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Bought new home after BK. Previous mortgage included in bankruptcy. It can be done!

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    Bought new home after BK. Previous mortgage included in bankruptcy. It can be done!

    I'm posting this in hope someone else can be helped by my experience.
    I searched high and low and could find no known instances of someone purchasing a new home while simply walking from a previous home which mortgage was discharged under a prior Chpt 7.

    IT IS POSSIBLE.


    The specifics.

    Chpt 7 discharged in 11/2006
    1st and 2nd mortgage included and discharged in BK, NOT REAFFIRMED.
    Chose to stay in home and continue making payments for 4 years. AKA Ride-through or Pay and Stay.


    In 09/2010 we had to move for numerous reasons. Consulted Attorney about home. Our initial plan was to simply walk as we had no personal liability for the home and go rent.

    Attorney advised we should technically be able to just go buy another home as enough time had passed to qualify for FHA even though prior home was still under our name. By his own research the prior home should not even come into play.

    We stopped paying on ride through home to save for down payment. Also verified my credit report. Found 1st mortgage was still reporting as normal. This had to be fixed as as soon as we stopped paying it showed as late and would not work for a new mortgage app.

    We contacted the mortgage company and credit agencies, provided documentation and record was corrected. Credit report now showed both mortgages as discharged in 2006 with no additional history. In the last year I had also purchased a car and received a credit card. FHA requires additional credit lines.

    Credit report was now perfect since discharge and scores were well above FHA minimum.

    By that time we had almost 6,000 saved as down payment and we started shopping. We started working with a mortgage lender who fully understood our situation and was willing to work with us.

    THAT IS KEY. USE A GOOD MORTGAGE BROKER THAT UNDERSTANDS THE SITUATION!!!

    Just to test that out we contacted numerous other brokers. Some said it couldn't be done, some thought it was fraud, others put the application through only to decline it at underwriting out of laziness.

    We found a great home and put in a contract. Because it was a short sale we had to wait for the contract to be approved by the sellers banks. That took about three weeks. At that time we submitted our official mortgage application. That was around 1/4/11. The process was quick but not without its quirks. In addition to all the normal documentation which any BK survivor would have needed we also had to supply

    1) a letter from our lawyer which basically said we should not be denied a mortgage just because we chose to ride through on our prior home
    2) supporting case law
    3) additional bankruptcy documentation
    4) MLS listing of prior home as were/are trying to short sell our ride through home simultaneously

    In addition, securing homeowners insurance was a challenging as many insurers would not insure a BK. As if that made us more likely to be hit by a hurricane. Our insurance agent kept working and found us a policy at a good price.

    By the mortgage brokers admission, his underwriters were skeptical and had to contact numerous other folks, including their own lawyers and the FHA itself. The main point is that they never gave up because it was difficult. They chose to educate themselves instead.

    We closed on 1/31 on our new home. Our ride through home is still under my name and up for sale.

    Why sell it? Its the fastest way to get it off my name. While its still on my name I have to continue paying HOA and utilities to keep up the lawn.

    At the end it all came down to the broker.
    Please PM me if you have any questions on this process.
    - Everything I write is based on my own personal experience with buying a home post Chpt7 and short selling an IIB home. It is not professional or legal advice.

    #2
    Originally posted by paystayFla View Post
    I'm posting this in hope someone else can be helped by my experience.
    I searched high and low and could find no known instances of someone purchasing a new home while simply walking from a previous home which mortgage was discharged under a prior Chpt 7.

    IT IS POSSIBLE.


    The specifics.

    Chpt 7 discharged in 11/2006
    1st and 2nd mortgage included and discharged in BK, NOT REAFFIRMED.
    Chose to stay in home and continue making payments for 4 years. AKA Ride-through or Pay and Stay.


    In 09/2010 we had to move for numerous reasons. Consulted Attorney about home. Our initial plan was to simply walk as we had no personal liability for the home and go rent.

    Attorney advised we should technically be able to just go buy another home as enough time had passed to qualify for FHA even though prior home was still under our name. By his own research the prior home should not even come into play.

    We stopped paying on ride through home to save for down payment. Also verified my credit report. Found 1st mortgage was still reporting as normal. This had to be fixed as as soon as we stopped paying it showed as late and would not work for a new mortgage app.

    We contacted the mortgage company and credit agencies, provided documentation and record was corrected. Credit report now showed both mortgages as discharged in 2006 with no additional history. In the last year I had also purchased a car and received a credit card. FHA requires additional credit lines.

    Credit report was now perfect since discharge and scores were well above FHA minimum.

    By that time we had almost 6,000 saved as down payment and we started shopping. We started working with a mortgage lender who fully understood our situation and was willing to work with us.

    THAT IS KEY. USE A GOOD MORTGAGE BROKER THAT UNDERSTANDS THE SITUATION!!!

    Just to test that out we contacted numerous other brokers. Some said it couldn't be done, some thought it was fraud, others put the application through only to decline it at underwriting out of laziness.

    We found a great home and put in a contract. Because it was a short sale we had to wait for the contract to be approved by the sellers banks. That took about three weeks. At that time we submitted our official mortgage application. That was around 1/4/11. The process was quick but not without its quirks. In addition to all the normal documentation which any BK survivor would have needed we also had to supply

    1) a letter from our lawyer which basically said we should not be denied a mortgage just because we chose to ride through on our prior home
    2) supporting case law
    3) additional bankruptcy documentation
    4) MLS listing of prior home as were/are trying to short sell our ride through home simultaneously

    In addition, securing homeowners insurance was a challenging as many insurers would not insure a BK. As if that made us more likely to be hit by a hurricane. Our insurance agent kept working and found us a policy at a good price.

    By the mortgage brokers admission, his underwriters were skeptical and had to contact numerous other folks, including their own lawyers and the FHA itself. The main point is that they never gave up because it was difficult. They chose to educate themselves instead.

    We closed on 1/31 on our new home. Our ride through home is still under my name and up for sale.

    Why sell it? Its the fastest way to get it off my name. While its still on my name I have to continue paying HOA and utilities to keep up the lawn.

    At the end it all came down to the broker.
    Please PM me if you have any questions on this process.
    thanks for the info, but why is it such a big deal to own a home?

    I just don't get it.

    Comment


      #3
      First of all, Congratulations!!!! Second, thanks for sharing your very inspiring story. We are currently doing a ride through on our IIB home. You've given me hope that we will be able to buy a new place in a year or so from now. Thank You!
      Filed Ch 7 Petition: 12/17/08
      341 Meeting: 01/14/09
      Discharged: 03/18/09
      Closed: 03/18/09

      Comment


        #4
        espo1357: Im not trying to debate the pros and cons of homeownership. Just telling my story so that others in my situation can learn from it.

        hopejones: Thanks and good luck. A few tips. Don't let your current property go into foreclosure as that may complicate things and make sure you work on rebuilding your credit and ensure its correct. For the 4 or so months prior to my purchase I bought a couple subscriptions to credit monitoring sites so that I could keep an eye on things. Cancelled them after closing.
        - Everything I write is based on my own personal experience with buying a home post Chpt7 and short selling an IIB home. It is not professional or legal advice.

        Comment


          #5
          Originally posted by espo1357 View Post
          thanks for the info, but why is it such a big deal to own a home?

          I just don't get it.
          To some home ownership is a big deal. She was just sharing her experience. Kudos to her for helping others!....... Your comment was a little bit harsh....but It did make me laugh.
          Don't take life too seriously, you won't get out alive.

          Comment


            #6
            Originally posted by vicmost View Post
            To some home ownership is a big deal. She was just sharing her experience. Kudos to her for helping others!....... Your comment was a little bit harsh....but It did make me laugh.
            lol, well, it is good information.

            I am just in a tailspin after all the headaches caused mostly by my "home ownership".

            If I didn't buy, the home, there would have been no BK, no headaches, no underwater. I could go on and on.

            Home ownership has set me back, and the BK is wearing on my a bit. I have over 3 and half more years in the BK that seems like a prision sentence.

            Its to the point where I am strongly considering quitting my job and converting to a 7, but I am not that dumb to quit a job, especailly in this economy!

            Comment


              #7
              THAT IS KEY. USE A GOOD MORTGAGE BROKER THAT UNDERSTANDS THE SITUATION!!!
              At the end it all came down to the broker.
              Please PM me if you have any questions on this process.



              Please let me know who you used- we are having a hard time finding a good broker and have a situation like yours. Please PM me the contact info- I would really appreciate it!

              Congrats on your new home!
              All posts are opinion only- I am not an attorney.

              Comment


                #8
                we brought our new home less than two years out.........we did it ourselves...rent with an option to buy...submitted a contract this dec., it was accepted....a done deal. we have a lovely home and it's ours. closed a couple of weeks ago on feb 15, 2011.

                100% owner financing.....15 year straight 5% mortgage....NO BANKS...NO FEES.....straight and to the point....by the way we are in florida as well, so as you know there are so many empty homes....you can find a creative way to get one, but as you know it takes a ton of work! . we had no broker...did it ourselves.

                note:...our "old" property surrendered in the bk...is still NOT forclosed. And, it's been 3 years.

                congrats on your new place!
                8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                Comment


                  #9
                  Originally posted by tobee43 View Post
                  we brought our new home less than two years out.........we did it ourselves...rent with an option to buy...submitted a contract this dec., it was accepted....a done deal. we have a lovely home and it's ours. closed a couple of weeks ago on feb 15, 2011.

                  100% owner financing.....15 year straight 5% mortgage....NO BANKS...NO FEES.....straight and to the point....by the way we are in florida as well, so as you know there are so many empty homes....you can find a creative way to get one, but as you know it takes a ton of work! . we had no broker...did it ourselves.

                  note:...our "old" property surrendered in the bk...is still NOT forclosed. And, it's been 3 years.

                  congrats on your new place!
                  Would you have handled it differently, and perhaps took advantage of the "free" rent?

                  Congrats on the home!

                  Comment


                    #10
                    well, in our particular situation it didn't pay for us to stay.....we had winters with wind chill factors at -30........our oil bill ran 600 monthly while our electric ran up-wards of over 500 montly.......we just didn't want to pay that kind of money!! ( oh and still be freezing since our home was always set at 65 degrees)...we had even shut off every room but three where we were living...but it was so expensive and we knew that money could go further....and we could used; in at LEAST a warmer climate...LOL!!...and our situation peeked in the dead of winter time.


                    while every person's situation is different, many stay, or can stay...and now with the summer months fast approaching it's great for many. we did in fact, not pay for over 6 months before we got the summons....and then still we knew we had 'time"...we just didn't bother to answer it since we knew there was so sense since we were in resolve that we after 33 years were going to leave.

                    also, and this was mentioned in another thread from one of our great mods on this site......we were so lucky to find our new home...owner financed property's are hard to come buy...we rented for a year somewhere else and just keep looking and hoping and poking until we lucked out.

                    just one more thing i want to mention........the cost of the heat and lights in the old 4500 sq foot home......cost MORE than it does to run our entire household here...including EVERYTHING!! so for our situation, it was best.....so AFTER all my ranting and chanting, no...we couldn't not have handled it any differently.
                    8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                    Comment


                      #11
                      Does this mean there is hope for us? Our situation: Ch 7 discharged June 2010. 1st & 2nd mortage IIB. No NOD yet, house in escrow for short sale. Should be out of our name in a month or so from now.

                      We have been told all along it is 2 years FROM TRANSFER of previous home - even if included in BK.

                      We are eligible for VA.. never had one before had prime mortgages. Didn't know we were eligble for VA until a few weeks ago.

                      I hope this means we can buy again in 15 month's time....
                      Stopped paying c. cards February 2009
                      Retained attorney 11/5/09 - $100k in C.Card debt - $120000 per year income - Filed Feb 2010 - 341 Apr 2010 - No Asset Case/Report of No Dist Apr 2010 - Discharged June 2010
                      Case went without a hitch!
                      I HELD MY HEAD HIGH IN THAT COURTROOM AND NOW I AM MOVING ON!

                      Comment


                        #12
                        Thank you so much for posting your experience in buying a new home post-bankruptcy. I am currently riding through in my home .... its been 1 yr and 2 mo. since discharge. I wanted to stay and pay a couple of more years, as I was told it needed to be 3 yrs since mortgage was included in BK. I contacted a broker yesterday and she told me I couldn't ride through, should leave my home and rent for a full year so FHA would approve loan when I'm ready.

                        Your story gives me hope that I can stay in my home and then stop paying mortgage 5-6 months prior to pursuing a new home loan.

                        Thanks again for posting your experience.

                        Comment


                          #13
                          Originally posted by calgirl67 View Post
                          Does this mean there is hope for us? Our situation: Ch 7 discharged June 2010. 1st & 2nd mortage IIB. No NOD yet, house in escrow for short sale. Should be out of our name in a month or so from now.

                          We have been told all along it is 2 years FROM TRANSFER of previous home - even if included in BK.

                          We are eligible for VA.. never had one before had prime mortgages. Didn't know we were eligble for VA until a few weeks ago.

                          I hope this means we can buy again in 15 month's time....
                          i hope so for you as well... and if anything helps...it's being "creative"...LOL!! think outside the box!
                          8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                          Comment


                            #14
                            February was an all time low for home sales. Prices are not going up for 3 to 5 years. Freddie and Fannie may be going away--banks don't like to lend money for 30 years so without F&F the 30 year loan may disappear--What that will do to housing we shall see.
                            Also, Foreclosures still up--23% of homeowners underwater--Price of food and gas going up yet incomes remain flat. The price of housing historically rises below inflation and with flat incomes and inflation we all have less money to buy houses.

                            My point---there is no rush to buy a home!

                            Logan

                            Comment


                              #15
                              logan,

                              that is extremely sensable....my daughter agrees with you, i'm just "old" school and felt we needed....NEEDED to have our own...but i'm seeing the ****LIGHT****

                              and they are now saying home prices will dip another 20% at least before things start moving up the ladder again.
                              8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                              Comment

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