Buying Your Own House After Foreclosure

[RickInMich]

We filed Ch. 7 and have had our 341 hearing. We're just waiting now until March 8 for any objections. Currently, we have a first mortgage to Countrywide of 107,000 and a second to Ditech of 43,000, for a total of 150,000. Our house at this point in this economy at BEST would appraise for around 120,000. Obviously, we're considerable upside down!

We've been thinking. What if we let our house go into foreclosure. We stay in our home through the entire process and save money by not making the payments. Apparently, Michigan is both a judicial and non-judicial state, which I guess I don't even understand the difference. But anyway, at the end when the house finally gets sold at auction or sheriff's sale, what if my wife's parents buy the house? We'd give them the deposit and make all payments, of course. How would it work with the first and second mortgages?

Would the person buying the house have to pay off that second mortgage? No one will do that. The house isn't worth that. Will the second just be out of luck? That would seem to be the only way we could possibly get out from under that 2nd mortgage, which is our whole issue anyway.

So would this idea work? And would they most likely be able to buy the house for less than we even owe on the first?

Thanks for ANY advice or help.

[HHM]

Generally, 2nd mortgages get extingueshed at a foreclosure so you don't have to worry about that.

You need to read up on foreclosure sales...they don't work like normal purchases. Generally, the buyer needs to have 10% on the spot, and be able to close within 2-4 weeks.

But yes, you could do that.

[BearChaser303]

My understanding is that the 2nd mortgage or any other liens become unsecured debt at the time of foreclosure, which should then be dischargeable in your bankruptcy like any other unsecured debt.

[2muchstress]

hi,
my case is, 1st mortg paid 2nd loan off, bought the house to resell.
is it strange or normal?

home status now is: pending release (on ad), yet bank owned sale.

they bought it and wont change the owner name until someone buys the house, so county land record still has my name. not sure what that will get me into as a result with tax...