Mortgage POST Bankruptcy 7 and Foreclosure

[saddebbie]

Hello, I filed for BK in 09/2007 and my BK was discharged in 10/2008.
I let a house go in my bankruptcy therefore it was foreclosed on. How long do I need to wait to obtain a new mortgage? How much $$ down are lenders going to require me to put down? Also, I actually had 2 houses in my bankruptcy but only 1 was foreclosed on. I continued to pay on the other and I am still living in that house. If I walk away from this house (I never signed a re-affirmation agreement) would this start the clock all over again if they foreclose on this house as well? I know my BK 7 relieved me of the responsibilities of paying on this house even though I have been paying on it and living in it. I look forward to your insight.
Thank you.

[oldhack]

The short answer is that the foreclosure will hurt you more than the BK. If you walk away from the second house it, too, will turn into a foreclosure which WILL start the clock ticking again.
Different lenders and different lending programs -- for example, FHA, VA, or USDA -- have different post-BK standards. With a foreclosure and BK, conventional lenders won't consider you until 4 years after the latest of the discharge or foreclosure. FHA won't guarantee a loan till 2 years post-Chapter 7, but the foreclosure pushes that out to 3 years from the date the deed was written to a new owner (not the date you filed, or quit paying). USDA requires 3 years post discharge for a guarantee, but might waive for an extentuating circumstance such as involuntary job loss. The USDA Direct lending program (you actually borrow directly from the USDA), however, generally has NO bankruptcy wait period. USDA properties, by the way, are limited to certain, low-density population areas (its website will tell you if a property qualifies).
The government-guarantee programs don't require any more from BK filers as a down payment than they do from anyone else. FHA, for example, is 3.5%. In all cases, as you likely know, you'll be responsible for some/all closing costs. However, having significant reserves than calm concerns about other weak spots in a mortgage application.

[saddebbie]

What about Deed in Lieu of foreclosure?

Would a deed in lieu of foreclosure also start the 3 year clock again?

How is a deed in lieu of foreclosure looked upon as? Is it similar to a foreclosure for this waiting period purpose?

[jwsmartin]

All programs have exceptions for extenuating circumstances. For example, you can get a FHA loan after one year post bk if you have reestablished credit, and your reason was not under your control (death of a wage earner, medical, etc). With a foreclosure, you can actually get a FHA one day out under the same circumstances. Fannie Mae and Freddie Mac have similar rules, but it has to be documented and it cannot be due to a job transfer. Do a search and you can find all of these.

We are currently 1 week away from a closing on a new home, and we are using FHA. We discharged in August 08, and our bk was due to premature birth of our twins and medical expenses. 3.5% down on a 280k home. Now, we have not signed anything yet, so anything can happen, but the lender says we are good to go, so I have to believe this will work out.

There are other things to worry about as well. If the original bank holding your mortgage filed a claim with HUD on the property you included in the bk, you will not clear CAIVRS. This is the system lenders check to see if a FHA claim was made. However, there are exceptions to that as well. We did not clear CAIVRS, and our underwriter is saying we are ok. Really depends on the reason.

Sorry for the lengthy reply, but I know what it's like to want info. This site is great for that. I will keep you posted on our situation and maybe it can give you hope... if it works out!

[moneytrouble]

I thought once your mortgage is listed in Chapter 7 on your credit, it can no longer change your credit if they decide to foreclose. So if the bank does not foreclose for a year after my discharge, my understanding is that they cannot list anything new about the foreclosure on my credit. Is CAIVRS different from credit?
A side question. Before my bankruptcy, they accelerated foreclosing after 4 months of non-payment. It has been a year now since my last payment, chapter 7 discharge, and no foreclosure notice, no nothing from the mortgage company. Anyone know how to get the foreclosure process started?

[StartingOver08]

I thought once your mortgage is listed in Chapter 7 on your credit, it can no longer change your credit if they decide to foreclose. So if the bank does not foreclose for a year after my discharge, my understanding is that they cannot list anything new about the foreclosure on my credit. Is CAIVRS different from credit?
A side question. Before my bankruptcy, they accelerated foreclosing after 4 months of non-payment. It has been a year now since my last payment, chapter 7 discharge, and no foreclosure notice, no nothing from the mortgage company. Anyone know how to get the foreclosure process started?

You are really talking about two different things when speaking about reporting a foreclosure on your credit report and checking CAIVRS.

Yes, the foreclosure is not suppose to be reported on your credit report if it occured after your BK because your mtg tradeline is supposed to read zero balance and iib (included in bankruptcy).

However, on the mtg application you will have to disclose that you surrendered your home in bankruptcy and naturally the foreclosure process continued to transfer the title to the bank. The lender will check to see the date of transfer and 'count' from the transfer date. The lender will check your default thru CAIVRS (http://www.hud.gov/offices/hsg/sfh/s...vrs/caivrs.cfm) so you want to be especially accurate in your dates.

As pointed out, exceptions can be made due to circumstances and underwriting guidelines of that particular loan program. Underwriting guidelines change based on the market. Who is to say what they will be in a year or two?

[moneytrouble]

Just to confirm, if the bank decides to foreclose in 2 years, that is when the mortgage lender will start the clock on their decision and not on my discharge date?

[StartingOver08]

Just to confirm, if the bank decides to foreclose in 2 years, that is when the mortgage lender will start the clock on their decision and not on my discharge date?

YES, when the foreclosure is COMPLETED and the title is transferred to the banks name.

[kayla]

i completed a three month trial period and was approved for pemanent loan mod by lender at court i the filed a chapter 7 and the mortage company nulled my mod please help

[StartingOver08]

Kayla, ask your question in a new thread so you get lots of answers.

Did you start paying on the permanent mod before you filed?

[kayla]

no i am due back in court on jan 20 to follow up if papers are received it was documented in court on nov 18 appoved by lender with terms

[moneytrouble]

My mortgage company did not want to discuss any loan mod with me.

[kayla]

Kayla, ask your question in a new thread so you get lots of answers.

Did you start paying on the permanent mod before you filed?

no i am due back to court jan 20 as mod was approved in court in nov and they made another court date to follow up if lender sent me papers