responsible.  The lien is evidence of ownership.  Hope this helps?

  • 2796land

    We’ve had some time to think since Wells Fargo released the lien on our vacation property back in November which we surrendered in Ch. 7 in 2011.  What we’re wondering now is if Wells Fargo implied possession by hiring a maintenance company who changed the lock making the bank responsible for the taxes and HOA fees from 2011 until 2014.

  • Mark9999 Thank you so much Mark!  Very good information!

  • Mark9999

    This suggestion may be of some assistance to people who have a mortgage holder who will not foreclose on their property after a BK. As part of your bankruptcy, make sure you have your lawyer file a motion to Abandon the Property in question. This will relieve you of all financial responsibility for the property after BK. This action will NOT remove you from the title but will protect you from financial threats such as liability if someone is hurt on your former property, etc. In my case, this option wasn’t available during my bankruptcy filing but the law has changed and you can now file this motion after the bankruptcy has been finalized. This is what I did. One side benefit of filing this motion is that the reticent mortgage holder finally started foreclosure proceedings. I believe this motion was the catalyst to force the start of the foreclosure process since I no longer had the legal responsibility to maintain the property.

  • cindi1958

    Hi Scott,

    Do you know of a lender in the Indianapolis area that will actually follow the new Fannie Mae Guidelines?  I am trying to refinance on my current home (purchased in May 2009) and I keep running into the same scenario.  All of the lenders state that it has to be 7 years from the BK Discharge, even though Fannie Mae states 4 years from the BK Discharge.  I had several rental properties and my own personal residence that were foreclosed on, however all properties were included in the BK (filed in December 2008) and the BK was discharged in June 2009.  It seems that all of the lenders have their own underwriting overlays.  Can you recommend anyone to me that will actually go by the 4 year BK discharge date?

  • bopeep9999

    I thought I needed 10-20% for conventional loan down payment. 3% is not much at all. Thanks again ffor your guidance. Very helpful.

  • bopeep9999 Conventional financing actually allows a lower down payment than FHA – 3% for Conventional, 3.5% for FHA.  Saving your money for a bigger down payment is a great strategy – Good luck!

  • bopeep9999

    Thanks for your quick response!
    I appreciate you listing the wait time for a new mortgage in the future. I won’t have enough money saved yet for conventional, so will continue saving while I rent. My rent will be $300 less than I was paying BOA, so plan on putting that $300 aside monthly. Thanks again.

  • bopeep9999 Thank you for such great detail, It makes it easier to understand all aspects of your situation.
    If both mortgages were discharged in your BK, then the last thing to do is to get those liens released.  If I were advising a friend or a relative in a similar situation, I would recommend that you take B of A’s offer to do the DIL.  They will naturally work with the second lien holder because as the first lien holder, once they take the home back, the second lien is extinguished.
    Since both mortgage were included in your BK, you do not have to worry about it affecting your credit, or the lenders coming after you for a deficiency judgement because you owe more than the home is worth, you’re protected by the BK law.
    As far was “when” you can buy again, that depends on what type of financing you are applying for.  If you apply for a conventional loan, you are eligible to buy again 1 day after your name is removed from title of the home, once the DIL is completed.  Conventional guidelines allow you to buy again 4 years from the discharge of a BK, if the mortgage debt is discharged through the BK, AND if the home is out of your name.  
    If you applying for a FHA mortgage, there is a 3 year wait from the date your name comes off title of the home. If you are eligible for a VA home loan, that wait is 2 years.
    Hope this helps?

  • bopeep9999

    Hi Scott:
    My husband and I filed Chapter 7, discharged in September, 2009, in MN.  We
    included a first mortgage with Bank of America, in addition to a HELOC with
    Fifth Third Bank.  Neither mortgage was reaffirmed, house is underwater.
    I made the mistake of “doing the right thing” and paying Fifth Third Bank for
    three years for the HELOC.  At the time I was trying to refinance the first
    mortgage, and nobody would assist us due to the bankruptcy.
    Fast forward to January, 2015.  I quit paying Bank of America in October,
    2014, as we decided we need to move on with our lives, as this house will never
    be worth what was originally owed.  Basically, a $50k debt will be forgiven by
    Fifth Third Bank; all I need to do is move out!
    I owe BOA $154k, and the house could probably sell for about $160k-$170k.  If
    I have anything left after trying to sell, would Fifth Third Bank get the
    equity?  I understand they still have the lien, so would they receive any excess
    I have left after I pay off BOA?. 
    Bank of America is looking into a “Deed in Lieu,” but I can change my
    mind according to their paperwork.Would a DIL be beneficial to
    us? BOA said they would contact the HELOC for negotiation on that lien release
    for us.
    Trying to decide if we should short sale, contact the second for a lien
    release ourselves, or let it go into foreclosure.  I have a place to live
    beginning in June, 2015, as a rental.
    If we do decide on the DIL, when would I qualify for financing on a
    future home?  I understand if I short sale or DIL, there are separate
    timeframes. 
    Thank you for any insight.  Very interesting forum.

  • matyvin ScottSchang I couldn’t agree with you more.  Your loan officer should have been able to identify this from day 1.  That’s a crime in my eyes equal to Chase not foreclosing.  We’re on the tail end of all this chaos, and I wouldn’t be surprised if you are able to buy sooner than 2 years with the way guidelines are loosing up around homes included in BK.
    If you haven’t already subscribed to my blog, do so in the upper right corner.  If there’s a guideline change around VA, I’m going to write about it.
    Good luck, and thank you for your service to our Country.

  • matyvin

    ScottSchang matyvin thanks for your quick response, I just wish the loan officer ran the CAIVRS  report before we went through all of this and put out so much money for inspections. It’s so not fair that Chase held onto this house so long without doing anything with it.

  • matyvin Unfortunately, even though you do not have any financial responsibility towards the house in terms of tax liability, or the creditor having the ability to come after you, you do still own the home.  You would need to have your name off title for 2 years before being eligible to apply for VA financing.  The BK, and the Foreclosure are two completely separate events, and have two separate timelines.

  • matyvin

    I was discharged from chapter 7 BK in 2012, the house was included in the discharge. We tried to apply for a VA loan but came up on the CAIVRS list. We just found out the house is now just going to auction on Feb.13. Is there anyway we could still get the VA loan? Chase said we have no financial responsibility towards the house, and our bankruptcy lawyer is writing a letter stating this. We live in N.C and the house is in N.Y. thank you for any help in this matter.

  • reklawty Fannie Mae would require that you wait 7 years from the foreclosure date, and 2 years from discharge date of the Chapter 13.  Both timelines are in affect, and the longest of the two waiting periods would be enforced.
    Hope this helps?

  • reklawty

    I was discharged from ch 13 BK in 2013. I had three houses. I reaffirmed my primary residence.  I included the other two houses in the BK. One of the houses forclosed. I have since paid cash for another rental property. Is it possible to obtain a mortgage to purchase another rental.

  • hunter11 Steve, I am not an attorney, I am a lender that specializes in helping folks buy after financial hardship like BK, or foreclosure.  In my experience, mortgage debt discharged through bankruptcy falls under bankruptcy protection laws which state that a creditor cannot “double ding” you for the subsequent loss of your home if you’ve already been deemed insolvent by a federal bankruptcy court.
    I am not as familiar with Chapter 13 rules as I am with Chapter 7, so this is where my input may fall short.  I would think that the answer would lie in the how the CH 13 was structured, and how the mortgage debt was dealt with.  If the mortgage debt was fully discharged, then I don’t think you are speaking to the right person at the bank.  If your intention with the CH 13 was to retain the home and restructure the loan so that you can continue to make payments, then your lender might be right.
    I am inclined to follow the advice of a bankruptcy attorney.  If you are not confident in your attorney’s opinion, I would seek the opinion of a different BK attorney – have them review your paperwork.
    From the perspective of a lender, if you are on title to the home, you are the owner of the home and responsible for all taxes, costs and liens against the property.  If you have stopped making payments on the home, the lender has the right to foreclose on the home in an attempt to recuperate their losses.
    In order for you to be in a position to buy a home in the future, you will definitely need to be off title.
    Hope this helps?

  • hunter11

    Scott I have a question.. I live in Pa. and we just received our chapter 13 discharge last July we never surrendered our home and stopped paying two years ago because it was 80,000 upside down with two mortgages. The bank now wants to foreclose are we liable for anything besides trying to clear titles? Im so confused my lawyer claims we are not but the bank says yes. Please help. thanks again Steve

  • retger1

    ScottSchang retger1  Great information. Exactly what I was looking to confirm. Thanks.

  • retger1 “responsible” refers to how a lender will look at qualifying you when you go to buy again.  For example – if the “she” quit claims, so you are sole owner of the home, and a foreclosure occurred on the home while you were the only one on title, then you are the only one that would have to “count” the foreclosure when trying to buy again.
    In this example, since the mortgage was discharged in the bankruptcy, all we are really talking about is that “she” could buy using FHA, and not be penalized by the waiting period, because she was not on title at the time the foreclosure occurred.  As long as the divorce decree is clear about who has sole ownership and responsibility for the home.
    Yes, given all of the information you’ve provided, it sounds like you are well within the guidelines to purchase using Conventional financing, with a 10% down payment, 4 years from the discharge date of the BK.
    Here is an article I wrote about this specific guideline change that has been in affect since August 16th, 2014 – https://www.findmywayhome.com/home-mortgage-news/fannie-mae-waives-waiting-period-on-foreclosure-after-bankruptcy/

  • retger1

    ScottSchang retger1 
    Thank you Scott for the quick and informational response.

    I may have used the incorrect term by stating “refinance”. I believe the exact wording Fannie Mae (who purchased the 1st mortgage) used was “Modification with lower payment”. At which point I was assured I would not be reaffirming the debt. This will be a topic with my lawyers, but I am just trying to get as much info as possible.

    Can you describe in a little more detail what “responsible” would mean when you state the “as long as the home remains in your name”?

    She is going to sign the quit claim but as the non-final divorce documents currently state, I will be awarded sole occupancy and the house as we allow it to go into foreclosure.

    I understand these questions should be handled by my lawyer, but again, I am just trying to gather all information and opinions I can.

    I really just want to be certain that if the house is foreclosed upon that I would be able to purchase another, as you stated should be possible given that I meet the criteria.

  • retger1 lots of good questions here, let me see if I can answer as many as I can.  First, if your mortgages were discharged in your bankruptcy then any subsequent loss of the home would not show up on your credit.  Bankruptcy law prevents a creditor from “double dinging” you on debt covered under bankruptcy protection laws.
    I also find it very difficult to believe that refinancing your mortgage will not “reaffirm” the debt.  I don’t care what anyone tells you, if you take out a new lien against a defaulted property, I don’t believe that is covered under your bankruptcy protection – you need to consult a bankruptcy attorney before you even consider this option.
    Now, fast forward to a date in the future when your name is removed from title of the home (through foreclosure, short sale, deed in lieu or quit claim) – Fannie Mae guidelines will allow you to be eligible for financing 4 years from the discharge of a BK, which you already are.
    Of course, you would still have to meet all other credit qualifying guidelines, but the timeline would not be an issue.  If you are trying to buy again using FHA, that’s when you will encounter a 3 year waiting period from the date your name is removed from title IF there is a foreclosure, short sale, or deed in lieu of foreclosure.
    The last thing I would like to add here is something we run into a lot.  “Who” is responsible for the home as defined and detailed in the divorce decree, will determine what responsibility you have for the disposition of the property after the divorce.  
    If the home is sold as part of the divorce, then you have a clean slate and you are eligible for conventional financing right away.  As long as the home remains in your name, you are responsible.
    Hope this helps?

  • retger1

    My 1st and 2nd mortgages were discharged in bankruptcy in 2010. I live in Minnesota and am in the process of getting divorced and am trying to weigh my options relating to keeping the house. The estimated tax assessment of the house for 2015 is 185K the mortgages total 196K. I am uncertain about the exact value of the house, but I believe 185K is likely on the high-end. Both lenders appear to be willing to refinance the loan without me reaffirming the liability and extending the period back to 30yrs. They have stated that they cannot state for certain whether they will or will not unless the other party (stbx) signs a quit claim deed or her name is removed from the title through divorce. The divorce should be final within the next couple months, but I am uncertain if the sheriffs sale will be set before that.

    Can anyone share if one of us signing the quit claim would shield either party from any foreclosure costs/fees/taxes etc. as well as if the quit claim prevents the foreclosure from being reported on credit reports?

    In addition, I am trying to understand how my rights/claims on the house differ between not reaffirming the mortgages and reaffirming them. The material I have found relating to this subject is confusing and vague.

    I would appreciate any advice on the situation. I do not love the house, but love having a house. I also do NOT want to wait 3yrs before being able to own another.

  • cindi1958 this is a really good question, and it kind of comes down to what Fannie Mae’s role is in the lending industry.  Fannie Mae is NOT a lender, they only created a set of “guidelines” for assessing risk.  If you follow Fannie Mae’s guidelines, they will purchase the loan from the lender on the secondary market, allowing the lender to then go out and offer that money to another borrower to purchase, or refinance their home.
    Many of Fannie Mae’s guidelines are open to interpretation, and the responsibility falls on the lender to decide whether or not they are willing to accept a certain level of risk, using Fannie Mae’s guidelines as a reference.
    The next challenge is, if a lender chooses to accept a certain level of risk, is there an investor that will purchase that loan on the secondary market – and herein lies the challenge.  If there are few investors that are willing to take the risk, then “street level” lenders do not have the ability to lend if that specific risk is present.
    In the case of buying after a hardship, it is considered by many investors to be too high of a risk, or they simply have not yet had enough demand to consider purchasing a loan after a major financial hardship.
    In my experience, there are still many investors that do not understand, or choose to not understand some of Fannie Mae’s more recent guideline changes regarding bankruptcy, short sale or foreclosure in the borrower’s past.
    I’m sorry that this is kind of long winded, the simple answer to your question is that lenders have the ability to decide what risks they want to take, and how they want to interpret Fannie Mae’s guidelines.
    The long answer, is much more complicated than that.
    Hope this helps?

  • cindi1958

    If a borrower meets all of Fannie Mae Guidelines, can a lender still refuse to service the loan?

  • cindi1958

    Hi Scott,

    Does the Fannie Mae “Waiting Period for Mortgage Debt Discharged through Bankruptcy” also  let you refinance or is it just for a new purchase?

  • Nicki72

    Nicki,

    My husband and I filed bankruptcy in 2010, and it has been discharged for over three years.  We included our home in the bankruptcy and it shows discharged with a 0 mortgage balance on credit report.  The mortgage company has not foreclosed on the property, and when we called the county auditor we were told that the company may have let the house go, they did not want to foreclose.  We cannot even locate the mortgage company that had the mortgage, we get passed from one company to another, and no one knows about the property.  We dont have a title or anything.  

    I know we are responsible for taxes, but we want to purchase a home in a few months.  We were going to try the Fannie Mae Conventional loan or FHA  first time home buyers program.  How does this affect us?  Are we still considered owning the home since it was discharged in bankruptcy?

  • MagicAB This is such a good question, and the second time i’ve run into a similar question in the past few days.  It sounds like you’re on the right track.  You can certainly try to contact the bank yourself, and depending on who holds the lien, they should be able to point you in the right direction.
    The owner of the home will definitely need to be involved.  In the other scenario, similar to this, the bank was requiring the owner to jump through all of the short sale approval hurdles, including completing a thorough financial inquiry and establishing a hardship, before the bank would even consider it.
    If the owner of the home you’re looking at is willing to cooperate, you certainly have nothing to lose by trying.
    I’m not sure if this is helpful at all, but I would love to hear back from you with an update?

  • MagicAB

    If I want to buy a property that was listed in a BK that has been discharged for over 5 years but title has not changed, how do I go about that? Do I just need to get a Authorization to Release information from the owner and take it to the bank asking about a short sale? Keys were turned over, property is vacant with abatement liens piling up.

  • ShariGrassoGresham

    ScottSchang ShariGrassoGresham Thanks so much.  I appreciate your efforts.  

    I am actually at the other end of this deal in that I am trying to purchase this property that Ocwen is holding hostage.  I have spoken directly with the original owner, he has granted permission for Ocwen to deal with me, but will not fill out the mountain of paperwork they are asking for because his bankruptcy discharged him from the house.  The property has been vacant since 2009 except for the squatter that resided there and taped into the water lines of the neighbors and rented rooms to others.  

    It is very sad as it is in a beautiful neighborhood and is rotting away and becoming an eyesore… among other problems.
    Thank you again for your thoughts.

  • ShariGrassoGresham ScottSchang unfortunately I do not know anyone in Virginia.  I found this attorney in California that seems to have experience dealing with Ocwen, maybe this is a good place to start?  Hopefully they can at least help point you in the right direction. 
    http://blog.consumeractionlawgroup.com/ocwen-foreclosure/
    I honestly do not know if Ocwen is allowed to trump up a bunch of charges, but it doesn’t seem like they should be able to hold you hostage like that.
    A Federal Bankruptcy judge granted you bankruptcy protection, and this seems to completely fly in the face of the intention of bankruptcy laws.
    I hope this helps, and good luck!

  • ShariGrassoGresham

    ScottSchang ShariGrassoGresham Virginia

  • ShariGrassoGresham I’ve heard some horrible stories about how Ocwen is holding people hostage with defaulted loans, but this is horrible on a whole new level.  I’m almost thinking you need to get a real estate attorney involved.  What State is the home located in?

  • ShariGrassoGresham

    Original mortgage was with BofA, discharged due to bankruptcy and servicing of loan transferred to Ocwen in 2012.  Now in 2015, interested person wants to purchase home.  Ocwen will NOT deal with them unless extensive paperwork is filled out including updated financials.  With bankruptcy there should not be any need for in depth info since there is no longer any financial responsibility.  Is there a way to force Ocwen (or at least convince them) to go ahead and make a deal?  Ocwen claims is the payoff price is 1.2 million, yet that is including all fees and interests accrued since last payment was made in 2009. Appraisal is approximately half of that.  Advise?

  • MLMcFadden

    I have run into a snag on a refi that I don’t understand the rationale for. I went through a bankruptcy and the first mortgage was discharged, but I continue to pay it. The first is willing to refi me to a better interest rate, but the second (HELOC) holder refused to subordinate thanks to a low-ball appraisal, which I am fighting (property is IMO close to not being underwater, but the appraiser who doesn’t understand the value of a good horse barn gave a low value). What I don’t understand is the second holder would refuse to subordinate – they are in second position now and would be again. (I should also say I did reaffirm the second, not the first). Can you give me any clue as to the rationale for refusing to subordinate?

  • crollerqueen

    ScottSchang crollerqueen 
    Ok !!! Thank you so much! So deed in lieu or maybe cash for keys!!! I really wanted you to tell me something different. I was hoping anyway! Haha. Thank you so much for making this sight available and answering everyones questions. It’s very informative .I will keep looking for your updates!
    Chris

  • crollerqueen ScottSchang Yes, you are correct in understanding that FHA considers bankruptcy and foreclosure as two separate events, with two separate waiting periods.  Both conventional, and USDA have recently changed their guidelines to make the bankruptcy override the foreclosure, however FHA has not.
    In any case, you need to get your name off title to that home as soon as absolutely possible so that you can clearly assess your options.

  • crollerqueen

    ScottSchang crollerqueen 
    Thank you for your reply. So I am to understand that even though this mortgage was included in the bankruptcy I will still have to wait to go FHA until 3 years after the foreclosure is over which hasn’t even started yet?. The bankruptcy does not override the foreclosure even though the bankruptcy was 1st?

  • crollerqueen thank you for your question, I can absolutely answer your question.  Based on current underwriting guidelines, FHA treats the bankruptcy and the foreclosure as two separate events, each carrying their own waiting period – 2 years for the bk, 3 years from the foreclosure date.  These waiting periods run concurrently, so the bk waiting period will have passed while the foreclosure period is still going.  
    If you are using conventional financing, it’s the foreclosure is treated differently.  There is a waiting period of 4 years from the discharge date of the bk, and as long as the mortgage debt was discharged, there is no separate waiting period for the foreclosure.
    If you allow the home to go into foreclosure, and want to use conventional financing, you will be required to have a minimum 10% down payment on the purchase of a new home.  If you are able to do a short sale, or deed in lieu of foreclosure (both better options than foreclosure), you can buy with the minimum down payment of as little as 3%.
    Here are a couple more options – If you are eligible for VA financing, the wait is only 2 years from the foreclosure.  If you buy using USDA financing, it is similar to conventional in the sense that there is a waiting period for the bk, but not for the foreclosure if it is included in the bk.
    I know, it’s a lot of information.  Here’s the quick and easy version.
    If you are trying to buy using:
    – FHA financing – You must wait 3 years from the foreclosure date
     – VA financing – You must wait 2 years from the foreclosure date
     – Conventional – You must wait 4 years from the bk discharge date
     – USDA financing – You must wait 3 years from the bk discharge date
    At this point, conventional financing is probably your shortest waiting period, putting in a position to buy after October, 2017.
    Hope this helps?

  • crollerqueen

    Hi. I have been reading all of these entries. Very interesting. I am in Minnesota and had to file bankruptcy that was discharged in Oct of 2013. My wells fargo mortgage was included in this bankruptcy. Since I filed I have gotten married and the mortgage that was included in this bankruptcy also has my husbands name on it as we bought together before we were married. We continued to pay but I never re affirmed the mortgage. We are soon to be going into foreclosure. Will I be eligible under FHA to buy again in Oct of 2015? Or is this whole foreclosure thing going to screw up my waiting the 2 years and will I have to start over from the foreclosure date? Not one mortgage person has been able to answer this question seeing as how we stayed after my bankruptcy and now can no longer make the payments. Does the bankruptcy overrule the foreclosure that will eventually happen?
    Thank you for whatever you can tell me.

  • bpjok2

    No not with this house that I did a bankruptcy in 2011 and later did a deed in lieu of foreclosure.Edit (in 7 minutes)

  • bpjok2

    No not with the house I did a bankruptcy in 2011.

  • bpjok2 I would try to use another lender.  Was the deed in lieu a VA loan?

  • bpjok2

    Fl. I did a deed in lieu of foreclosure with them

  • bpjok2 It sounds to me like you are trying to qualify for a VA loan after you discharged a VA loan in a Bankruptcy?  I’m wondering if this is a VA Guarantee issue, and not a BK issue?  It’s also completely possible that the lender is not willing to work with you because you discharged the last mortgage you had with them, and that may be a policy that they have.
    What happened to the home that you included in the Bankruptcy?  Do you still own the home or did you foreclose, short sale or do a deed in lieu of foreclosure.
    It sounds to me like the bank is simply not explaining things to you clearly.  I do not think there is purposeful retaliation going on here.  I think there’s more to it.
    What State are you trying to buy in?

  • bpjok2

    You said Lender cannot come after you for their losses. What happens when the bankruptcy is discharged and after 3 years I submit a new application with the same Lender and Lender insist that I must provide a copy of all the bankruptcy papers in order to approve a loan but ends up telling me loan request is decline because in order for you to get a loan you have to pay off a VA certificate you used to which a bankruptcy chapter 7 included the debt of the mortgage although my credit scores are above 640 and a deed in lieu in which we had agreed in court to do as so and there is special circumstances in regards. SunTrust asked for a complete copy of my Chapter 7 bankruptcy in which all debt was discharged as of 5/ 2011.  I suspect retaliation what are your thought? Can a mortgage lender demand a full copy of Chapter 7 Bankruptcy documents in order to approve a mortgage loan 3 years later after the bankruptcy closed and all debt was discharged?. Should they have asked for a full copy to come from my bankruptcy attorneys if allowed instead of me? I may not have other amendments that my attorneys could have made in my possession.

  • Fino269 ScottSchang yes, it’s a case by case situation.  I would start by contacting BOA, someone in customer service might be able to point you in the right direction, and ask them what their policy is on resubordinating.  
    You should probably speak to a lender first, to see if you would even qualify if BOA cooperates.

  • Fino269 ScottSchang Yes, that’s correct.  I would consult a tax professional to make sure there are no tax consequences of her “giving” you the property.

  • Fino269

    ScottSchang Fino269  How can I get them, BOA is the lender to resubordinate the lien? Is this a case by case situation?

  • Fino269

    ScottSchang  she is on title. Would a quit claim release her from any & all liability to home since BK wasn’t reaffirmed?

  • Terryr001 you should be able to find that information in your bankruptcy discharge paperwork from the court?  I would start there.  Hope this helps?

  • Terryr001

    How can you definitively determine if a mortgage was or was not discharged in a chapter 13? My attorney says it was and the mortgage company (OCWEN) says it wasn’t. I am seven months discharged from a chapter 13 that has subsequently aged off my credit. The mortgage company refuses to remove the house from my credit saying it was not included. I would have perfect credit if it were not for this.

  • Fino269 ScottSchang if your ex is not on title, she would have no liability or ties to the home, especially if you write the decree that way.
    If you are current on both loans, it is possible to refinance the 1st only, but it would require permission from the 2nd lien holder because they would have to resubordinate.  That basically means they will allow you to pay off the 1st lien without paying them, and they agree to stay in 2nd position

  • Fino269

    ScottSchang  Thanks for the quick response, there is no freeze on the assets. Shes not being cooperative. although the MTG. was discharged she feels that she will still be associated with the home because her name is on the MTG. Also would I have to refi both 1st and 2nd MTG. since there with different companies? Or could I get a lender to refi just the first MTG?

  • Fino269 ScottSchang It really just depends, is there a court ordered freeze on your assets during the divorce?  If your ex was cooperative and quit claimed off the home, the lender should have no problem with that.  If you’re asking if you can do anything with the home without getting her involved?  Absolutely not.

  • Fino269

    ScottSchang  Thanks for the info, every lender I call tells me they cant do anything without a quit claim deed or divorce decree. They wont even start the paperwork, is this normal practice?

  • Fino269 If both mortgages are current, you should be able to refinance the home 2 years from the discharge of the bankruptcy using an FHA mortgage, or 4 years from the discharge with a conventional mortgage.
    Any division of property would have to be something the two of you figure out through the courts.
    Hope this helps?

  • Fino269

    Hello Scott, I’m currently in divorce court in IL. Me and my soon to be ex filed chapter 7 BK in 2007 which included the 1st and 2nd mortgage, The BK was discharged in 2011. The mortgage is current, BOA transferred the 1st MTG. to another Co. and kept the 2nd. neither were reaffirmed, My question is how can I refi to keep the house and remove the ex? I suggested a quit claim deed but shes crying that her name will still be on MTG. Do I have any options?

  • msmagoo Hi Linda, you are certainly still responsible for the property taxes, you still own the home. In order for you to be in a position to buy another home, you have to get your name off title.  Waiting around for the bank to foreclose is certainly an option, but that puts you at the mercy of their timeline, before you can start on the road to recovery.
    I recommend attempting a short sale, or deed in lieu of foreclosure if you would like to expedite the process.
    In regards to tax deductions, I am not a CPA or tax professional and could not offer advice to the deductibility of these items.  Please consult a tax professional for that information.
    Hope this helps?

  • msmagoo

    Hello Scott,
    Our chapter 7 BK was finalized summer of 2013, including our home.  (Repeated attempts to modify with BofA were fruitless, and we had no alternative but to file BK and let the home go.)  We were going to just walk away, but saw an article by an attorney who said renting our home out until the bank forecloses & sells it at auction would give us income & keep it from being vandalized, etc..  We left the home Nov 2013, and began renting it out then, for cheap, with the tenants well aware of situation & on a month-to-month agreement.  We’ve kept Landlord insurance on it, are paying the water bill, and for a few months, we paid the HOA dues, then quit.  Foreclosure has still not begun 1 1/2 years after BK discharge.  BofA has transferred/sold loan to some other entity who keeps making noises about foreclosure, but hasn’t acted.
    My question is whether or not we’ve made the right decision in renting the home out?  I want to make sure we’ve not somehow inadvertently made ourselves responsible for the entire mortgage again, or the property taxes, etc..
    Also, can we deduct the insurance, water bill, HOA dues, etc., on our taxes since we have to declare the income?  If we take rental deductions, will that make us legally liable for anything concerning the home, we’d not be otherwise?

    Thank you.
    Linda

  • Stencraft ScottSchang Thank you for the kind words 🙂  I have successfully financed folks under almost all of these guidelines, except for USDA, which is the most recent of them all.  Good luck!

  • Stencraft

    ScottSchang Stencraft 
    Thank you for such a prompt response Scott.  I was not trying to go by extenuating circumstances as I know they are difficult to document and take a long time to resolve.  I just needed confirmation that we could be eligible again later this year via one of the loan programs available and from what you are saying it looks like USDA might be an option.  It seems that not all mortgage agents are as up to date with the regulations like you are and we have been told lately that the best we could hope for was 3 years after short sale date or April 2017.  I had seen different things about the new rules and wanted to reconfirm that information.  I wish you were in PA instead of CA as we would call you today.  This blog is one of the most helpful I have come accross and you do a great job informing the public

  • Stencraft extenuating circumstances are incredibly difficult to document, and is mostly limited to death of a primary wage earner, or permanent disability of a primary wage earner resulting in a significant reduction in income.
    When you can buy again will depend on what type of financing you are using to buy the new home. Conventional and USDA will use the BK waiting period of 4 years, and 3 years respectively, and ignore the short sale date.
    FHA will use the Short Sale date, and you would not be eligible for FHA financing until 3 years from the date your name was removed from title.
    Based on the guidelines as they are today, you could apply for a USDA loan in August of 2015, or Conventional in 2016.  FHA would be a possibility April 2017.
    Keep in mind that these are mainstream loan programs.  There may be other lenders out there that offer alternatives.  Most likely, these alternatives will require a large down payment and a higher interest rate, but it will get you into the home, with the opportunity to refinance into something more affordable once you’ve met the waiting period timelines.
    Hope this helps?

  • Stencraft

    I need some guidance regarding chapter 7 and short sale.  Both my wife and I filed chapter 7 in 2012 and were discharged in August of 2012.  Our mortgage was included in the chapter 7 and we did not reaffirm.   We kept making payments in our home in CT but were forced to eventually short-sell the property due a job relocation of more than 200 miles away.  The short sale closed in April of 2014.  We have been renting since July of 2013 (lease up in July of 2015) and want to purchase again this year.  We had been making timely payments on the mortgage up to the time we had to move from CT to PA but could not keep up the payments after our move since could not afford to pay rent and mortgage at same time.  Are there any options for us to qualify for a mortgage at this time either through FHA, USDA, or conventional means.  I have read various things about the waiting periods to qualify after chapter 7 and short sale and I also know that the rules have been changed recently in some instances where there might be extenuating circumstances.  Our credit scores are in the 680’s and salary between 90-95K, no late payments or credit issues since the chapter 7 other than the late mortgage payments which do not appear on credit report.

  • DaddieTang I am really sorry to hear about your hardship, especially being a wounded warrior.  That said, I am not an attorney, and am unable to offer legal advice, however, I can possibly offer some insight as to your rights in the property.
    Bankruptcy will protect you against any taxable (or subsequent negative credit event), however, BK by itself will not trigger the bank to foreclose on the home.  This is a very strange situation because you own all of the liability, but your ex owns the home.
    If you are allowed to file BK, and you include the mortgage, you can stop making the mortgage payment and it will not negatively affect your credit.  Your ex would have to figure out a way to keep making the payments or the lender does have the right to foreclose if she misses too many payment.
    I hope this helps, and thank you for your service to our Country.

  • DaddieTang

    I hope someone can help me! I’m a wounded warrior and now live in a veterans rehab center. 5 years ago I agreed to purchase a big home so my ex wife (she divorced me when I lost my limbs) would have a place to provide a place to raise our young daughters. She conned me into giving a quit claim to her, although the loan is mine alone. She married her dance instructor (rotten bitch!) and he moved in with her, my kids moved out. So now I am going to file chapter 7 and attempt to cause the couple to loose the home. Because she “owns” the title to the home (quit clam) I wonder if my chapter 7 will shut down the right to live there and have the bank demand she vacate the home . She can’t qualify for her own mortgage she just did a chapter 7 herself. Because the loan is mine, in my name only, and I’ve made all the payments from my military pension….how can I force the mortgage to fail and cause the happy couple to be tossed out on the street. Every lawyer I have talked to has a different take on this! Please help!

  • lindseyt02 There is a very common loss mitigation tactic that lenders can use called forbearance.  A forbearance essentially puts the delinquent amount on the end of the loan, and allows you to start fresh.
    Ask the lender if it’s possible for your to qualify for a loan, and do a forbearance for the delinquent balance?

  • lindseyt02

    My husband and I purchased our home in Sept of 2008.  In October of 2012, he left the home and we filed chapter 7 bankruptcy and included the house in the bankruptcy.  The bankruptcy was discharged in August of 2013. At the time of the bankruptcy, I had no financial means of making the mortgage payments.  Because we gave the house back to the bank, I assumed the bank would tell me when they wanted me out.  Since then, I have been living in the home.  The bank just contacted me and stated that I was eligible for a loan modification.  I applied for the modification, but was denied due to not paying the mortgage for two years.  In order for the bank to help me, they want 40,000 in back payments or they will start foreclosure proceedings.  I am now capable of paying the mortgage payments.  Is there any hope of getting the bank to work with me so I can keep the house?  Had I known that there was any possibility of keeping the house, I would have contacted the bank sooner. My divorce will be final in April and I would like to transfer the mortgage to my name.

  • 2796land ScottSchang ChristineKermit  You’re one of about 3-5 people I’ve spoken with over the past 5 years that have had this happen.  Congratulations, hopefully it’s still a nice Christmas gift after catching up on the HOA and property taxes 🙂  Thank you for your input!

  • 2796land

    ScottSchang ChristineKermit
    We are an example of the lender deciding it wasn’t worth pursuing a foreclosure and cancelling the lien.  Our vacation property has been sitting in limbo for 4 years waiting for Wells Fargo to make a decision on this mortgage they inherited when they bought Wachovia.  
    They just decided to cancel the lien which we consider a great Christmas present.  If only they made their decision sooner, as we now have been billed for over $10,000 in past due HOA fees + accompanying finance charges.  We are now bugging them weekly to get proof of the lien cancellation in writing as well as the keys. They changed the locks and said they will have them turned over to us in person the next time we are there by an agent of the company they hired to do maintenance during the last 4 years.  We’ll see how this progresses and, hopefully, will have it sold quickly without too many hassles.

  • ChristineKermit There is no such thing as getting the house “free and clear” because the lender does not have the appropriate paperwork.  That was tried over and over again, but  judge would never allow it.  I have however, heard of situations where there home just wasn’t worth the lender foreclosing, fixing and reselling – and in those cases, the lender removed the lien, making the home free and clear for the owners.
    You need to get your name off title if you want any chance of being able to qualify for financing in the next 2 years.  As long as your name is on title, you still own a home, with a defaulted mortgage (included in BK).
    Using Conventional financing, you can refinance your new home 4 years from the discharge date of the your BK (as long as all mortgages are discharged).
    If you are looking at FHA as an option, there is a waiting period of 3 years from the date your name is removed from title – through foreclosure, short sale, or deed in lieu.
    If you attorney has the ability to process a “quick” foreclosure, I think that’s a good option.  The next best option would be to try to contact the lender and do a Deed in Lieu of foreclosure, or, if that doesn’t work, have a Realtor list the home for sale as a short sale.  The single most important thing here is that you get that home out of your name!
    Hope this helps?

  • ChristineKermit

    My husband and I
    filed bankruptcy in June 2012. It has been discharged and our home (we no
    longer live there) was included on the bankruptcy.  Before filing
    bankruptcy we did work with a lawyer that was trying to help us modify our
    mortgage.  Bank of America was not cooperating and wanted to modify our
    loan that would decrease our payment by about $7.00 Oh boy!  During the
    bankruptcy BofA sold our loan to another company.  We went ahead with the
    bankruptcy and were discharged September 2012.  Since then we left our
    teaching jobs with one school district and therefore they cashed out our
    retirement.  We used that money to buy another house on a Realtors
    Contract.  It’s been a year now.  The previous lawyer called us today
    and said they have not foreclosed on the house yet with the bankruptcy
    therefore he can file for a “quick” foreclosure to get it done.
     We have to finance our current home in our name in two years.  I’ve
    heard about requesting the lender of the previous home to produce the title or
    deed. If they can’t, then we could end up with that house free and clear.
     My husband doesn’t want to bother with the hassle.  I think it might
    be worth the hassle.  My husband thinks it will hurt our chances of
    financing our current home in two years.  What are your thoughts?  (Live
    in New Mexico)

  • chicagovirginia ScottSchang Mark9999 If the second mortgage was settled for less than amount owed then it would be a short sale, it’s not debatable. Jumbo financing typically requires a minimum 4 years from the short sale before being eligible to apply for a new loan.  
    There are some investors out there have are relaxing those guidelines in certain situations, hopefully your lender is one of them!
    Good luck 🙂

  • chicagovirginia

    ScottSchang chicagovirginia Mark9999

    The BK was final in 2008 so that is long over, but we sold our house this year and it is debateable if it was a short sale- we paid the first in full, the second was settled but I think they were still calling it a short sale even though on the credit report it is listed as included in BK. That is because we had to negotiate a settlement for them to release the lien. So wondering if requested by lender, if they will put the term short sale on the credit or just something like ‘paid as agreed’ or something like that. Complex. It is a jumbo loan.

  • chicagovirginia ScottSchang Mark9999 If you are trying to buy a new home, depending on the type of financing you are trying to use, there will be specific waiting times from the both the discharge date and the date your name came off title, or if you are trying to buy using conventional (fannie mae) financing, you could buy 4 years from the discharge date of the BK as long as the mortgage debt was included in the BK.
    I’m not sure why your lender would be looking for an update to the credit report, that shouldn’t be necessary.

  • chicagovirginia

    ScottSchang chicagovirginia Mark9999 Thanks Scott..we are trying to buy a new house and if we paid less than owed (but  not really owed b/c it was in BK, but still needed the lien release) they categorized as short sale on the purchase contract. Our lender had requested a credit report update to clarify and just curious how that will come back.

  • chicagovirginia ScottSchang Mark9999 The lender is not allowed to report any status on the mortgage debt if it was included in the bankruptcy.

  • chicagovirginia

    ScottSchang Mark9999

    Related to this thread- if you had a Chapter 7 six years ago, but continued to pay your mortgage that is listed as ‘included in Bankruptcy’ on your credit so as to not lose the house, but then you do a short sale on the second b/c you want to move- do the lenders tend to re-report on your credit as a short sale if a credit report update is listed or will the likely leave it as is? Thank you.

  • zurc Any debt included in the Bankruptcy should not be reported to the credit bureau for any subsequent default.  The mortgage debt should be identified as being included and discharged through Bankruptcy, and then should have no further reporting.
    Hope this helps?

  • zurc

    Lost our jobs in 2010, then hurricane Irene in NY condemned the home. No flood insurance, and one week later GMAC asked for their money. Fast forward to the Ch.7 BK discharged 2/13 OCWEN in foreclosure process now. Credit scores are at 660 and rising, how should this be listed on my credit reports to cause the least damage? I am aware of the new FHA rules regarding the precedence of the BK but I still want it listed correctly. Thank you

  • naymike1

    ScottSchang naymike1 
    Yes Scott this helps.  My mother moved out the home first in 2008 and they were originally going to foreclose which is why we filed bankruptcy we moved out in 2010 and no one has being paying the mortgage since 2010.  She had no assets when she passed just insurance that took care of her funeral.

  • 2796land

    ScottSchang 2796land Thanks for your input.  We certainly don’t see it as a problem and anticipate being able to make a decent profit once we pay the past due taxes and fees.  We had one inquiry about buying it earlier this year but thought we couldn’t touch it because the bank “owned” it.  The local RE agent who has been dealing in this resort development for years sounded like he would want to list it.  So we’re keeping out fingers and toes crossed that it all works out the way we hope.

  • 2796land I have heard of other cases of this happening, it’s definitely not too good to be true.  I usually see it happen when the bank doesn’t believe that they could sell it for enough profit to justify the cost of maintaining property or executing the foreclosure – they are basically saying “It’s your problem now!”

  • 2796land

    Our 2011 BK included only vacation property (our residence was paid for by mortgaging the vacation place).  The original bank was bought out by another bank which never foreclosed but has been paying for maintenance, changed the locks and has never paid property taxes or HOA fees.  Just last week we heard from a researcher at the bank saying they’re releasing the lien.  They’ll send confirmation in writing in 3-4 wks.  It sounds like we’ve got it back and will be able to sell it to pay taxes and fees.  Is this too good to be true or does this actually happen to lucky suckers like us?

  • naymike1

  • naymike1

    Scott I had a house that My and my mom were on the title and my husband was a cosigner and in 2011 we filed bankruptcy and this included the house.  We went to court and the bankruptcy has been dissolved.  Last December my mom passed away and I get a letter from a lawyer saying that I owe the house loan as a part of my mothers estate.  I went to court today and they are telling me in 60 days the lawyer is filing a summons and I will have to pay the mortgage.  How could this be????

  • nelablake

    ScottSchang nelablake Thank you!  The sad part is the house has been vacant for 5 years now and has depreciated not only because of the housing situation, but also because of the vandalism done to the home.  We 378,000 for that place and now it’s not even worth 120,000.00.

  • nelablake You always have the right to Short Sale the home, or approach the new “owner” of the mortgage and do a deed in lieu of foreclosure.  If they attempt to renegotiate the terms of the loan, reduce principal, interest rate or extend the term, you would be removing the debt from bankruptcy protection.

    I would suggest finding a local Realtor that is a short sale specialist with experience working with the bank that now owns your mortgage.

  • nelablake

    Also, the notices that come to me from the collection agency now say “this is not an attempt to collect a debt”…

  • nelablake

    My house went into foreclosure in 09.  I filed for Chapter 7 in 2010.  The bankruptcy was discharged in 2011 and the foreclosure was dismissed in 2012.  The bank did receive an automatic stay, however, only 287,000 of the original mortgages (355,000.00) was deemed secured.  Anyway, the house has been empty for 5 years now, I am still on the title as the owner, the bank has not refiled the foreclosure, the property is only worth 140,000 or less now.  The morgage (287,000.00) went to collections.  They began harassing me non stop so my lawyer got onto them, they stopped and paid me 1000.00 for their actions.  Now I get a notice from the collection company monthly describing my mortgage, the balance due, how they have purchased insurance and paid the taxes, etc.  they are also maintaining “My” property.  I understand they need to file a new foreclosure action, but if they do not what are my options?  I’d love to be living in my HOUSE! or I want my name off of it.  How do I accomplish this?

  • MLMcFadden

    ScottSchang MLMcFadden Mark9999  This clarifies things very well. Thanks for explaining that the bank doesn’t have “title” but it does still have the ability to take the property if I opt to default. I have opted to continue to make the payments. It was when I went to talk to a credit union about the refi (I’m past the window)  that I got confused and apparently the credit union is as well. But it gave me a chance to reconsider the value/risk of getting a refi versus living with the existing ugly interest rate but having the ability to walk away. Right now I’m opting to stay put both literally and financially!

  • MLMcFadden Mark9999  You are talking about 2 different things here – we need to reel this in or I am going to have to delete this comment thread so people don’t get confused.
    The bank does not have title to your home.  You are correct, the bank cannot come after YOU for the money.  That said, if you continue to make your mortgage payments, the bank has no right to take your home, you are meeting your contractual obligation (mortgage) and there is no recourse that the bank can take.
    Mark is correct about reaffirmation, and about the bank not being able to come after you for the debt, however you’re missing the very important part here of the fact that you have the option, and personal choice to either make the payments and retain your home, or stop making your payments and the person who lent you the money can take back the collateral (home) securing the debt (mortgage).
    Even if you filed Bankruptcy, and you have equity in your home, you can sell the home tomorrow, pay the bank the balance of the mortgage, and walk away with the profit.
    Does this make sense?

  • Mark9999 Bankruptcy protection does not take the home away from you, nor does it relieve you of your obligation to pay the mortgage.  If you continue to make payments, you can stay in the home until it’s paid off and you live happily ever after.  You can even refinance the home once the “waiting period” is up.  If your intention is to let the bank foreclose, or take a more proactive approach to getting the home out of your name, you can stop making payments.  If you stop making payments, the bank will eventually foreclose and you will lose your home.  Bankruptcy protection does not in any way, shape or form affect your ownership in the property.

  • MLMcFadden ScottSchang there is no such clause, it’s a new loan.  Your BK protection only protects you against default on the current loan.  Once that loan is paid off, defaulted, the protection does not carry forward to new loans and liabilities after the fact.
    I know, it’s a crummy situation and it feels like you just can’t win.  If you know you’re going to live in the home, look at the refinance.  If you really cannot afford to live in the home, look at another solution.  Good luck, and you’re right, the banks pretty much got their way through this whole mess.

  • MLMcFadden

    Mark9999  As I understand it, they cannot come after ME for the money – but they can take the property which they still have title to, and I would expect them to do so. It’s not entirely valueless and could be resold.

    What am I missing here?

  • MLMcFadden

    ScottSchang MLMcFadden  And I would assume that any new mortgage would have a clause to hold the purchaser responsible for any deficiency should that occur on the new mortgage? Whatever happened to a mortgage only on the property value? It seems like this situation is a buildup to a new round of bankruptcies during the next downturn – the banks always win!

  • MLMcFadden

    Mark9999  Well of course, if I don’t pay the loan is still out there and can be foreclosed on and I don’t want to leave this property, which includes acreage for my horses. When I penciled moving out, renting someplace for me and boarding my horses, it works to stay here – for now. It was my decision, no one told me to do it. I have reviewed the situation again with my bankruptcy attorney. It sounds like a new mortgage could be dangerous too, as would been the case if I had reaffirmed.

  • Mark9999

    I assume you filed for Chapter 7 Bankruptcy. Why do you pay on a Mortgage that was discharged in bankruptcy? Even if you continued to live in the house, you have no legal responsibility to pay on a discharged loan. You received some very bad advice.

    Affirmation of a debt can only occur while your case is moving through the bankruptcy court.  Once you receive a Discharge of Debt from the US Bankruptcy Court, you have no further obligation to pay the debt. I will read the actual wording of the Court in this matter:

    “The discharge prohibits any attempt to collect from the debtor a debt that has been discharged. For example, a creditor is not permitted to contact a debtor by mail, phone, or otherwise, to file or continue a lawsuit, to attach wages or other property, or to take any other action to collect a discharged debt from a debtor…..A creditor who violates this order can be required to pay damages and attorney’s fees to the debtor”

    The wording speaks for itself.

    Hope this helps you.

  • Mark9999

    I’m assuming you filed for Chapter 7 Bankruptcy. Who ever told you to continue paying on a mortgage that was discharged in bankruptcy? Even if you continue living in the house, there is no legal reason for you to pay the loan. You have received some very bad advice.

  • MLMcFadden ScottSchang your attorney is right, any refinance would cause the new mortgage to not fall under bankruptcy protection.

  • MLMcFadden

    ScottSchang MLMcFadden  I’m in Washington state. My bankruptcy attorney also suggested taking a pass on the credit union, and reminded me of why it would not have been a good idea to re-affirm – but if and when I get a new loan – that will put me back in the position of being liable for any shortfalls – assuming the next mortgage has a clause like that, which I would assume is standard procedure at this point in time. This is all about getting clear of a stinking 7% loan!

  • MLMcFadden That doesn’t really make much sense, except that it’s a credit union, and credit union’s are not really great at difficult situations.  They tend to be very conservative and don’t really like anything that’s not plain vanilla.
    What State do you live in?  Let me see if I can point you in the right direction.

  • MLMcFadden

    I went through a bankruptcy in 2012 and the mortgage was discharged, but I was not in arrears on the payments and have continued to make them. I went to a credit union to apply for a HARP loan but they said since the mortgage was discharged (and GreenTreeServicing, which is still collecting the loan, keeps sending “this is not a bill” bills!) is not reporting my payments to the credit bureaus) so the credit union said they couldn’t do a refi since there really was not a mortgage to refi – how the hell do I get through that mess! Property is slightly under water but if I could score a decent interest rate it could right-size in a reasonable amount of time! Any ideas to resolve this problem?

  • 1angell18

    We filed bk 2009 and had the same happening to us. Originally we had chase and it got sold to caliber home loans. The credit report didnt change still says included in Bk and our second being a credit line showed zero balance. We never received any thing forcing us to reaafirm neither modify, however we received letters with forms to fill out and send back if we want to do. In our case we eventually stopped paying on thw mortgage and let the house go into foreclousure since we were too upside down. I hope this helps

  • soccergirl2013

    I filed bankruptcy in Sept. 2011 and was discharged in Dec. 2011.  Of course my home mortgage was never reaffirmed so it isn’t showing up on my credit report.  It shows up as discharged in bankruptcy.  I do still pay the house note.  I was just recently informed that they sold my mortgage to a new mortgage company.  My question is this new mortgage company will advise the credit bureau.  Will the mortgage now show up as a debt that is owed again even though I have not reaffirmed it?  I know they my force a reaffirmation now but was wondering until the due will this debt still show up as being discharged in bankruptcy since a new mortgage company has taken over and the fact it was not affirmed.

  • geeooff1 Yes, it sounds like a credit reporting error.  On an unrelated note, the loan modification removed your mortgage from bankruptcy protection, so no foreclosure is a good thing!
    I would simply dispute the credit line with the bureau that is reporting inaccurately.  They will research it and should correct the trade line.  It may cost you a few bucks to order your credit report through the bureau, and disputing the line item online is free and pretty easy.  I would start there.

  • geeooff1

    Well my mortgage is paid up to date and all arrears have been paid. I filed for bankruptcy in 2009, and it has been discharged back in November 2012. I have no concearns about foreclosure, my only concern is my credit report. As I stated, I went through my mortgage company to do a loan modification. How this information is portrayed in my credit reports is my question.

  • Mark9999

    Regarding Geeooff1’s comment about the bank’s request for relief from automatic stay, this is nothing more than the bank asking the bankruptcy court to allow them to collect from you directly instead of waiting for the stay period to end. The practical results of this are the bank and/or it’s servicing agent will be able to call you directly so the irritating phone calls will begin again. Also the stay allows the bank to move forward more quickly with the foreclosure rather than waiting for the completion of the bankruptcy process. My loan servicing company lied to me by implying the stay removed my home mortgage from bankruptcy protection. That is NOT TRUE! So be careful!

  • geeooff1

    Hi Scott. I had filed a chapter 13 bankruptcy that was discharged in November of 2012. During the bankruptcy my mortgage company filed an order for relief from automatic stay. The court granted it so I went through as loan modification with them. On my credit reports only two out of the 3 credit reports are showing a payment history. Is this just an error on one credit report?

  • ShaunSigley

    Hi Scott,
     I went through bankruptcy in March of 2013. My house was included and I decided to continue making payments without a reaffirmation agreement in order to stay living in the house until I was financially fit to move. I’m looking at moving at the end of next year and I would really like to know what I need to do to make the process as simple as possible. It’s my understanding I will be able to get a VA loan after July of next year (2 year anniversary of my bankruptcy closing date) but I don’t really understand the process that it entails. Will I have to pay back what is owed on the lien on my current house (I have about $5,000 of equity as it stands, leaving me with $5,000 to make a new purchase after the sale) or am I entitled to the entire sell price of the house (it’s worth about $80,000)? What exactly do I owe the lien holders of my current house when I go to sell and how does that affect my chances of successfully getting a new loan?

  • LindaLawrence

    Hi Scott, My husband filed chapter 7 . Now we received a phone call stating they have a program to offer us money to move out is this normal ? Are should we avoid these this?

  • Felicia08 Thank you for doing your research Felicia!  DO NOT reply to that property consultant, it is a SCAM.  You are already on title, and when the bank forecloses on the home, you would have absolutely no rights to the home, nor would you want any.  I hope this helps 🙂

  • Felicia08

    My Chapter 7 BK went through last March and I did not reaffirm my loan after BK. I decided to go ahead and leave the house to rent for a while several months ago since the house and maintenance was too much for me as a single mom, knowing that they couldn’t come after me for the balance. I recently heard that they are going to sell the home at a foreclosure auction on 9/30, in eight days. They sent me formal notice via certified mail. I just received a letter from a property consultant looking to pay me $ for an interest in the title. Is this something I should do? Are there any caveats to this? I am no longer in the home and have no desire to move back or buy for some time. I am also the only one on the deed.

  • LisaDF

    I live in Michigan and we short sold our home over 2 years ago.  Everyone signed off and we short sold the house to a buyer.  Now Fifth Third Bank is trying to come after us for the amount that they say we owe – they were our 3rd mortgage – home equity line of credit.

    Seems odd to me because they signed off…can they do this?

  • Rjkmom

    Thank you so much. There is not much chance of it regaining all the equity. It’s upside down by about $100,000.

  • Rjkmom if your mortgage debt is included in bankruptcy, you would not be financially responsible for any losses incurred as a result of the mortgage defaulting, or selling the home for less than what is owed.
    If you can quit claim off title, I would do so as fast as you can without even thinking twice about it!  You being on title will prevent you from purchase another home in the future.
    Since the debt is discharged, you cannot be held financially liable for anything that happens with the mortgage.
    As far as taxes go, you would not be responsible for any income taxes, however you may be responsible for property taxes if you’re on title.  You would want to speak to a CPA or maybe even your BK attorney for tax advice.
    The only downside to quit claiming off title would be if your ex-husband hangs on to the property long enough to earn enough equity to sell the home at a profit at some point in the future.  If that is his strategy, you may not be entitled to any of the equity.
    Hope this helps?

  • Rjkmom

    My filed chapter 7 bankruptcy a few years ago. I also got divorced during that time frame. My ex wants me to quit claim our investment property to him. The property is upside down. I know I’m not liable for the mortgage but if I’m quit claimed off the property would I still get a 1099 for the debt loss if he short sales property and would I have to pay taxes on this difference?

  • shaunnacarbonell

    Mark9999 Hi Mark,
    My bankruptcy was discharged last year that includedmy home but I did not receive this form.  Is that the way it works in every state?

  • Mark9999 Thank you very much for the correction and clarification Mark!  Your input is very much appreciated 🙂

  • Mark9999

    Just for the record, when a house is foreclosed on, the bank sends a 1099-A  (Acquisition or Abandonment of Secured Property) to the former owner. This is normal even for property declared in a bankruptcy. When filing your 1040 long form, you’ll have the opportunity to check this off as included in bankruptcy with no further issues. 

    IF the property was used in business (re.g. rental, etc), the situation gets much more complicated. You’ll have to file forms 4797 (Sale of Business Property), 8582 (Passive Activity Loss Limitations) and 982 (Reduction of Tax Attributes Due to Discharge of Indebtedness). It’s not complicated but you must have access to your previous returns to determine if you had a gain on the sale of the property after taking into account recaptured depreciation and other deductions. If you were seriously underwater to begin with, you shouldn’t have any taxes owed. If this all sounds confusing and complicated, go see a tax attorney or CPA.

    P.S.  I’m NOT an attorney or CPA.

  • shaunnacarbonell

    ScottSchang shaunnacarbonell Thank you so much.   This helps alot.  All of this is so confusing.

  • shaunnacarbonell absolutely no reason to apologize!  I honestly wish more people would ask more questions 🙂  The waiting period, and starting point for that that waiting period will depend on what type of loan you are trying to use to purchase your new home.
    If you are using FHA financing with 3.5% down payment, the waiting period is 3 years from when your name is removed from title.
    If you are using Conventional financing with 10% down, the waiting period is 4 years from the discharge date of the bankruptcy.
    If you are eligible for VA financing with 100% financing, the waiting period is 2 years from the date your name is removed from title.

  • suzq1411 Oh my gosh, I can imagine your frustration!  There are several things here that don’t make sense.  Did you record a reaffirmation of mortgage along with the bankruptcy?  If not, then Nationstar should have no right to come after you for late payments or penalties.  If the mortgage is included in the BK, that should be end of story.  You will want to consult your bankruptcy attorney regarding this matter.  The 1099 also concerns me.  A 1099 typically means that you the losses the lender incurred as a result of the short sale were reported to the IRS as income, which you would be responsible for paying income taxes on.
    First and foremost, you need to review your BK paperwork and determine if the mortgage was discharged.  If it was discharged, all this goes away, if it was not, you owe the money.
    What State are you trying to buy in?

  • shaunnacarbonell

    ScottSchang shaunnacarbonell This debt was discharged
    in the bankruptcy.  If I can get the bank to agree to a short sale or a
    deed in lieu of foreclosure how long will I have to wait before I can qualify
    to purchase again in another state?  Will the clock start when my name is
    removed from the title or when the bankruptcy was discharged?  I apologize
    for so many questions.  I just want to be sure that I am handling things
    correctly.

  • Mark9999

    Hi, I want to clarify something you have stated on this blog. From reading your responses to others, I believe you have stated that 4 years after a Chapter 7 bankruptcy, I can be approved for a conventional mortgage even if my former house title is still in my name. Is that correct?

  • suzq1411

    Soooo confused and annoyed! My Husband and I filed for chapter 7 in 2011 received discharge in 2012. We also did a short sale on our home since BOA kept extending our loan modification process and eventually sent us a foreclosure letter. Short sale was approved and house was sold in 2013. We received a 1099 stating everything was payed off. 2 years later we are trying to use VA loan to purchase again. VA approved the loan but our lender just called us that Nationstar which eventually took over the loan during the short sale process is now saying that we owe 137,000 in late payments and placed in our credit report. Can they do this???

  • shaunnacarbonell you basically have 3 options for getting your name off title.  1.  stop making payments and wait for the bank to foreclose, 2. find an experienced short sale agent and list the home as a short sale, 3. contact the lender and inquire about a deed in lieu of foreclosure.
    The 1st option should be a last resort.  The bank could take years to foreclose on the home and that could seriously hinder your ability to buy again.  If you are unable to get the home out of your name, you could buy using FHA financing in 3 years from the date your name comes off title, or 4 years from the discharge date using conventional financing.
    Hope this helps?

  • binnstacy Yes, I think that short sale is the best way for you to have any control at all over the timeline for getting those homes out of your name.  Of course, the bank will have to determine the sales price, you are not able to set the price yourself.
    Fannie mae guidelines would actually allow you to buy again as soon as your name is removed from title.  The waiting period to buy again using conventional financing is 4 years from the bankruptcy.
    Hope this helps?

  • shaunnacarbonell

    I live in Arizona and  chapter 7  bankruptcy was discharged over a year ago. We have remained in the home and continued to pay the mortgage and hoa fees. We now want to relocate and eventually purchase another home in another state. How do I get my name off of the title and how long can we stay in the home without paying the mortgage and hoa fees?

  • binnstacy

    Hi I filed chapter 7.. 4 years ago for two investment properties that i foolishly bought and owed more than the equity. they were discharged and Its been seven years and the banks have not foreclosed on the properties.. A investor suggested to short sale the two properties so they could buy them from the bank… I would like to get rid of the properties and start over…Do you think this is a wise decision to try a shortsale?

  • chestermeeker

    ScottSchang chestermeeker  yes PLEASE publish maybe a real estate attorney can answer.

  • dhite08

    My husband and I filed bankruptcy chapter 7 in February of 2010. It was discharged in May of 2010. I had an adjustable rate mortgage loan through a local bank that I kept through the bankruptcy but never reaffirmed the loan. So, the rate adjusts every so often and I have to sign paperwork for it, but it still doesn’t report to the credit bureau. If the payment stops being made I assume it would probably go into foreclosure. If that happens would the foreclosure show up on my credit report and would I be legally responsible for the payment?

    • Even though we discussed this over the phone, I want to make sure I share the answer in case others have a similar scenario. If your mortgage was discharged in the bankruptcy, should you default in the future (foreclosure) it would not show up on your credit report. The debt has already been discharged, and under bankruptcy protection laws, the creditor cannot hit you twice.

  • chestermeeker This is certainly a challenging situation, and I am sorry to hear that you have had such a difficult journey.  Unfortunately, I am only a lender that is trying to educate consumers about the qualifying guidelines for buying a home after bankruptcy, foreclosure, short sale, or deed in lieu of foreclosure.
    If you do not mind, I will publish your situation on my site and maybe a real estate attorney will be able to reach out and assist you pro bono.
    I apologize that I am unable to offer any other help, this is a legal issue and outside of my area of expertise.
    Again, I am sorry I cannot help more. I wish you the very best and am happy to hear that you have a lot to look forward to once you are able to navigate through these troubled waters.

  • jmmann72 The new law does not apply to FHA financing, only Conventional
    There are a couple of things here that would like to address.  First, what happened to the home?  If you simply quit claimed off title, and your ex received the property as sole and separate through the divorce, AND if the loan was current at the time and defaulted later (which would trigger the CAIVRS alert), you might not have to deal with it – but it would be manual underwrite situation.
    CAIVRS basically means that there was a default on a FHA loan.  The waiting period to buy after a FHA default goes from the date that the FHA mortgage insurance claim was paid, not the foreclosure date.  You should be able to contact CAIVRS to get this date.
    Either way, the waiting period for FHA is only 3 years from the foreclosure date, which will now be the date the MI claim was paid.
    Using conventional financing, you could be eligible for financing 4 years from the BK discharge date.
    Hope this helps?

  • jmmann72

    To get a loan earlier than the regular waiting period.

  • jmmann72

    My wife and I filled for chapter 13 bankruptcy during the process she decided she wanted a devoice. The 13 was then turned into a chapter 7. I have now tried to get another FHA loan. Does this situation allow me to get the FHA loan earlier than the standard waiting period. I have been turned down due to my name showing up on a carvis list. And my house had my mame on the deed till 2011. Do I qualify for an exception under the new law

  • redo2013 ScottSchang Yes, goes from discharge date if you are buying using Conventional financing.  If you want to buy using FHA financing, it will go by the date of the deed in lieu – 36 months from when your name comes off title.
    You should avoid FHA financing if you can, it’s very, very expensive.
    You’re in great shape!  Good luck 🙂  
    Please check back in and let us know how everything goes?

  • redo2013

    ScottSchang redo2013

    So it now goes by the discharge date and not the date our name is off the house?  That is great!  Hopefully they will agree to the deed in lieu.   As far as the bank, it is safe for me to complete forms stating our current income as that is only a formality to finish the process even if our income is significantly different than when we filed?  I really appreciate your advice.  This all makes me extremely nervous and I’ll be glad when it is completely behind us!

  • redo2013 You lawyer is absolutely correct, the debt was discharged through bankruptcy and the bank cannot legally pursue you for the debt.  They can either foreclose, or agree to a deed in lieu of foreclosure, which will save them time and money.
    Fannie Mae recently made a significant change in their qualifying guidelines which would waive any waiting period after a short sale, foreclosure or deed in lieu of foreclosure if the debt was discharged in Bankruptcy.  The only waiting period you have is from the discharge date of the BK.  For a chapter 13, that waiting period is 2 years from the discharge date, which would make you eligible to buy using Conventional financing in September of 2015 as long as your name is removed from title.
    Hope this helps?

  • redo2013

    My husband and I filed for bankruptcy in 2008 after he had lost his job.  We filed Chapter 13 and planned on keeping the house.  He found another job, but that company went bankrupt in 2009.  He was out of work for a year and when he did find a job it was half way across the country.  Our lawyer advised us to give up the house into the bankruptcy which we did and we moved in the spring of 2010.  Unfortunately for us, it was never explained to us that we still actually owned the house until the bank decides to foreclose on it until a Re-max realtor called wanting to rent it out or some such thing.  I called our lawyer and he said if we want to get our name off it faster, we could do a deed in lieu if the bank is willing.  The bank wants us to fill out all of their financial paperwork and says that it is just a formality and a step that has to be done in the process of deciding if they will do the deed in lieu or not.  I again called our lawyer as I was concerned with giving out our current financial information as we are finally doing good and the bankruptcy was discharged in September 2013.  I was and am still worried that if I give the bank our current financial status, can they use it against us?  My lawyer says that they can not come after us for the house.  What is your opinion? I am hesitant to give them the information but would love it if we can be done with the house in NY.  Are we protected by the bankruptcy?  Should we give out financial info?  We would like to buy a house sometime in the future and I know that there is a waiting period after either the deed in lieu or the foreclosure is final.  The house is going to be foreclosed on, but no date yet.

  • Wisdom810 What an unbelievabley horrible story!  I am so sorry you have been dragged through all of this.  I am unfamiliar with the laws in Oregon, but I would strongly recommend you hire a real estate attorney to assist with this process.  I wish you the best of luck, and again, I am so sorry you have had this experience.  I thought the worst of this kind of thing was over by now, but evidentially there are a few cases out there still kicking folks when they’re down.
    Good luck, I hope you revisit and let us know what happens, and maybe someone in a similar situation will be able to get some guidance on how to proceed.

  • Wisdom810

    I haven’t file bankruptcy yet but my mortgage for my property in Oregon for the last 24 yrs. was first with a company named Beneficial, then in 2005 I acquired Countrywide. I even refinanced in 02/2009 with Countrywide and they are who is listed on my promissory note and I paid them (Countrywide) for the rest of 2009 and started paying BoA sometime in 2010. When I signed the refi papers in 2009, someone came to my house and we sat at my kitchen table and signed away, is that normal? Thought it was kind of weird at the time. Something has my curiosity up. Fast forward to 2013 and BoA sends me letters that they have sold my mortgage to a company name Seterus and BoA quits billing me and I don’t receive any bills from Seterus either, so I called Seterus in 08/13 and ask why I haven’t been billed. I’m told that my mortgage was returned to BoA and they had no information why and after a long conversation I was told that it was a “business decision”. So I was given the Correspondence address for Seterus so I fired them off a letter to hopefully get in writing why my mortgage was rejected and sent back. Received a letter back saying something like they didn’t have my mortgage and  to contact BoA. So I ended up paying BoA for a few more months until I lost a job and got injured (hernia) on the job from another job. So I fell behind on my mortgage. When I came home from hospital in December of 2013 in my mail was a welcome packet from Seterus and  in the following days the statements from Seterus started arriving.  Eary in 2014 I worked with someone from Fannie Mae and she had me sending documents of my income, bank statements ect. over and over for over a month. When Seterus knew I was dealing with Fannie Mae they sent me a modification packet  saying I qualified for a modification  when I haven’t ever made a payment to Seterus. After Fannie Mae had me spend about 2 months sending them paperwork and hardship letters and proof of everything, they told me “Oh look, we we’re just notified that Seterus has sent you a modification, so fill out the paperwork and start making payments. Well I didn’t tell her this but the days of me just signing papers ARE OVER especially since the payments they were asking for was more than I could afford with the employment I have. So I didn’t do anything. Now in mid 2014 Seterus started moving my account to Foreclosure but in Oregon they are legislative laws saying the mortgage company has to go through mediation before they can foreclose. So I had to pay a non refundable fee to participate in the mediation but there’s a company name NEDCO that oversees these cases and they have a packet of paperwork and require the homeowner to go through some sort of housing counselling and within the packet they want to see all the promissory notes for the property. I haven’t been able to locate my copy of my promissory note so NEDCO told me to contact my servicer and they would have it. I called Setrus in early August and requested my note and they guy told me my foreclosure is on hold. He said he had to put in an order for the request so we’ll see what happens. I’m suppose to have my mediation hearing with the lender in September. I’m not sure how long it will take for Seterus to produce my note. I think my nightmare is just beginning.

  • mkcinca ScottSchang That sounds like GREAT news!  The only thing to be aware of is that if you “retract” your surrender, you may be pulling that debt out of bankruptcy protection, which means it would no longer be “discharged in bankruptcy” – I wouldn’t sign anything without running it by your bankruptcy attorney first.
    I am afraid that if you pull the 2nd mortgage out of BK, that you will no longer qualify for the waiting period being tied to the bankruptcy discharge.  I believe that under that circumstance, you would then be subject to a waiting period tied to the short payoff.  In addition to all of that, the lender has the right to come after you for a deficiency judgement for the difference between what you settled for and what you paid, or even submit the loss to the IRS which would trigger a possibly tax liability as it could be considered income, which you would have to pay income taxes on.
    Again, please consult a bankruptcy attorney and a CPA or accountant for guidance on these subjects.  I am only giving you my opinion and should not be taken as fact.  I am not a licensed attorney or accountant, I’m just trying to think of questions you should ask a professional 🙂

  • mkcinca

    ScottSchang mkcinca Followup:  After being sent to multiple different departments, I finally got through to someone who could help me at Chase. They had me in inactive accounts, so I was not accruing interest or penalties. She told me to send a note retracting my surrender and they would settle with me for a fraction of the loan. She was very cooperative, and said they do this all the time, they just want the loan off the books. So I sent the fax, and we’ll see. She told me to make an offer and we would go from there. Praying I’m not being played!!! I am going to offer $2500 on a $46K HELOC. I’ll keep you posted. Thank you for the advice, I already feel a little better. In the meantime, I took the house off the market. Once the lien is removed, I’ll re-list it.

  • panthr77 The good news is that your mortgage was included in your bankruptcy, so to answer your last question, you would be eligible to apply for conventional financing with 10% down in 4 years from the discharge of your Ch7.  If the bank has not started foreclosure proceedings, I would look for the short sale specialist (Realtor) in your area and begin the short sale process.  By starting this process, the bank will either offer a deed in lieu of foreclosure, or begin foreclosure proceedings.
    To buy using FHA financing, you would have an additional waiting period that begins from the day your name is removed from title and will end 3 years from that date.
    Hope this helps?  If you do not know a good short sale agent in your city, let me know where in NJ you live and I can reach out to my network and see if I know someone in the area.
    Hope this helps?

  • panthr77

    Hi Scott,

    I filed chapter 7 bankruptcy almost 4 years ago in NJ, We did not include our home, but they never reaffirmed it because they said we are upside down, Every mortgage statement we receive states that we are not liable  to pay this debt back, but if we do not they will take our home.We continued to pay the mortgage for the last 3 years but did not get credit for it, Our credit report reads chapter 7 bankruptcy $0 balance for our mortgage. We stopped paying it almost a year ago when we were unable to sell due to owning more than it is worth, Our neighborhood has gone down hill, I feel very unsafe here. I just want my name off the deed so I can move on with my life, Should I do a deed in lieu or try and short sale?? And, How long before I can buy again…..

  • mkcinca ScottSchang you wouldn’t have to remove the lien before selling, the loans would be paid off as part of the sale.  You would not be able to sell without the bank’s permission if you are trying to pay less than the amount owed.
    If you were upside down, they would have to give you permission to pay them less than what is owed.  Since you have equity, they have no incentive to collect anything less than everything they believe they are owed.  
    You can certainly negotiate with them and ask them to waive fees or penalties, but they have no motivation other than being decent human beings.
    Unfortunately, they have all of the control in this situation because you have equity.  I’m actually surprised that they have not started foreclosure proceedings knowing that they could be fully compensated for what is owed to them.
    The first step is definitely to reach out to them and start exploring your options.   If you simply go into contract without coming to an agreement first, they will return a payoff demand showing everything they feel you owe them.

  • mkcinca

    ScottSchang mkcinca 
    I’m confused about removing the lien before I sell it. Wouldn’t they be paid out at the close of escrow with the proceeds? 
    Also, do you know if they will hit me up for late fees and penalties from the last 5 years?

  • mkcinca

    I’m confused about removing the lien before I sell it. Wouldn’t they be paid out at the close of escrow with the proceeds? 
    Also, do you know if they will hit me up for late fees and penalties from the last 5 years?

  • mkcinca If you are not upside down, then you will most likely run into challenges with the second lien holder.  You need them to remove the lien on the home before you can sell it.  You could certainly approach them and ask them to settle for less than the amount owed, and you would fall under the new guidelines that would allow you to buy again using the BK timeline IF both the 1st, & 2nd mortgages were discharged in the BK.
    Unfortunately, it is unlikely that the second mortgage will settle if you have enough equity to pay them. 
    The good news is, whether they take less than what you owe, or if you pay them in full, you should be able to apply for a new mortgage right away, and if you qualify, you may be able to buy again without further delay.
    Hope this helps?

  • mkcinca

    I am selling my home in CA after a bk in 2009. I never reaffirmed my first or 2nd mortgage. I recently realized from researching online that I’m still responsible for the 2nd even though I have not received a single statement from Chase since the BK. Because I didn’t received statements, I assumed they had written the equity line off so I never tried to make payments. They aren’t listed on the lien as the original lender didn’t change it when they sold it to Chase. My questions are these:

    *If I’m obligated to pay the loan, which had a balance of $49K, will I be hit with late payments and interest, etc from the past 5 years since I haven’t made payments? 
    *Should I try to negotiate a payoff with Chase before selling my home? Many of my friends have settled for pennies on the dollar, some got free and clear write offs, but they were upside down. I am not. My worry is that I will open a can of worms and initiate a foreclosure. I have noticed that they check my credit regularly.

  • Mark9999

    ScottSchang Mark9999

    Hi, thanks for the note. Unfortunately, a short sale will require the approval of the second mortgage holder. They are not inclined to work with me at this time since the house is deeply underwater. Some have suggested renting the home which is a viable option here. But not I’m not interested in becoming a landlord since that would expose me to even more liability.

  • Mark9999 this is a very unfortunate and I’m going to say super sleazy strategy by the “servicer”.  Since you are the owner of the home still, why don’t you just list it for sale?  If you’re upside down on it, it would be a short sale, but that will not affect your credit, since the mortgage is already discharged.
    Maybe that will push them to do something, whether they continue with the foreclosure, or accept the short payoff, you’re off title.
    Good luck!

  • Mark9999

    I was amazed to learn that my original B of A mortgage which was discharged in a 2011 Chapter 7 Bankruptcy was ‘sold’ to a new mortgage investor. This investor, in turn, hired a new loan servicing company to ‘service’ this loan. In 2013 the mortgage investor started the foreclosure process only to stop it completely after 6 months. According to my attorney, this new investor & servicing agent have NO legal way to force me to pay on this loan since it’s been discharged. Accordingly all correspondence from the servicing company has been careful not to demand payment for ANYTHING! They continue to pay the taxes and insurance so I assume that once they realize I won’t be tricked into playing their game, they’ll restart the foreclosure process.The only issue I have is that the property title is still in my name.

  • Biggryan Thank you for that!  I have actually heard of this before, you’re absolutely right.  If the bank determines that it’s not worth the cost to foreclose and resell, you could find yourself with a free and clear title.
    What a great stroke of luck that you caught those past due taxes!  I don’t always get the success stories here, this is great to hear.  Thanks for sharing

  • Biggryan

    In my particular situation, I filed chapter 7 and waited 2 years for another mortgage. After calling my name was still on title, made a few phone calls and paid a real estate attorney for a title search. What I discovered is that the mortgage company released mortgage. I then at that point moved back in and paid the back taxes. They turned and walked away from house and luckily I called before house went to tax sell. So I now have my home back free and clear with a clear title and no mortgage on that title. Juatvthought I would mention this because everyone I’ve talked to even my attorney has never heard of this happening. Just thought I would throw this out there because mortgage company’s are walking from properties because it will cost them more to for close then to walk away.

  • aelias032003 The bankruptcy and the resolution to your defaulted mortgage are two completely separate issues.  The BK does not get rid of your mortgage, or your responsibility to pay the mortgage.  The BK does, however, prevent the lender from coming after you, or reporting a foreclosure on your credit report.
    A short sale is a much better solution than a foreclosure in my opinion, for 2 reasons.  1. In some cases you can buy sooner after a short sale, and 2. A short sale is the only option where you have some control over the timelines.
    In the past few years, lenders have been dragging their feet and postponing the foreclosures for years, which means that folks cannot buy again for much longer.
    In order for you to even be in a position to be eligible for a mortgage you either have to catch the mortgage up and make it current for 12 months, or get your name off title as soon as possible through foreclosure, short sale, or a deed in lieu of foreclosure.
    Hope this helps?

  • aelias032003

    I filed for bankruptcy in 2013 and let go of the house under the bankruptcy. I’m still living in the house and would like to keep it now because I can afford it. I filed a loan modification in June 2014 and that postponed a foreclosure sale date, but now I received another letter with a new foreclosure sale date in August 5. Should I still fight to keep the house? I’m not even sure if the mortgage lender will work with me because I let the house go under the bankruptcy. If I want to buy another house I know I need permission to get into debt again. How soon after filing bankruptcy can I buy a house? I’ve saved a very decent amount of money to put as down payment if I have to buy another house. Thanks.

  • Jessymoka

    I live in Indiana and have a discharged chapter 7 bankruptcy, it was discharged in 2004. We filed to reaffirm our mortgage only to find out years later that our request to reaffirm was never honored. I now (in our current situation) understand this to be an advantage to us. We live in an area changing for the worst, and no longer want to raise our kids here. The mortgage on the home is for more than what the property is worth. The mortgage has been sold to another lender since the bankruptcy discharge and the new lender (ocwen) acknowledges the discharge.
    We had the good fortune to be able to purchase another home with cash. When I contacted the mortgage company to file for a deed in lieu of foreclosure they want me to fill out some crazy packet and want me to submit all of our financial information. I do NOT want to give them all of this info, and it seems crazy to me that they would want to go through a foreclosure process rather than just do the DIL.
    I am truly tempted to just allow the foreclosure instead of dealing with their demands. If I were to allow the foreclosure instead of the DIL and waive the waiting period for foreclosure would this be a suitable option?
    Am I just being fickle by not wanting to fill out all of the paperwork they are requesting? Should I just fill out the paperwork and attempt the DIL?
    Also, if I do the DIL and have my 2004 discharged 7 protecting me do I need to make sure the paperwork states I am not responsible for deficiency or am I safe if the DIL doesn’t state this simply based upon the bankruptcy protection?
    Thank you in Advance

  • 1angell18 I would recommend contacting the HOA to make sure, but if your home was foreclosed, and you are no longer the owner, then you should not be required to pay HOA dues for a home you don’t own.  To confirm, you can check with your County Recorder’s office (or ask a lender or real estate agent) to verify that your name is off title.  It is a public record and should not be difficult to find
    Hope this helps!

  • 1angell18

    We had a real estate agency trying to short sale our for closure home. Meanwhile we kept paying HOA fees even thus we had left the house 2 years ago. I was notified that the listing was canceled because the house has been sold back to the lender. My questions are: can we stop paying HOA fees now? Is the title finally off of our names? Thanks

  • mewiththree If you default on mortgage after a Bankruptcy it should not report on your credit report, but your credit is not really what you would need to be concerned about.  If you end of getting rid of the home for less than what you owe on it, it would be considered a “pre-foreclosure” sale – also known as a Short Sale, or Deed in Lieu of Foreclosure.
    You will definitely have a waiting period before you can buy again after a Deed in Lieu.  The minimum wait would be 2 years if you are eligible for VA financing.  If not, FHA is 3 years, Conventional is 4 years from the date your name is removed from title.
    Hope this helps?

  • 2796land I apologize for the delay in answering this – my notifications stopped working 🙁

    Unfortunately, this sounds like a legal matter and you should probably consult a real estate attorney.  I am a mortgage lender, and can tell you the guidelines are for buying after a hardship, but this is far beyond my professional capability.

    Sorry I could not be more help

  • mewiththree

    Both my first and second home loans were discharged in a Chapter 7 bankruptcy in 2009.  Soon after, the loan companies gave me a not-so-great-for-me loan modification, which I have been paying on for 5 years.  I recently received a rate adjustment letter, which is now causing me to second guess my living arrangement. With the loans being discharged through bankruptcy, would a deed in lieu of foreclosure affect my credit and if not the credit score itself, would it prevent me from getting another home loan within the next 12 months or so?

  • 2796land

    We surrendered vacation property in NC (we live in FL) in ch. 7 in 2011. The bank never foreclosed and a property management company has now placed a lockbox on the mobile home that sits on the property. We owe back taxes and HOA dues since 2010 and never knew we were responsible for those.  The loan was only on the land, and we still have the title to the mobile home.  Do they have the right to lock us out? A good RE agent tells us we won’t make enough to cover the loan plus taxes, HOA, etc. if we sell.  Do we just ignore it now and consider it out of our control?  If not, what do we do?

  • Biggryan Hey Ryan, you may want to get a real estate attorney involved, and do a little more digging just to make sure you have all the facts.
    The first issue would be how the property was divided through the divorce decree.  If you have sole responsibility for the home, and your ex is not on title, then you are currently the owner of the home.
    The second concern would be the lien.  It sounds as though a BK was filed, and the mortgage was included – this does not extinguish the debt, it only protects you from any tax liability or a deficiency judgement in the event of a default.
    If the loan is still in your name, you are still responsible for the lien.
    Lastly, if the mortgage was included in a BK, and if payments are not being made, then the tax sale may take priority over the foreclosure, but the foreclosure may still be inevitable.
    Hope this helps?

  • Biggryan

    The house goes up for tax sale…..not foreclosure

  • Biggryan

    I owned a home and went thru a divorce…filed chapter 7 and surrendered the home. Its been 2 years now since discharge and I tried to get a new mortgage. I was told I couldn’t because my name was still on other house title. So I then did some digging and the mortgage company discharged and cancelled there debt. The house goes up for foreclosure in October, so I called the county treasure. They told me that I would only have to pay 301.55 just to keep it from tax sell. My question is if my name is still on title and the mortgage company has said there not pursuing foreclosure, can I retain my house and get title free and clear? Any ideas? Thanks Ryan

  • dena1

    When we did a re-fiance in 07,  I had no idea our loan would be ‘swimming in a pool of mortgages back securities . thrown on wall-  street to be flip over and over. If,    I the home-owners is a silent investor because my debt created the bond for investors to make fees – why  then is my mortgage lender and the service company that has a pool service agreement allowed to keep discounts and fees associated on my note to keep these fess and not apply some to my mortgage principle .

  • cherz

    Hi Scott,
    I live in Fairfield, Ca and have been in my home since 2003. In 2010 I was laid off do to the economy and during that time I wasn’t able to go back to work. I became disable and have been since July 2011. When I first was laid of it was getting hard to pay all the bills in this house, being since I was the bread winner. So after lots of debate and exploring I decided to file for bankruptcy (Chapter 13) plus I stripped the second off. I filled July 2010 and it was discharged Aug 2013. I took my home into the bankruptcy but paid the mortgage out of the bk. I am and always been current on this loan. So my question is this, we are looking to move out of Calif this year and I don’t know what to do with this home. FIRST I was going to sell, but it is underwater. SECOND I wanted to rent it till the market recoops when I am able to sell it. But to get a new loan they said I won’t be able to use this one as a rental property unless its been  a rental for two years. OK, I get this. I am trying to find out if I just give it back to the Bank what does this entail or what will it do to me financially .  Should I just call the Bank and let them know what my plans are? They for some reason feel I don’t qualify for loan modification since I am current with my mortgage. Which makes no sense to me. I am in a interest only loan that was a bad loan for Countywide then sold or merge with Bank of America and up until last July they sold it to Nationstar. I have been trying to modify this loan since I first filed for my bankruptcy. I believe they are not able to hit credit again but I know they won’t sell this for what is on the note, will I be responsible for short fall? Is there anyway I can proceed this year to secure a new loan? Thank you in advance for any information you can throw my way…Cheri

  • trickle77

    Hi, I am really needing answers that i  can’t seem to find anywhere with my situation so i am hoping you can help.  I was divorced in march of 2010.  Ex kept the house and was supposed to refinance in 1 year. In the mean time I filed for bankruptcy which was discharged in Sept 2010 which included the mortgage. I then took my name off the title via quit claim deed as well.  Well Jan 2013 I get served with foreclosure paperwork.  I had no idea he wasn’t paying the loan because I could not see the payment history on my credit report because it was discharged.  I also had no way to surrender the home or do a deed in lieu of foreclosure because I haven’t been on the title since sept 2010.  I have been denied FHA financing because my foreclosure has not been more then 3 years even though my bankruptcy discharge and my name removed from title in Sept 2010.  Should they be going by when my name actually came off the title via quit claim deed in 2010 or do I in fact have to wait 3 years after the ex let the house foreclose.  I also tried to file a contempt motion because I was to be held harmless from the mortgage and the judge didn’t care. One more thing, It was an FHA loan but I don’t think the bank filed a claim because they sold it for the principal balance one month after the Sherriff’s sale. And a mortgage lender has confirmed my name does not show up on CAIVRS, so I really don’t know if that is good or bad.

  • MML_214

    Maggie_A ScottSchang Wow! I FINALLY found a post that reflected what I am going through!!!! Please keep posting here as to how to get past divorce with bankruptcy and a discharged mortgage my ex is paying and living at. I want to be free and clear of him but I don’t know how to legally cut the strings. Will a Quit Claim do it?

  • alexander1galkin

    My bankruptcy attorney never notified me of the foreclosure proceedings, or the fact that after the mortgage debt was discharged, I still owed the deed, and was liable for HOA fees and taxes. My mortgage company also never reached out to me to explain the process. Neither did the bankruptcy judge. So 4 years later (my Ch7 was discharged in 2010), and after re-building my credit for 4 years, and all and thinking of buying a house, I finally sign the deed in leu, and go back to credit jail for another 3 years (best case scenario)??? I feel completely short-changed and taken advantage of. I am not sure I am OK with that. I feel like I am being punished twice. HELP!

  • coelsmith_fl

    We live in Florida and are facing foreclosure.  We purchased the home while we were married, but I am the only name on the mortgage and deed. Can my husband be held responsible for the deficiency if we have a short sale or after a judgement if it goes to foreclosure?
    If he purchases a home now in just his name ( since we need to live somewhere) will they be able to place a lein on his property?

  • Maggie_A

    ScottSchang Maggie_AThanks so much, Scott. We’re in Washington State. I’m pretty sure the bank won’t do a deed in lieu or a short sale. My fiance’s ex completely trashed the house, and in the five years that it’s been sitting there abandoned (unbeknownst to us) it has fallen into extreme disrepair and been broken into and vandalized. The bank doesn’t want it and my fiance needs to deal with his ex as little as possible. Your feedback is really useful. My credit is excellent, but I don’t make much money. He has a great job and makes good money, but the divorce debacle wrecked his credit, and we’re trying to rebuild. As long as that house has my fiance on title, that isn’t going to happen. I’m wondering about a USDA loan. We need rural / acreage property. I have to say get BIG points for so patient, hearing the same story (with minor variations) repeatedly, and replying to everyone who has been affected by this seemingly-unending nightmare. Thanks again.

  • Maggie_A  Hi Maggie, quit claiming off title might work in theory, and you may be eligible to buy after 12 months since there was never a foreclosure.  Another alternative is to approach the bank and try to offer a deed in lieu of foreclosure or short sell the property?  A lot of this will come down to what your new lender can do.  Lenders deal with these things in different ways.  You probably want to partner up with a lender and research the guidelines and make sure you’re going to be able to accomplish your end goal.
    What State are you trying to buy in?

  • Maggie_A

    Question : my fiance and his ex lost their house to foreclosure in 2009. They filed chapter 13 Bk and they separated; he moved out. She stayed in the house until the house was going to auction, and then left the state. The house was surrendered to the bank in the bankruptcy, at the bank’s request. When their divorce was final, my fiance and I tried to get pre-qualified to buy a home and — you guess it — we discovered the bank never actually foreclosed. We’ve done some pretty extensive research on the various options (none of which are particularly promising) and I’m wondering : would something as simple as quit-claiming the house to my fiance’s ex be adequate (for the purposes of getting a new loan) to remove him from title? His ex could continue to live in the house rent-free until the bank forecloses, which at this point looks unlikely. I know he’d likely have to wait two years from the time the title was quit-claimed for an FHA loan, but even that would be better than having to continue to be tied to her through the house. After five years, he — and I — really want to at least be making some progress towards a fresh start. Thanks in advance for any insight or suggestions; this is a really

  • McCoy  I really appreciate the question but I do not know anything about homeowner’s insurance policies.  I think it’s very unusual that the insurance company will not insure the property.
    The only think I would offer is that you absolutely should have insurance on the home.  Even if you have defaulted on the mortgage, you are still on title, and therefore owner of the home.  If someone were to get injured in the property, you could be liable.  I would call your insurance company and ask for the specific policy violation that caused the cancellation of the policy.

  • McCoy

    Hi,
    I live in Colorado. I’m trying to do a short sale since last Aug. My realtor found a buyer but the banks are dragging their feet. Since a buyer was found, we moved to rental home. I called my home insurance company and told them we no longer live in the house and need renters insurance. My insurance has cancelled the insurance on the house. Do need to reinsure the house? My concern is the Mortgage company sent me noticed about no insurance on the short sale home. Then I received a check from the insurance company for refund.
    What can happen if they deny the short sale?

  • spiritlovescolorado

    ScottSchang spiritlovescolorado  Thank you for your time.

  • spiritlovescolorado  thank you for sharing your story, this is unfortunately a very common problem.  The good news is, VA will allow you to buy as soon as 2 years from the foreclosure (date your name is removed from title).  Other than that, I am unaware of a way to force a lender to foreclose.
    It’s certainly not fair, and it’s rather tragic that the incompetencies of banks would drag out the pain it is causing good people that have experienced bad situations.
    I’m sorry I am unable to offer more help, good luck!

  • spiritlovescolorado

    We had to file in 2012 and the HOUSE WAS……. THE REASON…… Hubby lost His job to business Closure…ONE Month after purchasing the home….. His Father Was Ill Then I…. Long story Short The USDA Harrassed us until WE GAVE THE KEYS BACK IN JULY 2011 Which they WILL AKNOWLEDGE… We did TRY TO SELL….. Unsuccessfully…. We surrendered the Home IN THE BANKRUPTCY that WAS FINALIZED ON JUNE 26 2012…… We have been working on repairing credit AND ALTHOUGH MOST OF THE HARASSMENT HAS Ceased Praise God…….. Hubby looked and WE ARE STILL LISTED AS THE OWNERS….. With the County and When We called USDA She told Us…… She doesn’t have enough help to process the foreclosures…… SHE’S KNOWN ABOUT NOW 3 YEARS…….. That We May Move out of this 1976 RV and Hubby can get His VA loan! She told Us if We don’t like it We could CALL OUR SENATOR……..!!!!!!! How do You force……. USDA ( The Gov. ) TO DO ANYTHING! I told Them I COULD NOT AFFORD THAT HOME IF HUBBY LOST HIS JOB…….. The Loan WAS SUPPOSED TO HAVE SOMETHING TO DO WITH MY BEING DISABLED….??   AT CLOSING  AND THE VERY SAME LADY WHO WORKED ON THIS ORIG. MORTGAGE…….. AND MY REALTOR TOLD ME…… I COULD….. BECAUSE THERE WOULD ALWAYS BE….. UNEMPLOYMENT AND THAT THIS IS WHY THEY CHOOSE TO PUT ME ON THIS LOAN….????????  Any how…….. like I said STILL IN OUR 76 RV TRYING TO BETTER OUR CREDIT ……. Wanting to Move on AND AFTER 3 YEARS NOW THIS JULY……….. ONLY FAIR THAT WE COULD! Uhhhhh Lost……. For What to do Next.

  • oscerl  You definitely should speak to a bankruptcy attorney.  I am unable to say whether or not you would qualify for bankruptcy.  Bankruptcy is a strategy that many folks were forced to pursue because of this same reason.
    Hope this helps?

  • oscerl

    i have sold my rental property short sale, it was under water . now i have $130.000 for giving from my bank. my tax man tells me i have to put that as my income .  my question would a bankruptcy clears that.

  • rafelwilliamsloancompany

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  • mikeboth  Hi Mike, you’re on the right track except that the mortgage you included in the BK, which the home has not yet been foreclosed on, it technically still in default.  BK does not mean you don’t owe the mortgage, it simply means you cannot be “double hit” on your credit in the event that you should stop making your payments and default in the future.
    The criteria of the Back to Work program that you will need to be most concerned with is that 12 months of on-time payments on all of your debts.  Since the mortgage is in default now, you would have to cure that.  Once the foreclosure is complete (or short sale or deed in lieu), the clock will start ticking on the 12 months of on-time payments, after which you may be eligible.
    Hope that helps?

  • mikeboth

    Scott, I really appreciate a professionals point of
    view here so please let me know your thoughts. I’ve been reading more about the FHA Back to Work program and it
    looks to me like I would not need a final foreclosure to qualify based on what
    I can find on HUD. The qualifications of the plan state I would need just one of the following to qualify: A) a discharged
    bankruptcy or B) a short sale or C) a foreclosure. It appears that any one of these
    would qualify and while my house has still not been foreclosed my bankruptcy that
    included my mortgage was discharged on 3/25/2011. If I am reading that correctly I would only have to wait for 12 months after a foreclosure OR a bankruptcy
    discharge unlike the current FHA program that only accepts Foreclosure as a
    qualifier. My bankruptcy (Including my mortgage) was discharged on 3/25/2011 and I meet or exceed all of the other criteria for the Back to Work program. Does this sound correct or would underwriting kick it back somehow?

  • rubyreddawgy

    filed for bankruptcy2012 and got our release at the end of 2012. We let the house go . Then we had recently heard from the morgage compnay they are not forclosing and we dont owe anything. which we hadnt paid any morgage payments sence early 2012.  We still do not want the house and were notified the house would be going up for taxes starting in september.  We plan on just letting it go up for taxes. Will that be the end of it or will we have to claim on our taxes any thing for all the amt. we owed that they let go?? Just want this house out of our life already. Thought with the bankruptcy it was but now not to sure. 🙁

  • thatalluringscent

    Hello Scott.  I filed bankruptcy in July 2009 which was discharged in November 2009.  Uneducated on the entire process regarding my foreclosure after bankruptcy/ deed in lieu after bankruptcy, etc…  My husband and I continued to pay our mortgage on time after the discharge. Our house is upside down.  My husband tried to purchase a new home this past summer and was told that he could not because we still owned our current home.  We were told that since his name is still on the title/deed that he could not receive financing because our home has not foreclosed/short sale etc.  Both of our names are on our home.  Once we learned this information, we did a quitclaim deed removing him from the deed.  Will this now allow him to purchase a home and if so, how long does he have to wait?  If this does not allow him to purchase, what are or options?

  • chrisdowns1970

    hello scott, my name is chris and a filed for chapter 7 and its been discharged already. my house was included in the bankruptcy. and I have not not reaffirmed my mortgage. I however was offered a loan modification to my understanding is not reaffirming my mortgage. anyways my question is this. currently I still live in my home and make my monthly payments. But I want to buy a new house. I heard I have to wait 2 or 3 years before I can buy one. does my house have to go into foreclosure before my 2 year wait starts? can I just pay my mortgage and live here for the 2 years . then stop paying and get a new loan for a different house. lol im not sure I even made sense.

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  • dimend2459

    ScottSchang dimend2459 Thank you for the reply.  I may not of  asked the question for you to fully understand.  I will probably give you a call but will not be until tomorrow.  Have to go to work right now.  Hopefully I will get in contact with you tomorrow. Thanks and have a great day!

  • dimend2459 Thank you for the question!  There are many folks out there in similar situations and I get this question often.
    I am a lender, so that is my perspective and the basis of my answers to you.  I can tell you how each option would affect your ability to qualify for a new home loan.
    Since the mortgages are included in your bankruptcy, if you stop making payments and allow the mortgage to go into default, it is not supposed to hit your credit as a derogatory item.  I am really surprised that the lender is reporting your payments to your credit report.  You may want to speak to an accountant, and maybe your bk attorney to be sure that you did not reaffirm the mortgage when you filed bk in 2005.  If your husband included the mortgages in his bankruptcy, but you did not, there is a possibility that you could have your credit negatively affected in the event of a default.
    If you keep your payments current, you may be eligible to refinance if you have enough equity and you can meet all other qualifying criteria.
    If you simply stop making payments, the loan will default and you will be unable to buy another home until the liens are removed.  The liens will be released either by selling the home, or foreclosure.  If you allow the bank to take the home through foreclosure, or if you sell but cannot cover the amount owed on both the first and second mortgages, you will have a “waiting period” of anywhere from 3 to 7 years depending on what kind of financing you are trying to qualify for.
    There are many ways to approach this, and depending on what you choose, that will directly affect timeline before you are eligible to buy again.  
    If you can verify that both mortgage were included in both yours and your husband’s bankruptcies, then your credit should not be negatively affected regardless of which path you take.
    The method by which your name is removed from title would determine when you would be eligible to buy again.
    Does that make sense?  It’s kind of complicated, I know that.  If you still have questions, feel free to give me a call on my cell phone at 714-336-8286 and I will try to do a better job of exploring all of the options.
    Hope this helps?

  • dimend2459

    sorry forgot to put this in with first one.  If we try to rent the house(dont know if thats a good idea)  we could make enough to pay the mortg. with a little extra and keep building our credit. Just not sure if this is a good idea either.  The other question I had was How bad would it hurt our credit to just walk away from it since it is already been declared as a bankruptcy and its already been almost 4 yrs for him and almost 8yrs for me . thanks

  • dimend2459

    Hi Scott- My husband filed bk in 2010, I filed in 2005.  I signed to reaffirm both mortgages but my credit report says bk with 0 balance. My husband signed to reaffirm both but the attorney never filed it his also says bk 0 balance. We have been making payments on time to both mortgages since 2010, 1st is about 540.00/mo and the second is 360.00/mo.  We owe about 26,000.00 on the first and 56,000.00 on the second. We have been trying to build our credit and our scores have come up into the low 600 for my husband and high 600 for me, that is only because after yrs of calling I finally got the 1st mortg to report the pymts but they are only reporting them on me. The second will not report.  We are on a fixed income.  We are still living here in ohio and we are building a house in ky.  My husband wants to just stop making payments and leave the house to free up the 900.00 we are paying to these 2 mortg so we can use the money towards the new house.  I do not want to do this and have been trying to find a way to not ruin the credit we have built. The housing market is not very good around here to make a profit if we sold the house but we may be able to break even.  HELP!!  what should we do??  Thanks

  • yingayang

    HI scott,
    we have not stop making payments on the old house we are up to date on our payments. our new lender is aware of our other loan. when they approved us they quilified us for both house payments. but like i said just  our income just changed. So that is why I am asking since we haven’t been able to rent it and it is going to be hard now to make both payments. I know you said short sale is our best bet but on that we will still have to keep up on the old house payments right? And i know we will not be able to. so if we do a deed of lieu will that make us lose our new house we are living in now. I guess i am a little confused with all of this.

  • ELLEhouse the lender cannot take your new home if you default on your previous home.  The only challenge you may encounter is qualifying and timing.  You would have to qualify for both payments on both homes, AND you cannot have any late payments on the old home which was included in bankruptcy (if a BK was involved).
    It is very common for lenders to “miss” the other loan if it’s included in a BK, therefore making your approval for the new home invalid.  Unfortunately, this is typically not discovered until far into the escrow process on the new home.

  • ELLEhouse

    yingayang Were you asking if they can take the new home you are living in now, IF you fell behind on payments on the old home??? That is what I have a question about also…Was approved and now we are closed and living in the new home. Can’t get old home to rent out and are worried about getting the bank to take back the old house. I am pretty sure they can’t do anything about the new house we are living in now.

  • khwilliams2014 Yes, it’s unfortunately true that you do still own the home, and while the mortgages are discharged, you still have to get the lien removed.
    I would definitely try a short sale or deed in lieu as opposed to continuing to wait for the lender to get around to foreclosing.  It sounds like you stopped making payments?  That will make it very difficult to get a loan to do repairs to the home, unless you can get a personal, unsecured loan.  
    If you are able to get the lien removed by short sale or deed in lieu, there is an opportunity to buy in as short as 2 years if you have a 20% down payment and a minimum 680 credit score using conventional financing.
    FHA requires a minimum 3 year waiting period regardless of foreclosure, short sale or deed in lieu.
    Hope this helps?

  • khwilliams2014

    My husband and I filed chp 7 in 2010, it was discharged in 2011. We were beginning the process of purchasing a new home until we recently found out that we still own the old house that we put in bankruptcy in 2010. We had someone do some research and they said we did not list our home as an asset. But we surrendered the house and we also got our 2nd mortgage dismissed, so it does show a zero balance. What should we do? Short sale, deed in lieu, or let it foreclose which it has yet to do since 2011. We would then need to wait another 3 years to purchase. We were thinking of another option which was to try to get back into the house and get a loan to pay for repairs that need to be done before moving back into the old house. The loan had been transferred from Chase to Select Portfolio Servicing in April or May of 2013. We are absolutely confused at this point.

  • yingayang

    No we haven’t missed any payments. And we are already living in the New house. So if he were to fall behind on payments on the first house they can take the new one from us too.

    • Ok, good – No, if you default on the other loan, they can’t come after your new home.

  • yingayang  short sale will give you the most control over the process for sure.  Most lenders may require that you attempt to do a short sale first, and only if you cannot sell the home will they offer a deed in lieu.
    Again, I want to stress that if you stopped making payments on the other home, you will not be eligible to buy another home.  I just don’t want you to short sell this home and then find out that your approval is no good.

  • yingayang

    Hi Scott,
    when we applied for the loan to get the new house they did calculate the payment on both and we were just fine. that is why we were approved. but in the last 30 days our income has changed my husbands job downsized and it knocked him down to maybe 20 to 25 hours a week and with that happening it has put a struggle on us. So that’s why we have to do something with the other house. so you think a short sale or deed in lieu of  foreclosure would be best..

  • yingayang  You may want to get a second opinion on the loan approval you received 3 months ago. Because your mortgage was included in the BK, the lender has most likely stopped reporting to the credit bureaus. If you have less than 30% equity in your current home, and if you do not have a 2 year history as a landlord, you would not be able to use the rent payments to offset your expenses, and the lender is required to calculate both payments (current payments, plus proposed payments including taxes and insurance) when qualifying you for the new home.
    If you miss any payments on your current mortgage prior to purchasing a new home, you would be ineligible to purchase a new home until this is resolved, and the waiting period is up.
    Neither foreclosure or deed in lieu will show up on your credit because the mortgage was included in the bankruptcy.  If you have the ability to do a short sale, that is your best option, deed in lieu of foreclosure is the second best option, foreclosure should be the very last option.
    Hope this helps?

  • yingayang

    In 2007 we filed BK and it was discharged in 2007. We never signed anything to reafirm the loan and up till 3 months ago we lived in the house ( all payments were on time.) We were approved 3 months ago to get a new house. We were going to rent the house out but so far we have not be able to get anyone to rent it. So i guess my question is should we let the house go into forecloser or should we see if we could do a deed to lieu. your advise would greatly be a big help.

  • megamom6 the pay status of the second mortgage should not be there at all after the bk.  Normally it would say mortgage discharged in bk, and the lender stops reporting.  What the 2nd mortgage is selling, is the right to foreclose on the home, due to no payment.  

    Bankruptcy prohibits creditors from “double penalizing” you after bankruptcy by reporting discharged payments as being late.  You can dispute inaccurate reporting with the credit bureaus by going to each one online, and submitting a dispute.  You may also want to include bk schedules showing debt included in bankruptcy.

    If you sell the home, the second will have to be paid so that you do not then have a short sale, which you would put you a minimum 2 to 3 years before you can buy again. 

    Hope this helps?

  • megamom6

    I live in WI. I claimed bankruptcy and was discharged in 2010. I had 2 mortgages, 80/20 loan. I have conitnued to pay my 1st mortgage ever since, no late payments, balance is 167k. I stopped paying my 2nd mortgage balance owed is 37k. Would it be stupid if I called the 2nd mortgage and asked if they would take a deal so that balance is paid off if I plan on selling the house? I was thinking of selling the house within the next 2-5 years, not sure yet. Also, on my credit report I show multiple mortgage companies who have held my mortgage, they were sold quite often. Should the Pay status say late 30 days, unknown, or condition as derogatory if they were sold to another company? For the latest one it says it was opened in 2004 is that correct or should it show when it was sold to them? Thanks in advance.

  • JLL5

    Hi Scott!
    I filed 7 in 2008 and added both mortgages, but kept paying until I recently went through a divorce. I couldn’t sell or afford the house, so I am right in the middle of doing a DIL with Carrington Mortgage (the first mortgage lender on my house). They paid off the second mortgage, Green Tree, a few months ago to clear title and do the DIL
    We finally got the DIL papers signed and Carrington checked the title one last time… they found the original 2nd mortgage company wars still on the title (the 2nd mtg loan was sold 3 times since the original lender). Here is the part we are having trouble with… It is “Argent”, the original lender, who is still on my title and they are no longer in business.
    I understand when they sell a loan they have to do an “assignment of mortgage”. Green Tree can’t find theirs to release the lien… They are working on this. They aren’t even on the title though. They bought it from Bank of America, who bought it from Willshire, who bought it from Argent/Ameriprise.
    Don’t they all have to file these mortgage/lien changes when the loan is sold with the county? Shouldn’t there be a record of these turnovers? What in the world can I do to get this done quickly, as Argent, the one on the title no longer exists.
    Thank you!

    • This is really a mess, huh? Wow. This is a question for a title company probably, regarding title. Is the DIL complete? Did Green Tree accept the payment? I appreciate the question, but this is not something I have any experience with at all.

  • annasmamma

    Scott, thank you, I live in the Scottsdale/Phoenix area.  I remember when I first started to ask questions and begin the process of learning about what being a “zombie” meant early last year. You answered my many questions about my loan with BofA,  my Greentree short sale and finally encouraged me to move forward.  You were right, the time goes by quickly and the pain and anguish lessen with the passage of time.  I appreciate your help and support.  Happy New Year. Tess

    • Thank you for the kind words Tess! I just sent you an email with the contact information for a good friend of mine that specializes in boomerang buyers in Arizona. Steve Lines is a great guy and very knowledgable.

  • annasmamma what you are referring to is called the “Back to Work, Extenuating Circumstance”.   Many lenders are not offering this program right now, so it might take some research to find someone that can help.  The basic criteria for Back to Work is that you have a minimum 20% decrease of income for a 6 month period, which resulted in the financial hardship that led to the loss of your home.
    The documentation process is the biggest challenge that most are having when trying to qualify to buy using this extenuating circumstance.
    Congratulations on completing your short sale!  Even if you are unable to qualify for Back to Work, the short sale leaves you with a couple of other options for buying again:
    Using FHA financing, you can buy in 36 months from the date your name was removed from title.  Using conventional financing, you can buy in as soon as 24 months with a minimum 680 credit score and 20% down payment.
    What State are you buying in?  I can reach out to my network and see if I have a friend in the mortgage business, in your State, that can offer the Back to Work program.

  • annasmamma

    Scott, you were very helpful recently with my many questions regarding a short sale.  The home sold as a short sale and was recorded in November 2013.  Am I correct in that I may qualify for an FHA 3.5% down after one year if I can prove the short sale was due to overwhelming medical bills and a reduction in income due to that?  I had a chapter 7 discharge in 2008 and three homes foreclose in 2008.  Thank you.

  • EK78 you would be eligible for FHA financing in 2 years from the date your name comes off title, the completion of the deed in lieu.  To buy using conventional financing, you could be eligible in 2 years with 20% down and a minimum 680 credit score.
    Hope this helps?

  • EK78

    If I filed ch 7 bankruptcy in 2008, and boa never foreclosed, instead they sold the home in july 2013 to everhome, and now I started a deed in lieu this past week, how long do I have to wait to get fha approved? my credit is very good, I have a good job, and on my credit my home shows included in bankruptcy. the only thing that held me back from buying before was because it still showed on public records that I was still the owner of my old home.

  • JamesJCCrowton ScottSchang the only real change to FHA last year that you may be concerned about would be that the mortgage insurance required on all FHA mortgages is now permanent.  The only way to remove PMI will be to sell, or refinance the mortgage at a future date.   FHA only requires a 3.5% down payment, so it sounds like you have plenty saved up to cover down payment and closing costs.

  • JamesJCCrowton

    ScottSchang JamesJCCrowton  Were thinking of getting a FHA loan since its been only two years..  Can you tell me what changes in the FHA loan has been made this year. I know its allot of hoops to go throught but thats the only loan we can qualify. We have our credit scores in the 700s and have hardly any debt except my student loans. We also have money saved up for 8% down.

    Thanks, James 

    PS: We live in Ohio

  • JamesJCCrowton ScottSchang ok, cool – so you’re in California?  Sounds like you’re trying to buy in the near future?  We are a direct lender here in California, and recent changes in Fannie Mae Desktop underwriter address this exact situation.
    I’ve got your number, shoot me a text with an “ok” if you’re ok speaking to us about expediting this process.

  • JamesJCCrowton

    ScottSchang JamesJCCrowton  Thanks Scott, I disputed the debt on equifax and I have the information that Im going to call and mail them a copy of my discharge papers. As of contacting my bankruptcy attorney, We were not happy with the services with our bankruptcy attorney, so we might seek legal advice somewhere else. 

    PS: I was the person monday evening that texted you 🙂

  • JamesJCCrowton ScottSchang If the first mortgage was foreclosed (sold at sheriff sale) then the 2nd mortgage should have been extinguished.  I know that in some cases, a second lien holder will convert the secured 2nd lien into unsecured debt, but that should have been addressed by including it in the BK.
    OCWEN seems to be doing some pretty shady stuff with discharged mortgages, as you’ve read in some of the other posts.
    I don’t think you would need to spend a lot of money on an attorney, and I would start with your BK attorney that helped you in the first place.
    I am unable to help with legal advice.

  • JamesJCCrowton

    ScottSchang JamesJCCrowton Hi, Scott. Thanks for replying to my post… The home loan we had was a 80/20 loan. the 80% went to the sheriff sale the 20% was included in bankruptcy because they kept coming for us to redeem payment for the loan, hence why we filed for chapter 7 and discharged the debt.   So, do you feel I should contact the bank again and or send them a letter and a copy of my petition of the bankruptcy to them and see what happens before I retain a attorney, which I know will cost allot for attorney fees.

    Thanks, James

  • jennysue67 you’re awesome!  Thank you for sharing your experience 🙂

  • jennysue67 great feedback!  Thank you so much for sharing your success story with us, I am confident that your experience will help many others in the same situation 🙂

  • JamesJCCrowton Hi James, it is not legal for a creditor to continue to report a debt as being due after it was included in the BK.  I recommend that you maybe speak with a Real Estate Attorney and discuss options for requesting that the new “lender” stop reporting.
    The challenge here is that the appearance of that debt may impact your credit score.  If it is not affecting your scores, and you qualify for a loan, then the lender will not deny you because of something that is erroneously reported on your credit report.
    Hope this helps?

  • EK78 what you’re referring to is cash for keys, which is a program that some lenders will offer. The criteria set on receiving cash-for-keys is usually that you agree to leave the home in good condition.  I would ask the lender if they are able to help you with your moving costs in exchange for leaving the home in great condition.  It’s worth a shot.  I seriously doubt that the lender will give you $6,000 and and just let you keep what you don’t spend to extinguish liens.  
    Hope this helps?  Good luck!

  • johnfs1985

    I guess it makes sense, no one has ever explained any of this to me. It is unfortunate as I’ve been wasting the last 5 years and the house would’ve been much easier to sell considering its condition is now deplorable. So what happens to the difference of the amount I short sell and the amount that I owed? I am still not responsible? Also, I assume I’d have to pay the real estate agent which really isn’t in my budget unless we are talking less than $500 for a fee.

  • jennysue67

    Yes, you can def sue Ocwen because you are protected from the bankruptcy.  You need to make sure your attorney puts in the lawsuit that Ocwen remove all reporting from your credit report immediately!  It took several months but they finally removed it from ours.  Don’t continue to contact Ocwen, they won’t help you directly, they are infamous for this.

  • jennysue67

    The same thing happened to us, only it was 5 years after our home was foreclosed on and our bankruptcy was discharged.  Not only did it show up on our credit but the title wasn’t taken out of our name for 5 years.  We went back to our bk attorney and now we have a lawsuit against the mortgage company that posted it on our credit, it is illegal for them to do that since you are protected by the bankruptcy.  The mortgage company is settling out of court!  I suggest you get with your bk attorney and see it he will do the same.  Good luck.

  • JamesJCCrowton

    Hi, We foreclosed on our old home in 2007 and was sold in a sheriff sale in December of 2007.  My wife and I filed for chapter 7 and discharged the loan in bankruptcy.. After a year later, I see that its on my credit report. So I called the bank and they tell me the loan was sold to another bank. Ok, fine… I call the other bank and they say that it should be showing up on my credit report. Well, I tell them it is and they say it shouldn’t be. So I tell them to please make sure it doesn’t show up again after I disputed it.  Well, a month later.. BOOM! It showed up…  So,  what should I do too get this too stop so that when I apply for my new loan, it wont be on my credit report?!

  • EK78

    Hi,

    Ok, so the mortgage company finally agreed to do a deed in lieu, but told me the liens have to be taken care of first and that they would pay up to 6000.00 dollars towards the liens on the property as long as I got pay offs from the companies (county lawn care). I did this, and submitted it. My question is if they are willing to pay 6000.00 and the liens are less than 2000.00, do I get the difference? I heard mortgage companies pay the owner to do a deed in lieu rather than go thru foreclosure.

    Thank you.

  • johnfs1985 the word “discharge” is a little misleading.  The fact is, bankruptcy only protects you against a deficiency judgement or tax liability in the event that you should default on the loan.  The loan is not forgiven, you just can’t be penalized further due to your bankruptcy.
    I would recommend speaking to a short sale specialist (Real Estate agent) in your area to get an idea about your options.
    You are ineligible to refinance, or buy until you remove your name from title and you complete the waiting period, depending on what route you take for removing your name from title.
    Does this make sense?

  • johnfs1985

    Yes I am still on the title as the owner of the home…I didn’t think I had any options after surrendering my home to bankruptcy. At this point the home could maybe short sell for 20k if I was lucky and I discharged 60k. What’s the best move here?

  • johnfs1985 The advice to contact the CFPB is a good move, but will probably not help you with your immediate issue here.  BOA can certainly sell the discharged debt to OCWEN, but OCWEN should not be able to report it as delinquent to the credit bureaus.

    You may need to consult an attorney about sending a letter to OCWEN about reporting the mortgage as late.

    Now, to address the elephant in the room – are you still on title for the home that went from BOA to OCWEN?  If you are, you’ll want to explore ways to get from under that home.  A short sale or deed in lieu would be your best options, foreclosure only as a last resort.

  • derme2000

    johnfs1985 
    Ocwen is being investigated by the Consumer Financial Protection Bureau for their business practices.  You should go to the CFPB website and see if your situation fits the investigation.  There is always the chance of a class action suit against Ocwen which has always been a shady operation.

  • johnfs1985

    Hi – I have what I feel to be an odd scenario…I think. I discharged my ch. 7 BK in 2009 and included my BOA mortgage in the BK. I already had another home rented and wanted to get rid of this house so I had no problem surrendering the house (way upside down in it). So, in 10/2012 BOA sold my mortgage (even after the debt had been discharged) to Ocwen Loans. Since 10/12, Ocwen has been trying to collect the debt for the house including a ton of interest and also has been reporting it to 4 major credit bureaus as 180 days late. So they’ve been hammering my credit and trying to collect a debt (illegal) and I’m not even sure that BOA legally could’ve sold that mortgage to Ocwen to begin with. This is causing ridiculous stress and preventing my credit from repairing. I’m so angry that my attempts to contact my BK lawyer have gone nowhere and I’ve made several attempts to contact Ocwen including emailing them a copy of my discharge paperwork and have had no results. I think its time to get an attorney and teach one or both of these companies a lesson…I’m real frustrated. What to do next??? Any advice? Think I can sue them?

  • dogg70 ScottSchang  As long as you keep all mortgages current, the BK does not affect your ownership in the home, and therefore your ability to sell, refinance or do anything else you want to do with your property.

    The mortgages not showing up on your credit will not impact your ability to sell the home using normal channels.

  • dogg70

    ScottSchangdogg70 Thanks for the feedback!  Helps a lot.  We have considered moving closer to my spouses place of employment, but won’t plan to do that for 2-3 years when our youngest child starts kindergarten.  I thought maybe just stay in this loan until that time and then sell the house.  My other question would be can I sell the house normally with a realtor, etc., if I keep the 1st mortgage as-is through GreenTree? Didn;t know if there might be an issue since it shows up as included in bankruptcy on my credit report.  Thanks again!

  • dogg70 The fact that the mortgage is not reporting on the credit will not affect your ability to qualify for financing.  Other than meeting your standard qualifying criteria, once enough time has passed since the discharge, and if your payments on being made on time, the process should be just like applying for any other loan.

    The waiting periods you need to be aware of are 2 years if using FHA financing, 4 years if you want to use Conventional financing.  With equity, you want to use Conventional.

    With all that said, I’m not sure I would touch that ARM loan!  30 year fixed conventional rates are going to be in the high 4%, or low 5% range, and they will continue to increase (my opinion).

    I think that if you plan to live out the rest of your days in this home, you might want to seriously consider converting it to a long term fixed.  This is based on the fact that rates are increasing, and I am confident that they will continue to increase as the Government is starting to pull back from propping up interest rates.

    Hope this helps?

  • dogg70

    I filed Chapter 7 bk in april 2007, was discharged in july 2007.  I had 1st and 2nd mortgage with Bank of America.  I tried to reaffirm the mortgages, but BoA said they dont do that.  If you continue to pay we take that as reaffirm.  So I continued to pay on time never missed payments on either.  Fast forward to 2012 and the 1st mortgage was sold to GreenTree.  They changed it to an included in bankruptcy on my credit report.  Prior to that, both accounts were showing up as normal mortages that were paid on time.  To this day i continue to pay both mortgages on time.  I am not upside down in the house.  I probably have about 20% equity based on homes being sold in my neighborhood.  At this time i want to keep the house but want to know how hard it will be to be put back into a regular mortgage.  Credit is great.  Close to 700 FICO, never late on anything since BK in 2007.  BTW, the first morgtage is at 2.975% and adjusts each year with a cap of 1% adjust each year.  It’s actually a nice mortgage.  And I pay P&I each month.  So sometimes i say to myself that i might as well keep the current loan terms…  Thoughts on what i shoudl do?

  • kc4eversweet You should speak with an attorney, preferably your BK attorney regarding this.  You should not have to pay any deficiency that resulted as a result of the BK, but I am unsure about how Florida foreclosure law works.

  • kc4eversweet

    I reside in the state of Florida and  I declared bankruptcy almost 4 years ago and included the house; moved out over four years ago when bankruptcy was declared and was finalized 6 months later.  Never made another payment, turned the keys over to the bank and never looked back.  The house has been in foreclosure since that time and rescheduled with the courts for final judgement several times.   Just received notice to appear in final judgment of foreclosure on house for end of month for monies owed bank and attorney’s fees.  Am I responsible for this and must I attend this hearing?

  • Princess1126  If you can break even on the home by selling it, that is by far your best option.  It is only a short sale if the proceeds from the sale are not enough to cover the loans against the property.  You’re probably going to need time to do this, in which case I would talk to a bankruptcy attorney about your options for postponing the foreclosure so that you have time to sell the home.

    The house is definitely still yours, and the debt is yours as well if your husband was on the loan.  Just because the ex filed for BK protection, doesn’t mean that your husband is protected.  He’s still completely on the hook for the mortgage, and he’s on title, so he’s the sole owner of the home.

    Do NOT let the home go into foreclosure if you can help it.  Especially if it’s not upside down.

    That’s my opinion, hope it helps?

  • Princess1126

    This is a sticky one.. My husbands ex wife quit claimed house in divorce. He was behind and we caught up. Ex wife filed for BK and mortgage was discharged. He has never taken her name off by refinancing as his credit is not good since he was left with 80% of marital debt because he made more. Mtg co never sent him anything to reaffirm the loan, we’ve just been paying every month. Have fallen behind due to him having a job making $40k less a yr and were making late pymts and including late fee. We were trying to make a pymt online before we became 90 days . Thus the pymt wouldn’t go through. Now during this time we noticed that GMAC placed mortgage with Ocwen. We called Ocwen immediately since pymt wouldn’t go through. the first thing he says is the mortgage has been dishagred and part of a BK so I cannot try to collect this. He explained that we were actually 4 days past the 89 day mark and the loan is in default. He wouldn’t accept our $2400 pymt(sept) and said only full pymt would be accepted and needs to be paid by dec31, $9700. Then he said or we could go to January 15 but pay the $9700 plus $2400 for jan or it would start foreclosure. Or we could try for a modification. We’re up in the air on what to do. The house right now is at a break even if we sell. If we don’t get approved we’ll lose the house anyway. And if we borrow the money to get caught up, we’re afraid that we’ll fall behind again being we’ve been struggling so since the huge pay cut. Do we just save that money and move and let them take the house? Is the loan really ours if he never reaffirmed ? Should we short sale?

  • sugaroneus as long as you are still on title as the owner of the home, you are 100% responsible.  Including a mortgage in BK does not change your ownership, it only protects you agains tax liability in the event of a default.
    Hope this helps?

  • sugaroneus

    Further question re: homeowners insurance; original lender advised intent to foreclose on property, house has been discharged in bankruptcy, we’re still living in the house waiting out the entire foreclosure process; under those circumstances who is responsible for maintaining homeowners insurance

  • derme2000 elange ScottSchang great feedback!  Thank you for your input.  You’re right, I am seeing a lot more of this come up as home values and interest rates increase.
    In most cases, a removal of the lien is not part of a bankruptcy and it is simply not explained well by the BK attorney.

  • CH72009

    This is very helpful- I will call them again.  I appreciate your input and quick response!  Thanks so much!

  • CH72009 Wells Fargo does have the ability to help you.  You just have to find the right person to speak with.  If you owe more than the home is worth, you will need permission from both the first and second lien holder to sell for less than what you owe – this is called a Short Sale.
    Unfortunately, you will have to deal directly with the lien holder to discuss your options.  Refinancing probably isn’t an option since the “correction” of the the second mortgage is required, this means catching all of the payments up (with on-time payments for 12 months).  
    Ask to speak to the bankruptcy division at Wells Fargo, or just ask to escalate your call to a manager, and hopefully they can point you in the right direction.
    I’m sorry you have to jump through all these hoops to get an answer here – it shouldn’t have to be this difficult to get straight answers!
    Hope this helps?

  • derme2000

    elange ScottSchang This is going to be an up and coming on going problem as home values rise and junior deeds that were discharged in bankruptcy can be called in.  My loan servicing recently went from BofA to Nationstar.  I have a junior deed that was discharged in chapter 13, with the minute order for motion to value ordering the lien reconveyance. BofA was served at the time of the chapter 13 discharge, did nothing and again Nationstar was served after they took over.  They are extremely unorganized and have, in contempt of court, tried to collect from me on the discharged junior deed.  It’s probably only a matter of time before they try to enforce the lien once my home value rises.  Therefore, I have sent extensive detailed documentation with attachments to the Consumer Financial Protection Bureau.  Even if they cannot help me (which I doubt because Nationstar has not met the RESPA guidelines, has tried to collect on a discharged debt which is contempt of federal court and keeps playing dumb about understanding the motion to value order which they, as a federal institution have access to anytime they want), and I have to open an advesarial action against Nationstar, it is good for them to be notified of the practices of these financial institutions they oversee.  You should definitely contact them through their website.  You can file a complaint online that they will investigate.  I don’t believe, now that we have weathered all these foreclosures and finally got the banks to be more agreeable in working things out with homeowners, that the government will risk another effect on the economy by these institutions trying to foreclose through these discharged junior deeds and causing another wave of foreclosures.  Consumer Financial Protection Bureau keeps statistics as the overseer of all financial instutions.  Then they take action as they are now with the payday loan companies,

  • elange ScottSchang Keybank has the ability to initiate the foreclosure process.  The first mortgage is always paid off first, then Keybank will get whatever is left over.

  • CH72009

    Hi-  My husband and I filed chapter 7 in 2009.  We kept our home and have never missed/ had a late  payment on our first mortgage.  In addition we had a second/home equity lihne of credit through Wells Fargo.  This was discharged and we have not made a payment since 2009.  We recently tried to take advantage of the low interest rates and re-finance.  Problem is we cant as Wells Fargo has a lien on our property.  We have contacted the attorney that handled our bankruptcy but they state there is nothing they can do.  We have contacted Wells Fargo and offered to settle or even have them re-finance our first and second- they state they are unable to do anything as our second was discharged.   What will happen if I sell?  How do I get someone to work with me in resolution? Not sure what I should be doing or how to resolve- any advice/suggestions would be greatly appreciated. Thank-you!

  • elange

    ScottSchang elange My first mortgage is current, I have been paying the payments.  I am quite certain I owe more than the home is worth.  My current mortgage I owe about  $89,000 and the keybank mortgage (2nd mortgage) I owe around $23,000.  This home is prolly not worth more than $75,000.

  • elange Bankruptcy protection will prevent any additional credit hits, tax liability or financial liability, and Keybank is absolutely right.  There is still a lien against the property securing the 1st and 2nd mortgages.  Should you stop making payments, the bank has ability to exercise their right to foreclose in an attempt to recover as much of what’s owed to them as possible.
    Remember, BK doesn’t mean you don’t owe the money, it just means that you cannot be sued or taxed if you default on the debt.
    The only way to cure this is to make arrangements with Keybank which may include catching up all the payments and keeping them current, or settling for less than what’s owed in exchange a release of lien.
    Is the home upside down?  Is there enough equity to pay off the first and second mortgage?
    You may want to speak to a real estate attorney because the second lien holder can force the foreclosure at this point.
    Hope this helps?

  • elange

    Please help and explain in easy terms for me to understand.  Filed bankruptcy and discharge was jan 2011.  I continued to make my house payment and still am.  There was also some type of second mortgage and it was pay the interest for so many yrs then you make payment.  Well I always just sent them $75 a month cause the statement would show like $50-$65.  I had continued paying this after the bankruptcy until a few months ago I got a letter from Key bank saying regulations require the account to be charged off unless the debt is reaffirmed.  Also i could continue to mail payments to some attorney office.   Well I really have no clue what I even was suppose to be paying them, so I never sent anything.  (I know wrong).  Anyway now I got a letter again from Key Bank listing the account number etc.:  You entered into a consumer transaction described above on which Keybank presently holds the title/lien securing the account.  Keybank is aware that you have been discharged in your bankruptcy from your personal obligation on the promissary note for which the security interest was granted.  Nevertheless the security interest in your property was not discharged by the bankruptcy and keybank has the right to enforce its lein.  Upon review of this letter please contact the undersigned to discuss your intent with respect to the property.  While you are under no personal obligation to pay Keybank the payment due under the note, we may nevertheless exercise our lein rights under the law including our right to repossess the collateral or foreclose on the property.  We look forward to hearing from you in regard to your intent regarding the property.  Please be advised that keybank may exercise it rights under its security agreement without sending you another notice like this one.  If you have any questions please write to keybank or telephone the number below.  This is an attempt to collect a dept and any information obtained will be used for that purpose.

  • william pelfrey this is a unique situation William.  A lender will look at public records to determine the status of the liens and the circumstances under which the liens were removed. The lender will pull public records to verify the liens removed from the home, and follow the paper-trail to determine the conditions under which the liens were removed.
    I can see a possible challenge with proving that the home was not a short sale or deed in lieu if the notes were not actually paid off.
    If you’re in California, I would be happy to look into the the paper trail to see if any red flags pop up that might cause questions later down the road?
    If you’re not in California, you are asking for a chain of title from the county recorder office or a title company.

  • william pelfrey

    I have a unique situation. I am preparing to file chapter 7 . I have no real estate in my name I sold the house over a year ago I did not payoff the note because the original lender had filed a release  4 years ago and they are out of business now. They apparently made a mistake when I paid off a second mortgage they also released the first.

  • Malyzoelma I am really sorry that you’re going through this – sounds like a pattern of misinformation and bad advice here.  Bankruptcy only protects you tax or deficiency liability in the event that you lose the home and the lender takes a loss.  BK does not affect your ownership in the home at all.
    You will be unable to buy another home until your name is off title of your current home.  My advice would be to contact the lender and see if they will do a Deed in Lieu.  This does not make you liable, it actually relieves you of all liability.
    Hope this helps?

  • Malyzoelma

    I live in michigan…our bankruptcy was discharged over 2 yrs ago. We have rebuilt our credit & just started out on the mortgage hunt but have hit a huge road block. The lender never took our name off the house so essentially are being told we still own the home and need to ask the lender to start foreclosure and then have to wait out the time after the foreclosure is done before getting a mortgage. I checked with the county and indeed our name is still on the house but don’t understand why this is a problem for getting a mortgage since we don’t have financial responsibility (mortgage was included in the bankruptcy). Our attorney told us not to do a deed in lieu as it would tie us back financially to the house…….ugh, anyone know this gray area?

  • soccergirl2013 ScottSchang ok, you are not “released” from the debt.  If you “walk away” the lender can foreclose on the home and neither of you would be buying for at least 3-7 years.  
    While it is true that the lender cannot go after you for a deficiency judgement if you owe more than it’s worth at the time of the foreclosure, the fact that you defaulted on the mortgage which resulted in foreclosure is a matter of public record and would prevent you from buying a new home until you’ve met the waiting period requirements.
    In regards to your ex forcing you to sell, that’s a legal question that you should ask of your divorce attorney.

  • soccergirl2013

    ScottSchang soccergirl2013 We never fully settled community property. We did a consent judgment where I have use of the home until I could refinance.  I never realized until he just started pushing the issue that we were released from the debt, meaning if I wanted to I could walk away and they can’t come back on me for any negative amounts owed.  Can my ex force me to sell though?  So I just discovered we were releases from the debt .  I was wondering why it was showing up on my credit report as a debt owed.  So I wonder if I need something drafted by a divorce attorney stating what you said he has no ownership or responsibility of the mortgage and also he can sign the quick claim deed.

  • soccergirl2013 The short answer is that Yes, he can quit claim off title and you will own the home as sole and separate owner.  The more complicated issue here might be how the asset was addressed in the divorce decree.  Unless you specifically stated in the decree that he has no ownership or responsibility for the mortgage, he may still have challenges buying a new home.
    Bankruptcy does not absolve you of the responsibility for the mortgage or change your ownership position, it simply protects you from impacting your credit, or subsequent lawsuits by the lender in the event of default.
    Hope this helps?

  • soccergirl2013

    I am in Louisiana and my husband and I filed for Chapter 7 when were married.  After we were discharged in December of 2011, we divorced in July 2012.  My question is since we were discharged from the debt yet we are still the homeowners how does this work.  He has since remarried and is pushing me to either refi or sell the home which I have continued to live in and have continued to pay the mortgage and it is current.  His issue is that this is affecting him to buy a new home with his new wife.  Can he sign a quick claim deed and it can free and clear him since we are already cleared from the debt per the bankruptcy prior to divorcing?  Can he force me to see the home because I do not want to refi because at this moment we may just break even and then I would be locked into a home more than its possibly worth if I can even refi.  Your thoughts are appreciated.

  • Cerika2010 ScottSchang you’re welcome, Good Luck!

  • Cerika2010

    ScottSchang Cerika2010  It does make sense. I am going to contact my mortgage company and see what they are willing to do and go from there. Hopefully it’ll be good news. Thanks again!

  • Cerika2010 ScottSchang your hands are tied for 2 years because of the discharged bankruptcy.  What happens to the home is completely other issue.  Your options are to either keep the home, maybe rent it out, and continue to make both payments, or do a short sale or deed in lieu of foreclosure.
    I would not recommend just walking away from the home because the bank could take years to foreclose, and that would put you that much further away from being able to buy another home.
    There are other options, it’s called hard money, or portfolio lending.  These are high interest, high cost, usually short term loans that will allow you to borrow money if you have a large down payment – usually 30% or more down payment.
    Your best bet, if you think you are not going to stay in this home, is to attempt to short sell or negotiate with the bank to do a deed in lieu.
    That would put your timelines of both the BK and the short sale or DIL pretty close to the same.
    I don’t know of any other solutions being offered by Government or Conventional lenders.
    I know it’s not the news you were looking for, but at least knowing what options are available to you puts you in a more informed place when making decisions moving forward.
    By doing nothing, and letting the home go, it could delay your ability to buy again for years more than is necessary.
    Does that make sense?

  • Cerika2010

    ScottSchang 
    thanks for your quick reply, I have to correct myself, the house was added to the bankruptcy. Am I just with my hands tied for 2 (long) years? I know everything takes time but the mortgage won’t work with me about the fact that the house is worth one 55k 🙁
    so I really just want to be able to maybe move on but don’t know what options I have. Do I even have any?

  • Cerika2010 there are two timelines you will need to be aware of when trying to buy another home.  The first is the Bankruptcy.  If using FHA financing, you would be eligible to buy again in 2 years.  If using Conventional financing, the wait is 4 years.
    As far as the home goes, what was the reason for excluding it?  The reason I ask is that if you are behind on the payments, and if the loan goes into default and you either lose the home to foreclosure, do a short sale or a deed in lieu of foreclosure, you could be liable for the loss that the bank takes.  This would be reported as income to you, which will create a tax liability.
    The second timeline will only come into play if you cannot pay the full balance of the current mortgage.  If you do lose the home in one of the three ways I described above, depending on what you happens to the home, it will trigger another, separate but concurrent waiting period before you can buy again.
    If you catch up on the payments, and make the payments on-time for a minimum of 12 months, then it’s possible for you to buy again once the bankruptcy waiting period is up as long as you can afford both payments on your current and new home.
    Hope this helps?  Please let me know if you have further questions?

  • Cerika2010

    I am in Michigan now where my home is. My original loan was for 135k and the house was appraised at 55k. I have filed for bankruptcy and I will have my first meeting in court on Nov. 21st. My question is… I am behind on payments with my loan but I did not include my home in the Bankruptcy. Am i going to be able to buy another home sooner than the 24 months? My family has outgrown the house and honestly I want to move on but feel as though my hands are tide. Any insight? Help… thanks

  • sugaroneus

    Thanks, ScottSchang, just wanted confirmation.

  • sugaroneus

    Thanks, ScottSchang, just wanted to make confirm.

  • rjmason ScottSchang you’re not pressing at all, I completely appreciate the situation you’re in and I would do the same if I were in your shoes.
    I don’t believe that an insurance payout would require paying off any existing liens on the property, but I don’t know for sure – that might be a question for the insurance company.
    Chase telling you that they cannot take payments is simply not accurate.  I can understand that they would be unable to take partial payments in light of the loan being in default.
    Again, I think you run into the problem of the fact that the lender can take the home at any time.  You need to speak with someone higher up in Chase servicing (or maybe a different department deals with bk).
    The last thing I want to clarify is that your mother is going to be unable to qualify for a new loan due to the fact that she is currently in default.
    If the balance of the loan with Chase is $45k, it sounds like you can pay that off so that there is not a short sale or deed in lieu of foreclosure preventing your mother from qualifying for a loan in the near future.
    If you pay the Chase loan in full, then you would only need to wait for 12 months before she may be eligible to qualify for a new loan that you can co-sign on.
    Most lenders only require that there are no late payments in the last 12 months.  If you only pay part of the Chase loan, or allow the bank to foreclose, that waiting period extends to at least 3 years.
    I know this isn’t the silver lining you were looking for, but hopefully being able to look at this from the outside, without the emotion, will help you in your decision making moving forward.

  • rjmason

    ScottSchang rjmason And…yeah…so she tried to make payments….I even tried for her and Chase WOULD NOT TAKE OUR PAYMENTS!  They said that the debt was charged off and there was nothing they could do.  I wish I could comfort her in some way with some good news….she’s lost everything, and at a time like this, who needs to still be plagued with a question on if they’d be homeless or not.  My wife and I will help her of coarse.  If she receives enough for at least a reasonable portion to substantiate a rebuild (at least 50% then we can co-sign a new loan for her and pay it. We would be half owners and take life interest in the property.  But it doesn’t look like she’d get anything except depreciated values of replacement contents.  Are we right about at least that?  Sorry for pressing….it’s just so hard to find any information about this very UNIQUE situation to say the least.

  • rjmason

    ScottSchang rjmason Thank you for that reply….So, unfortunately, the loan DID default.  Long story short…she tried everything she could to save the home…even tried re-affirming….however, Chase was a mess at that time.  The BK lawyer tried desperately to reach them to re-affirm, but no response….he has numerous letters returned.  So, we are going to contact them in the AM for sure.  Chase hasn’t attempted foreclosure at this point because the house would not have sold no matter what….just because the economy in the are is really bad.  Houses in the area were selling for $5-10K.  We are just looking at her best option.  Rebuild costs are $60-$80k and the past mortgage is either $25K or $45K.  Total for dwelling is $80k possible to be reimbursed.  Will the loan come from this amount?

  • rjmason ScottSchang Did your keep up on her payments after the bankruptcy, or did she let the loan default?  If the loan is in default, I would contact the Chase immediately and inform them of the accident.  The home was the collateral for the loan.  I am a lender, and can advise on how lenders will treat certain situations in terms of qualifying for a loan, however I am in no way qualified to comment on this subject.
    I would contact the lender and ask them what they would like to do.  If the home is in default, you do not want to be in a situation where you fix the home, then the lender proceeds with a foreclosure.
    Sorry I couldn’t be of more help, I hope this at least points you in the right direction.

  • rjmason

    ScottSchang lhall Hi Scott.  So, my mother’s house just burned to the ground two days ago.  She filed bankruptcy on the home and it was finalized in Dec of 2010.  She still lived in the home when it burned.  She kept her insurance going as she was still trying to work with the lender and Save the Dream program.  We have an agreement from Chase to settle the debt for $24,000.  The total due was $45k.  That agreement expired on Oct 25 and was in place because Save the Dream agreed to pay $25k.  My mother’s insurance company seems to be confused as to who they should pay and how much.  The agreement only says that the total amount awed COULD go back up to the original $45k…..it was not a guarantee.  The house is only worth $19k Fair Market Value.  But again, she wants to rebuild.  She’s lived in this neighborhood for 44 years.  I am telling my mother to fight for the LEAST amount going to Chase as the insurance company will deduct this loan repayment from her costs to rebuild.  Is that accurate advice or should she tell the insurance company to pay the total $45k?  Chase does NOT know there’s been a fire yet.  Also, will my mother’s personal belongings still be replaced?

  • sugaroneus It is not uncommon for lenders to sell the loan after being included in a BK, especially if you’ve stopped making payments and defaulted on the loan.  The new lender may contact you in an attempt to modify the loan, or offer a deed in lieu of foreclosure, I see this a lot too.
    If you write a new loan with the new lender (loan modification), you would not have bankruptcy protection on the new loan.
    Simply the fact that the lender sold the loan to another mortgage corporation will not affect your discharged debt.
    Hope this helps?

  • sugaroneus

    My home was included in a BK, the original mortgagor was foreclosing on the property but has sold the loan to another Mortgage Corporation, how does that affect our discharge debt?  We are still in the house/

  • zgirl it depends on how the 2nd lien holder dealt with the default (you stopped making payments?).  You need to see what happened to the 2nd lien.  If you defaulted on the loan, your “waiting period” would start from the time your name is removed from title.  If there’s a lien from the 2nd, the sales price will need the approval of both lien holders, and the total of both liens would need to be satisfied in full or a short sale would be required.
    If the 2nd lien holder has removed the lien, and if you can cover the pay-off of the first loan, including closing costs, your “waiting period” would begin from the time the second lien holder removed their lien.
    Hope this helps?

  • jennysue67 I completely understand your frustration, unfortunately this problem comes from bankruptcy attorneys not knowing that banks would not foreclose.  Unfortunately, bankruptcy only protects you from further credit reporting by creditors, and taxes due in the event that the lender takes a loss should you stop making payments and they must foreclose.  It is not unusual for banks to sell the loans, or servicing from one to another, especially if the loan went into default.  Bankruptcy also does not extinguish any liens against the property.  You still own the home after BK and if you stop making payments, the lender is allowed to foreclose.  
    Here’s a thought, have you looked into the FHA Back to Work extenuating circumstances exception?  If your household income dropped 20% or more for a period of 6 months, then you may be eligible to buy after 12 months of no late payments.  That would make you eligible in February 2014, that’s not so far away?
    Hope this helps

  • zgirl

    Hi Scott,
    Thank you so much for answering our questions. Here goes another question… our house was included in BK and the second also, discharged in 2011. We are going to short sale but the value is getting close to what we owe so if by chance it sells for what is owed on the first , what happens to the second which is $100,000?

  • jennysue67

    We filed BK and included our home in 2008, discharged 2008 and we had already moved out of the home.  Last year we bought a home FHA (2012)  Now we have our home for sale and want to buy smaller only to find out from our broker that we got lucky to get financing last year because no one did a title search but now we can’t get another FHA loan because the banks just sold the home in 2/2013 and just changed the title out of our name.  It seems that they sold the home to 4 different lenders in the last 5 years.  How is that legal for them to sell a mortgage that is protected by bankruptcy?  How is this fair to us and who in Congress do we need to write to get this changed??  Does FHA ever take this into consideration?

  • Globalpct

    Scott,
    Thank you for the quick response.  Your information provided was very helpful. My choices are much more clear.

    Rob

  • Globalpct thank you for the question Rob, you bring up a very good question, and I have a very good answer for you 🙂
    The fact that your mortgage does not report on the credit report does not affect your credit.  In terms of how the credit bureaus calculate your credit score, a mortgage is an installment loan, similar to a student loan, or auto loan.  A mortgage has a fixed loan amount, and a fixed payment.  The only thing factor that the bureaus look at is if an installment loan is reporting, that the payments are made on-time.  The absence of a mortgage is not a negative factor on your credit.
    In the event that you ever want refinance, or buy a new home, the lender will simply contact your current lender and order what is called a VOM (Verification Of Mortgage) to document your history of on-time payments.
    DO NOT fall behind on your payments.  I have actually heard stories of homeowners that stop making their payments because it didn’t show up on their credit…..that’s just crazy!  
    If a tree falls in the woods and nobody is around to hear, it does make a noise.  If a mortgage is being paid on-time and it doesn’t appear on your credit, it still establishes a history of on-time payments!
    Second Question:  There is no right answer here.  Continue to make your payments and, if you are able, pay a little extra each month to apply directly toward principle.
    If you can cover all payments, taxes and maintenance by renting the home out, that’s a great option that may create a great income stream for you in the future.
    DO NOT WALK AWAY!  Including a mortgage in bankruptcy simply means that you cannot be sued by the bank if you default.  If you walk away, or stop making payments, the bank still has the right to foreclose.  A foreclosure is a matter of public record, not necessarily a credit reporting issue, and it will prevent you from buying a new home for several years.
    A short sale or deed in lieu could be options, but then again, this is very similar to a foreclosure in the sense that it is still considered as a negative (settled for less than amount owed) and could require a waiting period before you would be able to buy again.
    It sounds like you are close to owing about what the home is worth now?  In 3-4 years when you retire there is a really good chance that you will have enough equity in the home to sell it without a loss.
    Sorry about writing a book here – I hope this helps to answer some of your questions?

  • Globalpct

    Scott,
    I really enjoy reading your comments and replies. 

    (Some History) We purchased our home in 2005 at the top of the market in NJ. We paid $459k for the home and took a mortgage of $340K. Two years later 2007 with market still strong we took out a 2nd mortgage that is now owned by Chase for $75k to rebuild kitchen, baths, and many renovations. In 2008 my wife lost her job due to downsizing, 2009 we were forced to file ch 7 due to mounting debts and were discharged in 2010. Both our 1st and 2nd show as discharged on credit reports although we never missed nor were we late on any payments.
    2011 we were very financially sound again (3 year  job search) and started rebuilding our credit. We noticed that we were not receiving credit for making the 1st and 2nd mortgage payments on our Credit report and as stated listed as discharged in ch7. We contacted Wells fargo who owns our 1st mort and asked if they would reaffirm our mortgage. They state they are unable to do this as it has to be approved by the court and should have been requested at the ch7 proceedings by my attorney. Chase, our 2nd mort  states they cannot do anything. My Attorney no longer practices, Another attorney states would have to reopen entire case. 
    Question #1 Any suggestions?
    Question # 2 Although we are financially sound again and able to build savings and new credit I am concerned with the fact market is still dead. My home is currently appraised at $385K. Still owe $380-390k with both mortgages. I plan on retiring from my career in 3-4 years and relocate. If I am still upside down what do you suggest to be my best options since I have 2 mortgages with 2 different banks

    -Rent home out?
    -Walk away from home?
    -Should I try to talk to mortgage company about short sale or sign over deed if they will let me walk away. But have two mortgages?

    Thanks, Rob

  • KatieLucilleMiller

    Im dealing with the same situation kinda only diff is thishouse was for rent soo I looked up the info a d talked to the owners told them a guy was trying to rent it to me as the new owner they confirmed what he said they lost the house in chap 7 bankrupsty and dont own it I told them the house was still in there name and I wld only move in with there permission givin the fact the home is still in there names so they said I cld move in well 3 days later cops come ask why im here I told them the story I guess the guy who rented it was a scammer and I think the owners were in on it but ne ways the cops call the bank the bank says the owners still own it sooo the owners say no we lost in bankrupsty and signed a deed luir of forclosure so when they found out itwas still in there name they thought they got lucky so they locked me out and kept all my property and my sons property they wanted too sell the house but was advised not to sell because legally they cant (thats the hard partwho really has the rights to the home?) So now there renting it out…. and kept my property the bank says the dont own it yet but the bank wintereised the house legally they wld have to own the home to take possession mostly of the time if you do not refirm the debt the bank will have u sign something giving up ypur rights even tho they have not forclosed yet nor filed the paper work they still technically own it and if the owners try to sell well they will be in bigggg trouble

  • Kristeng2217 that’s unfortunate and unwise advice.  They still own the home, they are still responsible for the mortgage, they will be prevented from buying another home in the future unless they get their names off title to this home.  A short sale is the only way they can sell the home to you.
    They need to get a second opinion.

  • Kristeng2217

    We spoke with owners they were advised by their bankruptcy attorney NOT to be involved in any of this at all. That I would have to talk to Bank of America but Bank of America cannot give me any info because I am not on the account

  • Kristeng2217 Bank of America gave you the right answer.  Nobody can “lose” a house through bankruptcy.  BK only provides protection agains financial liability in the event of a default.
    It sounds like the owners stopped making payments, moved out of the home, and Bank of America never foreclosed.  This commonly known as a “Zombie Foreclosure” – the owners probably don’t even know that they still own this home.
    You should be able to look up title records to find who the owner of the home is.  If you can find the owner’s name and contact information, and if you make an offer which is less than what they owe BofA, you could enter into a short sale offer, and BofA has the ability to accept less than what is owed them.
    Hope this helps?

  • Kristeng2217

    Alabama….We have found a home that has been vacant since 2010… We want to purchase it. Found out that Bank of America held mortgage. I called them they said they “service” the address but we would need to contact our county probate office and find out the owners names and make them an offer. I tracked down the owners and they say they lost the house in 2010 through a chapter 7 bankruptcy. Their attorney said they cannot sell it that it was discharged and the bank could come back after them for taxes and “servicing” fees and not to be involved in this in any way that if we want to buy it we would need to call Bank of America and make them an offer. I call Bank of America back and they say these people still own the home and Bank of America cannot sell something they don’t own. What can we do to buy this property.

  • payment I think you should try to speak to a manager at OCWEN to get a straight answer.  If you have a loan modification on your first mortgage, and if there was any principle reduction involved or a new loan with new terms was written, then your first mortgage is re-affirmed and no longer protected under the bankruptcy.
    To stop making payments would give the bank the right to foreclose, and take the home.  Do not take any chances!  If they say you can make payments online, make them online.  I would ask OCWEN to provide you the instructions of how to make your payments now that they are your servicer.  Get it in writing!
    You may also want to get a real estate attorney involved if you have the means.
    Sorry I can’t offer anything more concrete, I hope this helps?

  • Looking for answers You are right in thinking that.  The timelines to be eligible to buy again begin from the most recent event.  So, even though the home was included in the bk, and that timeline began upon discharge of the bk, a new waiting period began as soon as your name was removed from title on 6/13.  
    The waiting period to buy an owner occupied home using FHA financing after a foreclosure is 3 years, unless you think you could be eligible for FHA’s Back to Work extenuating circumstances exception.  
    You can read up more on this exception here:  https://www.findmywayhome.com/home-mortgage-news/fha-back-to-work-extenuating-circumstances-explained/

  • payment

    Hi! Scott. I filed bankruptcy in 2008 December and discharged March 2009. After bankruptcy, i had loan modification with my first mortgage which is GMAC. I had senconed mortgage  payment with Wells Fargo. But Well Fargo  never send me billing statement so i never made any payment after loan modification with first mortgage company. Now it’s three and half years past. I  got a letter from Wells Fargo  that they released my second lien and they will clear out lien at the county. In September i mean this month I didn’t get the statement with my first mortgage company which  is GMAC  now changed to OWCEN and I called Owcen asked why I did’nt get statement, they told me it is illegal to send me staments from now on. So I told them if I don’t get the statement then I don’t want to make a payment.. They said I can make a payment with online. Now I don’t any idea with my first mortgage company. Please help. Thank you

  • Looking for answers

    Scott
    Me and my husband filed for chapter 7 and was discharged 6/11.  In my bankruptcy I encluded a 1st and 2nd mortgage I had on an investment property.   although  my owner occ home was included  on the bankruptcy  I never missed a single payment and still have not missed a single payment on this home.( Chase contacted me and was able to refinace this mortgage to a lower interest/payment after my bankruptcy so my pay history now reports on credit) The rental property was officially foreclosed on 6/13.  Me and my husband are moving to a new city and plan to sell my owner occ home.  Am I right in thinking I will not be able to finance a new home until I wait 2-3 years from the final foreclosure from my rental property even with 20% down, good pay history from my OO home reestablished credit a 3 year employment history??

    • You are correct. The foreclosure will not show up on the credit report due to the bankruptcy, however, it is a matter of public record and will be addressed during the approval process for your new loan.

      You are subject to the waiting period for whichever loan program you are trying to qualify for. If you buy using FHA financing, the waiting period is only 3 years. Conventional is 7 years from the foreclosure.

      You also always have the option of buying using private money, or a portfolio lender like a credit union or other small regional bank that services the loan themselves.

      The last thing you may want to look into is the new FHA Back to Work extenuating circumstance exception. If you and your husband experience a 20% or more drop in income which resulted in financial hardship & the BK, you may be able to shorten that timeline.

      Here is a link to more information about this exception: https://www.findmywayhome.com/home-mortgage-news/fha-back-to-work-extenuating-circumstances-explained/

      Hope this helps?

  • Nicolemomof4 yes, your credit should be ok.  Now, if you want to buy another home in the future, be aware that if you end up selling the home short (for less than you owe), that would trigger another waiting period separate from the bankruptcy.

  • Nicolemomof4

    Yes I have. I was just concerned about those 2 statuses since I am trying to rebuild credit. Thanks!!

  • Nicolemomof4 It is not uncommon for lenders to stop reporting your mortgage after a bankruptcy, and because there is no recourse (other than getting the property back) for the bank in the event that you default, it’s also a common practice to sell that loan to a lender better equipt to manage high risk loans.
    The Bankruptcy is the only thing impacting your credit scores, temporarily, until you build positive credit. The fact that it’s showing as discharged and transferred does not specifically affect your score.
    You said you were 2 months behind when you filed, did you catch the payments up, and making payments on time since the filing?

  • Nicolemomof4

    Hello. I filed for bankruptcy in 10/2012. My discharge was complete in 02/2013. At the time of my filing, my mortgage was with BoA. After filing, I received a letter from BoA that notified me that my mortgage had been sold to Nationstar effective 12/2012. All of that is fine because I planned to keep my home anyway. My question is, why does my credit report show Bank of America as being discharged in the bankruptcy and transferred to a new lender? Does the discharge status on BoA have a negative affect on my credit? And at the time of filing for bankrupty, I was 2 months behind on my mortgage.

  • Discountphones this is a legal question that you would want to run by your bk attorney, but you are correct.  Bankruptcy protection specifically prevents creditors from seeking a deficiency judgement in the event of default.
    It sounds like you’re not making payments on those mortgages any longer?  If that’s the case, I have heard several stories where mortgages discharged in bk and defaulted are being sold to collection agencies.  These agencies are calling as the owner of the mortgage and trying to collect.
    Hope this helps?

  • Discountphones

    Hi, you seem very knowledgeable. I went bk 7 and was dishcharged in 4/1/11. We did not reaffirm 1st or 2nd. Money owed was 230k. Trying to help do a short sale as we have moved . I do not want to participate in hafa. Someone from the 1st mortgage company called saying if I didn’t participate in hafa I would be responsible for the deficiency balance. How is that if none of my loans were reaffirmed.

  • Martina628

    Thank you very much. You have eased a lot of concern and doubt.

  • Martina628 Hi Martina, thank you for the question – you’re on the right track here with your questions!
    I am unclear about whether the loan was included in the bankruptcy or not?  It is not uncommon that the lender will refuse to reaffirm a mortgage that is included in BK, which leaves many people believing that the home was not included, even though it was.
    First thing you should understand is that BK only protects you from a deficiency judgement by the lender as well as any tax liability that may be incurred through the income from discharge of indebtedness protection that you mentioned.
    Deed in lieu is a good option – you do not own the home free and clear, to the contrary, you have a $50,000 defaulted loan on the bank’s books and you’re still the owner of the home.
    The bank is entitled to a cure – either foreclosing on the home and reselling it, or you give them title in exchange of distinguishing the debt, or you can short sale and let the lender make the decision on whether or not they will accept what’s being offered.
    The gentleman that will give you $10k is a short sale scenario – you would not be able to keep that money because you will owe $50,000 to the lender.
    My advice?  I would take the deed in lieu – it’s the quickest, and puts you in a position to possibly buy another home with less of a waiting period than if the home is foreclosed on.
    Hope this helps?

  • 1angell18 This is a very common challenge, I am sorry you’re having to go through this. 
    Unfortunately, the lender has the right to foreclose on the home, but it’s not a requirement that they do so.  Bankruptcy protection means that will cannot incur any additional tax liability or judgements by the original lender in the event of default.
    I cannot comment on the specific laws in your state regarding transferring servicing from Chase to Caliber.
    The best approach here might be to try the deed in lieu approach again.  I do not believe the lender cannot come after you for costs if the home is included in the BK, but you’ll want to confirm that with an attorney.
    Hope this helps?

  • Martina628

    Hello. My husband and I stopped making payments on our home in July 2012 due to financial problems. We moved into an apartment and are willing to let the house go. Months went by and the bills stopped coming. No sign of foreclosure proceedings or anything. Then I received a letter stating they received notice of my husbands bankruptcy (which was filed in 2007 and in my knowledge, did not include the house) which said the loan was discharged. The mortgage company is trying to talk me into a deed in lieu which would be me just signing the house over to them. Or, I could do a short sale. My concerns/questions are if I do the deed in lieu, am I, in fact, just giving away a house that I own outright? If I do a short sale, I’ve been told I could be responsible for taxes on any amount not recovered from what is owed (income from discharge of indebtedness?). Is that possible even with the bankruptcy being a part of this? Could you please advise on the best option? We basically want rid of the property, but if there is an option to make any money, obviously we are willing to do so. There is a gentleman willing to give a small amount ($10,000) to take it off our hands. House is barely worth $29,000 and the loan is for approximately $50,000.
    Thank you for any advice you can give.

  • 1angell18

    One more thing, I recently found that (Chase) former lender of the home has filed a Lis pendens on the property that they have transferred to another lender. Is this the procedure? 
    thanks

  • 1angell18

    Scott, 
    We have stopped paying on our *discharged* home. The 1st and 2nd mortgages were held by Chase, only recently we kept getting phone calls from Caliber Home loans, stating that they are now the holders of our mortgage. when we contacted them they only make mentioning of the 1st mortgage there is no 2nd. We called Chase and they said was discharged or charged off.. I don’t remember the correct term. I know the credit report shows it is discharged, but we are wondering what happened to it.  Here is where I need help, We were sent forms to proceed with a deed of lieu in foreclosure, we received the forms and after having our BK attorney look it over, we were told not to sign those forms as had some mentioning of costs expenses and attorneys fees. We want to give the house back to the bank, because have moved on but are still paying for HOA fees and lawn maintenance (to avoid city fines). Can we try to Quit claim deed on the house and how would we do it?  is there something we are missing that would allow us to give the house back to the Bank. We do not want to do short sale as the market is not that great and could potentially  take too long. Beyond that we don’t want to have to keep paying for HOA fees, or maintenance.. One more thing the property now has no insurance, as our policy was cancelled due to non payment by the lender. (Chase) and it doesn’t seem to be insured by Caliber home loans.
    thanks for your help

  • EK78 ScottSchang – Yes, cash or portfolio is always an option.  A deed in lieu is considered the same as a short sale, “settled for less than amount owed”. The waiting period is the same as short sale for Conventional and FHA.
    This puts you at 3 years after deed transfers out of your name using FHA, as early as 2 years with 20% down for Conventional.

  • EK78

    ScottSchang
    Ok, so being able to buy again would be cash or portfolio loan then right?  Also, spoke to the lender.  I am going to try to do deed in lieu of foreclosure.  How will that show up on public records?  That’s what held me back before because underwriting showed I still owned the home.  Also, with deed in lieu, is there a waiting period for FHA or Coventional?

  • kmcdon ScottSchang I do not have any experience at all with warranty deeds.  I would check with a title company to confirm that you are free and clear from title and/or hire a real estate attorney regarding this entire situation.  There might be some cost, you may also be able to pose your question as part of a free consultation. 
    The timeline for the BK is the minimum waiting period after the discharge of a BK. This is different depending on what type of loan you are trying to qualify for.
    FHA is 2 years, Conventional is 4 years from the discharge date.
    I hope this is helpful.

  • kmcdon

    ScottSchang kmcdon 
    Thanks for responding so quickly!
    I live in SD where the BK was filed but the home is in CO.  I have not lived in the home since March of 2006. 
    I looked up the property record and do not own the home… the company I mentioned is listed.  The records show a warranty deed filed in March of 2006 and a special warranty deed filed in August of 2007.  I do not know what the special warranty deed entails however.
    I have told Ocwen that the other party is both paying the mortgage and listed on the deed/title. 
    When you say the “timeline after the BK”, to what are you referring?  I have seen other posts reference timelines after discharge.  My BK was discharged in Dec of 2007.  Hopefully, I am using the right terms so that we are all on the same page.
    Thanks again!

  • kmcdon Oh boy, this is unique – I have not had a scenario like this on any of these articles yet!
    On the surface, it sounds like you sold the home in 2005 for the cost of the monthly payments on the existing mortgage.  This type of purchase is called a “subject to” transaction and it’s not exactly not legal, but it’s not exactly above board either.  The challenge comes from the fact that in your loan documents it states that transfer of ownership in the property triggers an acceleration of the mortgage making it due and payable immediately.  Most lenders are not organized enough to identify when this happens and the mortgage is not called due and payable.
    So yes, the mortgage is included in the bankruptcy which would relieve you of any tax liability or a deficiency judgement in the event of a default.  Since the “investor” owns the home, and you included the mortgage in bankruptcy, I want to say that you only need to wait out the timeline after the BK to be eligible to buy again.  
    Even if the investor stopped making payments on the home and the bank forecloses on the home, the foreclosure would not count against you because you have no ownership rights in the property.
    Couple of quick clarifying questions though:  Do you still live in the home & What State do you live in.
    I would want to review public records and verify that indeed you are not the owner of the home.  I also would want to dig a little deeper into this scenario and get a second opinion from some underwriters, which I will not be able to do until next week.
    If you can answer those questions for me, I’ll do more research next week and try to get you a more definitive answer and game plan!
    Hope this helps?

  • zgirl22 This is a great question!  You actually have 2 separate timelines that you’re dealing with – One for the BK, one for the completed Short Sale.  These timelines run concurrently and your eligibility will depend on the completion of the longest waiting period.  In this case, it will most likely be that the short sale timeline. 
    Hope this helps?

  • kmcdon

    Good afternoon Scott,
    Thank you for helping so many people! 
    I’ve reviewed some of the posts but could not find one that matched my situation… I hope you can offer some advice.  I am not sure what to do.
    I lost my job in 2005.  A company (I think they were going to flip the house) offered to pay mortgage as they looked for a buyer in exchange for me signing over the deed.
    I filed and had the bankruptcy discharged in 2007.  The house was included.  I told the attorney’s aid about the situation with the third party and was told the debt will be discharged and the bank can take the house. 
    So… the bankruptcy was discharged, the third party still pays the mortgage, my name is not on the deed but is on the mortgage (and I’m assuming it’s on the note as well), and Ocwen (they bought the mortgage on the secondary market) still sends me statements.
    I would like to buy again in the next couple of years but am concerned that the mortgage and note (I’m assuming) are still in my name.  Since I don’t have the deed/title any longer, what can I do?
    Any advice would be greatly appreciated.
    Thanks!

  • kiki22 if your neighbors/friends are still on title to the home, they can do anything they like with it.  One challenge with renting it out is that I’m not sure how ethical it would be to rent a home to someone that is in default and could be foreclosed without notice.  The first thing they should do is look up public records to confirm that they are still on title as the owners.
    Hope that helps?

  • zgirl22

    Hi Scott,
    I included my house in my Chapter 7 discharged in July 2011. I had continued to make my payments until about 3 months ago and am now working on a short sale approval. My question is will my waiting period begin after the short sale or after the discharge of the bk. Thank you for all you do to answer our questions.

  • kiki22

    My neighbors/friends filed for bankruptcy around 2009/2010, with medical issues, they had to move to lower elevation (we live over 9000′) and get out from their medical bills, they included their house in the bankruptcy and have moved on.  BoA has yet to finish foreclosing on the house, BoA did change the locks 2 years ago and have put up notices of foreclosures that never happen.  I hate seeing a nice house just waste away with no upkeep in the neighborhood, can our friends (who still technically own the house) have the locks changed back and rent it out?

  • McCoy this is where an experienced real estate agent could help.  Yes, Chase would have to agree to the short sale.  Many cases, the first lien holder will pay the second lien holder a percentage of what’s owed to them in exchange for removing their lien.
    Short sale agents many times either have contacts at the banks that they can negotiate with, or they have services they work with that have these relationships.
    If you short sale the home however, you would be subject to a waiting period before you could buy again.
    Hope this helps?

  • EK78 As I mentioned above, I do not believe you would not have to open your bankruptcy back up to short sale your home – you should do more research about that.
    You can always go to the bank and negotiate to keep the home.  It is up to them if they will modify the loan balance to market prices or close to it.
    If the value is only about $45,000 it might be too little profit after hiring lawyers to complete the foreclosure process.
    You might be surprised, the lender may be willing to negotiate with you.  I would definitely contact the lender and explore your options.

  • EK78 I think I answered this offline, so I want to make sure I also answer it online in case anyone else has a similar situation.
    Including your mortgage in bankruptcy will protect you from any tax liability or default judgement by the lender.  The BK does not affect your ownership in the home, you are still the legal owner until you short sale, deed in lieu or allow the bank to foreclose if you have defaulted on the mortgage and stop making your payments.
    You should not have to open up your BK to do a short sale.  You own the home, you can sell it if you like.  If you are selling it for less than what you owe on the (defaulted) mortgage, you will have to have the short sale approved by the current lender.
    You can certainly still buy, you just wouldn’t be able to use FHA, VA, USDA or Conventional financing.
    Hope this helps?

  • McCoy

    Hi, our bankruptcy was in 2009. We kept the house but now husband health is going down and he cannot go up stairs. We owe more on the house than it is worth and would like to move to a ranch style home. I’m not sure if we can do a short sale because we have a second mortagage from Chase and our first is with Wells Fargo. Would Chase have to just write off the 2nd? If they do that then the house would not be upside down. We live in Colorado. any recommendations would be appericated.

  • EK78

    Hi,
    I filed chapter 7 bankruptcy in 2008 and included my home.  It’s been 5 years and BOA never fully foreclosed on it, yet instead, sold it to Everhome as of July 1, 2013.  My credit report shows the home included in the bankruptcy, but public records shows I still own the home; therefore, I cannot get approved for any type of mortgage, preferably FHA, which I found out a week before closing on a new home this year.  What can I do?  This is a nightmare!  The amount owed on the house is like 200k, yet it is only worth about 45k now.  I want to buy a new home, but I am stuck.  I started looking into owner finance, but my realtor said that first I have to short sale my old home, which means I have to open up my bankruptcy, and I am not willing to do that.  He said if I owner finance and don’t short sale the old home then Everhome will file a judgment against me on the new home and the IRS can tax me 25% for the difference of what is owed on the old home versus its value now and apply that tax lien to the new home as well.  I believe this is inaccurate information since my old home was a discharged debt in chapter 7, but regardless, with owner finance I am going to be wasting a lot of money, so what other options do I have?  Please help!!!
    Thank you.

    • EK78

      Also, if I did open up my bankruptcy, could I buy back my house, like a mod, for what it is worth today?  Or is that far fetched since its only worth 25% of what is owed?   And is opening up my bankruptcy a bad idea in general?
      Thanks again.

  • lhall

    Scott, I also have another question. On the lawsuit that was served to me on my foreclosure there were two companies listed for a person with my name with a different middle initial who is listed on my foreclosure. What do I do to get this person off my lawsuit from my mortgage company? I am in a terrible state of mind over this.

    • lhall I apologize that I cannot really help here.  If there is a law suite filed, you should consult a qualified attorney.  Hope this helps?

  • lhall

    I live in Florida and my home is in forclosure. My biggest concern is that the home is upside down. I just placed on the market as short sale. My question is if the home sells for less than what is owed does that mean that I will be given a 1099 for the deficiency of the loan? If so that means I will owe IRS a lot of money in which I can not pay as I live on Social Security and my husband passed away last year. Next question is I suppose I will be taken to jail. Can you please help me as I am in a panic. Linda

    • lhall Hi Linda, I’m sorry to hear about your hardship.  You should first check with an accountant to see what the tax consequences might be.  There are ways to protect yourself from a 1099 being issued.  If your accountant determines that you would be liable for any losses the lender incurs, you should look for a free consultation with a bankruptcy lawyer.  Bankruptcy may be one of your options for protecting yourself against a deficiency judgement.

  • Cyndyparis

    Scott, We wanted to thank you for your advice awhile back. We filed bankruptcy in July 2010, but BOA never foreclosed. We were, unbelievably, accepted for a modification!!! We have went through our trial period and are back to a regular mortgage. We wanted to tell you that we had to go through so much to get here, but we were successful and are thrilled. We were told by so many at BOA it couldn’t be done. We would hang up, do more research of other ways to approach BOA and keep calling back until we found someone to work with us! We started trying for a mod in 2011, were approved, but the payments were insanely high. We rejected the offer and were told that the house would be foreclosed on. In January 2012, BOA still had not foreclosed. We decided to try for a mod again. We went through the whole insane process while dealing with: lost paper work, late paper work, rejection of our applications for various reasons at different times, requests for more paper work, requests to restart the process, etc.. It was very frustrating and we thought about giving up. We thought about selling our home to get the clock ticking for a new mortgage on another place. We were finally accepted for a trial mod in April 2013. We had to make three on time trial payments, then the mod would be reviewed. We received our mod docs within weeks of our July payment! We made our first official mortgage payment in over three years this month! Please tell people not to give up on a modification. Tell them to call back to speak to someone else. Please let them know if they want to keep their home, NEVER give up until the house is foreclosed on! We were ready to give up so many times because we were so discouraged. We are so very thankful for your advice, your web site, for bank representative Arlen Faloon at BOA, and our good fortune! Thank you again!

    • Cyndyparis thank you so much for taking the time to come back and give us an update!  Congratulations on winning your fight.  I am confident that people will benefit from your example, thank you again.

  • ChristinaG

    Scott after jumping through some hops I was finally able to close on my home and am now in it with my family. Thank you for the advice back in April/ May. After a bankruptcy it does not all go away. There are still situations it affects and the title company can be one. I got with a second title company and then the first one looked into why they said their was a lien against my name. It is the property and due to human error they were not going to close until the second title company came into play. I finally received a call stating they were wrong. After three years I did get a house for 20k and with a little money it is a great home. Thank you for you great advice  Christina

    • ChristinaG You just made my day!  Thank you so much for taking the time to come back here and tell your story.  These forums tend to expose many hardships that folks are having while dealing with this situation, it’s awesome to hear the success stories 🙂
      Congratulations Christina & Family 🙂

  • derme2000

    I completed Chapter 13 in March 2013.  Included was a second mortgage the objective of which was to “strip” it off.  The second was discharged at the completion of the bankruptcy.  My credit report states that it was “discharged in bankruptcy”.  Since March, I have been on the servicer BofA’s back to release the lien against the property.  In July, I was informed that BofA sold the SERVICING of my loan to Nationstar Mortgage.  I received, this week, a statement for the second mortgage stating the original amount borrowed, the interest accrued over the 3-year chapter 13 and the balance of the loan amount with that interest.  The statement also said I owed $23K+ as a payment, gave me 30 days to deny the debt and also had all the usual cavaets that if this loan was discharged in bankruptcy, Nationstar is not attempting to collect. When I called them, they said because they have taken on all these new loans, they are contacting people attempting to clarify whether or not the loan was or was not discharged in bankruptcy and would be doing research to verify that so to give them a month (I explained to the customer service guy that I didn’t have a month according to the 30-day deadline to dispute in the statement!).  So here are my concerns:  1.  How do I get this lien off the property?  My house/1st is upside down by about $100,000.  That said values are rising.  2.  Nationstar is calling this a “chargeoff”….is that a negative though my credit report doesn’t state that?  Do I need to monitor my credit report to make sure Nationstar doesn’t report it differently (How could they?  It happened before they got in the picture?).  3.  If values rise, eventually can Nationstar foreclose if I cannot get the lien removed?  It was my understanding that the 1st and 2nd were owned by Wells Fargo but the statement Nationstar sent to me states the 2nd loan was owned by “The Bank of New York as Trustee”.  Are there any “trends” that have successfully been used to remove liens? Any other traps you can see if my story I need to watch out for?  Thank you!

  • time5050

    Thanks for the quick response, and I may try that but getting a lawyer for things seem to always work.

  • time5050

    I just want to know what can be done about mortgage companies that continue to post to your credit after they have offically repurchased your home. If I get the 1099 after a foreclosure, should they still be reporting that they are foreclosing on the proporty. I saw my credit and it has over 3 years of information on it from the mortgage company after I received the 1099. I know this is dragging down my credit, and have made request from the credit complanies to remove PNC banks constant information that I am still being foreclosed upon.

    • time5050 that is unusual.  The first thing I would do is confirm that you are off title of the home.  You can contact a local lender, title company or real estate agent and ask them to pull a chain of title for the home.  Once you’ve confirmed that you’re off title, maybe a credit attorney would be the next step.  Sounds like it might just be a miscommunication at PNC.
      Good luck!  Hope this helps?

  • indianabuyer

    In Indiana they past a law that took effect July 1st, 2011. 
    The law refers to Effect of Surrender in Bankruptcy.
    Section 1. This chapter applies only to mortgaged real property that the mortgagor surrenders in writing to the court or to mortgagor as a part of or while in bankruptcy proceedings as long as the mortgagor doesn’t occupy the property.
    Section 3. A mortgagee shall properly record the mortgagee’s interest in the property with the county recorder not later than 60 days after the property is surrendered under this chapter.
    My situation is as follows: I filed for bankruptcy chapter 7 in ’09, it was discharged in 08/2009. In my bankruptcy papers, I surrendered the home to the bank through the proceedings, and moved out before my bankruptcy was discharged. The bank didn’t foreclose on the home until 12/2012, and didn’t put the property in their name on the deed until 03/2013. My question is: Shouldn’t the bank have put the deed back in their name with the county recorder within 60 days from the property being surrendered through bankruptcy proceedings? I understand the law wasn’t in effect until 2011, so shouldn’t the bank have deed the property in their name within 60 days from the date the law went to in effect at least, since they hadn’t foreclosed on property already?
    Thanks

    • indianabuyer thank you for the question, I am very happy to see that a State even passed a law to this effect.  I would not be able to offer any advice on this question as it’s a legal issue and would need to be addressed with an attorney – maybe your BK attorney could address it?
      I believe you would need to read the law to see when the “effective” date of the law begins. If it was retroactive, it sounds like you would have an argument here.  If it was effective beginning the day the law was passed, moving forward, then your loan sounds like it would not fall under that law.
      Sorry I am unable to offer more help.  I would really appreciate if you can come back and post the answer to this question once you find out so that others in your situation might benefit?

  • Help please

    How does a deed in leu foreclosure works?. I file ch 7 surrender my house in 2010. Find out a year later the Litton Loan transfer to Owen in 2011. When I got sited on the house with the city. Now I have to keep the house up because it’s in my name. They won’t. Foreclose. I can’t go on with my life I would like to purchase another within 6 months. I need help please. What does affirm doc means?..taxes Lien on property in my name. I would like to be in the same position as Miles 123. Below
    Thank you reading hopefully you help so I can help

    • Help please a deed in lieu in foreclosure occurs when the lender agrees to forgive the debt in exchange for you signing title over to them.  This process will typically save the lender attorney’s fees associated with a foreclosure.
      When you say the bank won’t foreclose?  Did they tell you that they will not foreclose?  What happened to Miles123 is that the bank released the lien on the home and forgave the debt and allowed her to keep the home free and clear.  That’s a really, really rare situation that I’ve never heard of.  
      If the home is not marketable, or not worth enough money for the lender to go through the trouble of foreclosing, I can see where this would be an option.
      However, if you’re trying to buy another home, you are still subject to the waiting periods involved once your name is removed from title.  It sounds like you’re currently in default on the mortgage.   
      That needs to be cured before you can borrow money for another home.
      Hope this helps?

  • klovesme

    ScottSchang miaupa  ok so I man rented me a home for cheap in exchange I do work on the home so he could sell it he said he worked for a company who deals with these issues and fixes the home for a year or more any ways it sounded off so i looked up the owner it wasn’t him it was the jays I called them and verified they lost the home when filed chance 7 bankruptcy bank took it back I contacted the bank but didn’t get much so I spoke more to the jays and asked there permission just in case something went wrong with the bank they said they relinquished all owner ship of the home Ext and it was fine for me to rent it from this man so I did cops came one day said it was bank owned that I got scammed and it shows on the deed the jays own it and now there trying to evict me when I have a lease and I asked and verified plus way more research it was not listed as bank owned foreclosure pre foreclosure Ext they admitted to the cops I called and they gave me permission and they told them they were going to evict me …….when the cops left they said you have a week to get out it came out of know where what now??? I had permission from them just in case…… and they filed bankruptcy chapter seven and it was DISCHARGED they said they signed over relinquishing there rights so do they own it? do they have legal right to do this?? Who really own it and has legal right to give a lease for that home please help me email ……..even if they do after I got permission and paid

    • This is not an uncommon scam, and I am sorry to hear that you were taken advantage of. The owner on title of a home is public record. Just because the Jays discharged their mortgage debt in BK does not mean they are not the owners of the home any longer. It has been taking the banks years of not receiving payments to foreclose on some of these homes.

      If the bank did foreclose, and they own the home, there is nothing you can do – the lease agreement was never valid or legal and cannot be enforced.

      It’s very important that if you should look up the owner of a home before renting if it sounds too good to be true. This is a very common scam.

  • iabgirl

    Hi Scott,
    We surrendered our home in Florida to Chase in January 2012 due to relocation out of state. We filed for chap 7 bk June 2012 and our first and second mortgages were discharged in the bk in January 2013. Were unaware that the bk suspended the foreclosure. Chase has had the bk paperwork since January but did not close out our loan until last week and this was only because I made multiple calls to ensure it was taken care of. I spoke with the foreclosure department at Chase today and was told it would be at least 6 months before the foreclosure process restarts back at square one and because the property is in Florida it may take 3 or more years for the foreclosure to be completed. We bought a home on contract in another state and have 4 years until we, have to get financing. The problem is, we won’tbe able to do that if the home in Florida, hasn’t foreclosed, correct? Chase suggested trying to short sale. The attorney for our HOA has asked us to consider a quit claim deed to the HOA. Would there be any benefit in doing this? Would it help us in securing a mortgage within 4 years even if the house in Florida hasn’t foreclosed?

    • iabgirl Chase gave you the best advice, but I would ask them if they are willing to do a deed in lieu of foreclosure.  That would be the quickest and easiest way to get your name off title.  A short sale would be the second option.  Waiting around for the lender to foreclose can postpone your ability to buy again for years, as Chase mentioned.
      You are eligible to apply for FHA financing in 3 years from the date your name is removed from title.  FHA waiting requirements are 2 years, so the 3 years for the short sale, deed in lieu or foreclosure will dictate when you are eligible.
      Conventional financing carries a 4 year wait after BK discharge, and only a 2 year wait after short sale or deed in lieu with 20% down payment and minimum 680 credit score.
      Hope this helps?

  • annasmamma

    Also, Can I try to do a short sale through Green Tree, there is interest in the property?  The city is on me to do repairs and I do not have the funds to fix the home.

    • annasmamma – you are still the owner of the home, you can pursue a short sale.  The lender will ultimately make the decision of whether or not they will cooperate. 
      I’m sorry you have to go through this 5 years after your bankruptcy, hope it’s resolved quickly!

  • annasmamma

    B of A accepted my Deed In Lieu offer.  I was sent paperwork and everything was notorized. The attorney received my paperwork the same day that B of A notified them to close the file.  My loan was then sold to Green Tree.  Do I start the process over again with Green Tree to see if they will accept a deed in lieu?  The mortgage was covered in a Chapter 7 5 years ago. What are my options with Green Tree?  I did notify them that I do not intend to keep the home because it was discharged over 5 years ago.  Thank You.

    • annasmamma unfortunately you will have to start the process over again with Green Tree.  Hopefully they will honor the decision made with BofA, but that’s their decision to make.

    • annasmamma

      I was not current with my mortgage with Bank of America when it was sold to Green Tree.  Can I notify them that I want to apply for a mortgage with Green Tree?  It is my understanding that I do not have to re affirm the debt since it was discharged in a 7.  I would like to know if I can try to keep the home.

      • annasmamma if Green Tree is the servicer, you would be working with Green Tree regarding anything with your loan from here on out.  As long as your payments are caught up, you can keep your home.  Including the mortgage in bankruptcy does not mean you don’t have a mortgage any longer, it just means that you will not have tax liability and cannot be sued by lender if you stop making payments.
        If Green Tree will refinance your home, that is re-affirming the debt.  If you complete a new loan, or loan modification that involves a principle reduction, that will mean the new loan is no longer protected by the BK.
        I hope this makes sense?  These things can be pretty confusing.

      • annasmamma

        ScottSchang annasmamma 
        That makes sense.  I am pretty sure they will not give me a deed in lieu and I do not have much hope in the short sale department from what I have read.   I can just about find a realtor to deal with doing a short sale that deals with Green Tree.  The courts are on me to fix it up or they will condemn it which means it then goes through the foreclosure process.  My thought is, throw some money into it, rent it out and continue to fix it up until I can apply for a home loan, at this point it needs repairs.  My next question is what will Green Tree want to consider as the loan balance, as there is the Total amount due and then there are two negative balances one is a negative escrow balance and one is a corporate advance balance that is not a negative figure.   I am not sure if those two figures are calculated into the total amount due. Thank you for help.

  • mommy2elf

    I filed bankruptcy ten years ago during my divorce; I filed a quit claim and he kept the house.  His lawyer advised against refinancing since I’m “free and clear” of any debt, but now he’s $11K behind on his mortgage.  The house I haven’t owned in a decade is showing up on my credit reports [all of them] as a foreclosure in my name.  What can I do?

    • mommy2elf this is a little tricky because it all comes down to how it is addressed in the divorce decree.  If it explicitly states that you are in no way financially obligated on the mortgage (as evidenced by you Quit Claiming), then we, as a lender, could disregard the mortgage when qualifying you for a home loan.  Have you spoken to any lenders yet?

      • mommy2elf

        ScottSchang mommy2elf 
        I’m actually not too worried about getting a mortgage [my fiancé and I live in his house, which he alone finances].  The negative information has impacted credit card applications and my car insurance, however.  I’m working on changing fields and the poor credit rating may affect hiring.
        The divorce decree states that the house is his and he is/was to make good faith effort to remove my name from the financing, and that I am/was to file a quit claim in his favor [which I did immediately].  I had already filed for bankruptcy during the divorce, so the family court upheld [in a later ruling] that I had not acted maliciously and that my ex had sufficient notice of the filing.  It was ruled that I had absolved myself of any debt to his house; unfortunately, there was nothing ordered insofar as how he was to remove my name from his property and debt. 
        I’m wondering if I will now have to go back to court and have this so ordered, retroactively?  Or will it suffice to send copies of everything to each of the major credit reporting bureaus?

      • mommy2elf ScottSchang a mortgage included in bankruptcy usually will not report on your credit report.  I would start with the credit bureaus and provide them with the documentation you have (divorce decree, bk discharge).
        It does sound like this is being reported in error.  I hope this helps?

  • panthr77

    I live in NJ. My husband and I filed chapter 7 bankruptcy 3 year ago.Our mortgage was not included in the bankruptcy.  We pay our mortgage on time
    every month. They let us keep the house but the mortgage was never
    reaffirmed.On our credit report it states we owe $0 and notes say
    chapter 7 bankruptcy but the deed is still in our name.How can I get my name off the deed so I can purchase another house, Our home is upside down. We live in a bad neighborhood and want a safer place to raise our family. I hear you can quick release your deed, but I don’t know if I can get another home right away.  Thanks You

    • panthr77 including your mortgage in bankruptcy does not mean that you no longer have a mortgage.  Bankruptcy protection simply means that you cannot get hit “twice” if you default on the mortgage or lose the home to foreclosure.
      If your home is upside down now, your only options are to short sell, or do a deed in lieu of foreclosure with the bank.  Either of these options will remove your name from title by way of transferring ownership in the home.
      The soonest you would be eligible to apply for financing for a new home would be 2 years using conventional financing with a 20% down payment and a minimum 680 credit score.  
      If you don’t meet those requirements, you are eligible to apply in 3 years for FHA financing.
      Hope this helps?

      • panthr77

        ScottSchang panthr77 Thank you!!!! 🙂

  • JLL5

    Hello,
    I have a home in Minnesota and I am in the middle of negotiating a Deed In Lieu with the 1st mortgage. They are negotiating this with the 2nd mortgage company. How do I make sure that the second mortgage doesn’t come after me for the deficiency? Do I call them or have the 1st mortgage add that to their negotiations?  Thank you…

    • JLL5 if the home was included in bankruptcy, you are protected against any tax liability – was it included?

      • JLL5

        The second was included; however it was a different lender at the time of BK. They have sold the loan to a few lenders.
        I also looked at the BK paperwork. There is a reaffirm document that had a vehicle and the 2 nd mortgage on it. I didn’t sign a reaffirm doc WITH the 2nd mortgage company. Is this document a reaffirmation or would that have been a separate doc signed between the 2 nd mortgage and myself?

      • JLL5 that doesn’t matter – it’s the same loan, only the servicer changed.  Verify with your BK attorney and CPA, but I think you’re protected.

      • JLL5

        I will do that… Thank you so much!

  • miles123

    Hello again Scott,
    I have a recent update on the situation im in, the mortgage company canceled and discharged the debt and released the lien to the property and recorded it with the county! I had finally got in contact with someone in the BK department at the mortgage company and they said to fax the letter I received about releasing the lien and they told my the property was mine free and clear and not to make any payments! , it took less than 10 days after I faxed the paper to the time it was all recorded. it all just seems too good to be true you know, so I took the papers to my bank and they were also aware of my situation and they couldn’t believe their eyes lol thank you for all your help, my guess is people out there in similar situtations hang in there you might just catch a lucky break!

    • miles123 that is amazing news!  Thanks for the update 🙂

  • zgirl22

    Hi Scott,
    I just found out that my 2nd mortgage company has a sale date for their mortgage which was included in my bk. I have stayed current on my first but made no payments to them. I have received no notices from them. How does this affect me? Can they take my house? Thank you so much for all your help.

  • Suezie37

    My husband and I filed Chapter 7 and being discharged on May 30, 2013. Our mortgage is included in bankruptcy but is only in my husbands name. How does that affect me getting a mortgage in the future.

    • Suezie37 great question – is your name on title to the home?  Also, what are your intentions with the home?  Do you plan to continue making payments on the home and live in it, or do you intend to default on the mortgage and allow the home to go back to the bank?

      • Suezie37

        It is soley in my husbands name. We include in bankruptcy so defaulting as it is worth half what is owed and is a manufactured home. Have tried numerous ways to refinance, modification but not available with a manufactured home.

      • Suezie37 it shouldn’t affect you then – as long as your name is not on title or on the mortgage, it’s not your debt.

      • Suezie37

        tHANKS THAT IS SOME RELIEF FOR THE FUTURE WHEN WE WANT TO BUY A HOME AFTER SAVING A DOWN PAYMENT.

  • miles123

    ok here it is, i filed a chapter 7 in 08 did not reaffirn but retained the property, was not working at the time,so the bank stoped taking my calls and payments about a year ago, and just recently out of the blue i get a letter from them saying that thewhaty are releasing the lien on the property and exerything in my complete responsibility now! i do not understand wht this means my lawyer is no help to me, can someone please help me understand? what about the balance of the note? if they release the lien on the property is it mine? im just really confused thank you

    • miles123 this is very unusual, but if you hold title free and clear of any liens, then that means the bank if giving up it’s right to foreclose on the home as a result of a default on the note.  I would definitely follow up with the bank and ask more questions.  You can also pull public records, a chain of title, and see if all of the liens have been reconveyed.

      • miles123

        ScottSchang miles123 So if the lien is relesed and the title is clear of liens then the house is mine ? i can not get a hold of anyone at the bank i spent 3 hounr on hold one day!

      • miles123

        ScottSchang also would the bank be able to re attach the origonal lien? thank you

      • miles123 ScottSchang Ok, this is a little tricky only because of the wording you’re using.  The house is already “yours”.  If the bank files a reconveyance  (removal of lien) then title to your home is no longer being used as collateral for a debt.  If you should default on that debt, they do not have the right to use your home as collateral.
        As to whether they can reattach a lien?  Sure, it’s always possible I guess, but unlikely.  That’s probably above my pay grade, you should probably consult a real estate attorney about this just to make sure.
        This is my opinion based off my experience in the industry, do not accept my opinion as the final word on this.  Hopefully though, I am close enough to the right answers to at least point you in the right direction to get verification of my answer.
        Hope this helps?

      • miles123

        ScottSchang miles123 One more question, if the lien is released, and the mortgage company is not on my credit at all now after the bk, how hard is it going to be to get a new mortgage coincerding i have had trouble in the past due to not being able to get  payment history from the bank, (they cannot locate any info since the bk) is what there telling me. so if my credit is good and no forclouser or shortsale or deed in lieu and i own the current house free and clear do you think ill run into any problems with the prior mortgage company? would i have to wait to get a new loan?

      • miles123 ScottSchang a payment history can still be requested from your lender.  Technically, the is currently in default until which time the lender releases the lien.  Even if the lender releases the lien, you would most likely have to wait a at least 12 months before being able to qualify for financing.  The reason is that the new lender will have to contact your current lender to get a payment history.  The history will show that the mortgage was in default until the date that the lien was removed.  The most liberal underwriting guidelines state that you can have 0x60 days late in the last 12 months.
        Hope this helps?

  • Beastie2us

    I live in California. Chapter 7 BK discharged in 2010. Moved out of hues that wasn’t reaffirmed in BK. just found out home is still in my name & in process of doing a deed in lieu. Problem is ex husband s living in the house all this time and lying saying he doesn’t live there. I went over to the house to clean it out for the lender and ex husband barricaded the front door to prevent me from entering. The house is in my name only. What can I do to proceed with deed in lieu? How can I get in the house and get him out?

    • Beastie2us I would suggest maybe contacting the local law enforcement and letting them know that there is someone unlawfully occupying the property if in fact he is trespassing.  Does he have any right to be there at all?  Is he on title, on the mortgage, or allowed to live there as terms of the divorce decree?

      • Beastie2us

        He is none of the above ( on title, mortgage and nothing in divorce decree for him to be there).
        He is lying to me everyday saying he has nothing in the home and doesn’t live there. However I have neighbors who call and tell me he is there on occasion. I just need to know if I have a right to break down my own front door to gain entry?

      • Beastie2us again, I would contact the police and have them escort you to the property – I’m more concerned for your personal safety than your legal right to enter your own home.  If you are on title and the legal owner of the home, you have the legal right to do with is what you wish.

      • Beastie2us

        Thanks I appreciate your help. I will be asking the police for assistance when I arrive there tomorrow. I will post the results.

  • cindi1958

    Hi Scott,
    I owned my own real estate company and filed BK in 2008 (discharged in 2009) and owned 12 properties all of which were foreclosed on except (1).  The lender will not take a Deed in Lieu and will not foreclose (the Sheriff’s Sale was cancelled the day before the sale back in 2008).  I purchased a new home and financed with a private lender in 2009 and have a $20,000.00 balloon note due in June of 2014.  I am trying to refinance my current home; however, since the (1)  home was never foreclosed upon I cannot provide the date of sale.  I Quit Claimed the property out of my name last year and the property was sold at tax sale in October of last year.  If the lender does not redeem the property then the tax sale buyer will get deed to the property. 
    Do you know of any lenders who can help me refinance the current home I am in?  (credit score is good and I have no derogatory credit since the BK)

    • cindi1958 when you say you quit claimed the property – who did you quit claim it to?  You also said the property was sold at a tax sale?  Who was the seller?  or was the tax lien sold?
      Unfortunately it sounds like there is a technically a foreclosure (either by the lender or the tax lien holder), which would mean at the very least, there is a waiting period of at least 3 years from the date your name was removed from title.

  • jojo118

    Hi Scott, I am separated from my husband and he has been living in our house that both our names are on…for the past 1 1/2 yrs I thought he was making the payments, but a letter from an attorney saying the property was forclosed on and was up for public auction oppened my eyes…I tried to contact and work with our morgage company Citi…that didn’t work and they wouldn’t accept any payments from me…the public auction happened and the bank bought back the property…that was 5 months ago now and there has not been any eviction notice…anyway this week I get a letter from Citi saying “we appriciate your pursuit of a hardship treatment!” and gives her name as our “Homeowner Support Specialist” throughout the review process…then at the end of the letter it states…”To the extent your obligation has been discharged, or is subject to an automatic stay of bankruptcy under Title 11 of the USC, this notice is for compliance and informational purposes only and does not constitute a demand of payment or any attempt to collect such obligation.”   What does this mean?  We have not filed for bankruptcy as of yet…

    • jojo118 are you sure your husband has not filed for bankruptcy?  I would recommend speaking to an accountant/cpa or bankruptcy attorney if the home was foreclosed at a loss to the lender.  Was the home upside down?  At this point, you want to make sure that you can protect yourself from any additional legal or tax liability as a result of the foreclosure.  Hope this helps?

      • jojo118

        ScottSchang jojo118 
        No, my husband said he spoke to a ban