Surrending Home ??'s

[csrhjr31]

Has anyone surrendered their home? My husband and I are awaiting discharge and currently have found a lease/own home that we will be moving into next month.

We are hoping to avoid the foreclosure and surrender our house through a deed and lieu. Our lawyer said more than likely they will still foreclose on the home. Why? If we are handing over the deed and keys, why would they still foreclose?

If we have a foreclosure and bankruptcy on our record, how will that effect us getting a home loan in two years when our lease/purchase is up?

[Help!]

If you are filing Ch. 7 and indicate that your intention is to surrender your home, the mortgage company will file a motion for relief from stay. There will be a hearing scheduled, but you will not attend and neither will anyone else. The judge will grant the motion and that will allow the mortgage company to contact you to talk. In our case, relief from stay was just granted and we are hoping to hand over the keys without foreclosure to expedite the process. I can't answer your question about getting a home loan two years from now, but I would guess it would be tough to get a rate low enough to make it worth your effort.

As for me, I won't be buying a home until I have the money sitting in an account to pay for it. If this never happens, I'll be a renter forever. I will never have the life sucked out of me by a mortgage again! We are renting a home as nice as the one we just handed over for about $1000 less per month. After paying on that house for 5 years, pouring money into home improvements, paying all that interest to the bank and huge property taxes... it was worth less than what we owed. We would have been better off renting and stashing that extra $1000/month into a savings account. It sounds crazy, but I think times have changed and home ownership is overrated if it's done with mortgages.

[BassBoy]

When you surrender the home and include the loan in your BK, it shows up as Included In Bankruptcy on your credit report. It SHOULD NOT show a foreclosure unless the home was already in foreclosure when you filed.

When you are ready to apply for another home loan down the road, the potential lender will only see the loan as discharged, so in a sense, you do not have a foreclosure on your record.

FHA does allow you to obtain a home loan after two years if your credit if 580 or better. You would have to wait 3 years if the foreclosure proceedings happened before you discharged the debt. Anyways, you're going to have to do some rebuilding in order to raise your credit scores and show that you are doing better now before any lender will talk to you. As for the interest rates.........they are pretty good these days, but I can't say what they will be 2 years from now.

If you're going to allow the home to go into foreclosure and include the debt, then let the bank/lender do their thing. A Deed In Lieu can be time consumming because my understanding is you're supposed to provide the bank with documentation as to why you can no longer afford the house and what not. We wanted to do this because it was going to take the lender 18 months to foreclose and we were supposed to provide the lender with all of these documents as to why we can no longer afford the loan. Why go through the hassle of gathering all of those documents if you're simply discharging the loan?

[Help!]

When you surrender the home and include the loan in your BK, it shows up as Included In Bankruptcy on your credit report. It SHOULD NOT show a foreclosure unless the home was already in foreclosure when you filed.
... Why go through the hassle of gathering all of those documents if you're simply discharging the loan?

I'm very confused. I've asked my attorney about how the bank takes possession of the house and he said relief from stay allowed the bank to accelerate foreclosure on a home in BK. That didn't make sense to me... how is it a foreclosure if I'm voluntarily surrendering the house in BK? I thought I needed to do a deed in lieu after discharge in order to prevent having a foreclosure on my credit report in addition to the Ch. 7 filing. While we're on the topic, do you know how property taxes are handled after discharge? If the house isn't sold by December am I going to be on the hook for the $6K tax bill? What a friggin' mess.

[BassBoy]

Even though you are surrendering the home with your BK, the bank/lender still has to go through the legal foreclosure process. It's the only way the bank/lender can legally repossess the home. You don't need to do anything after your discharge. You WILL NOT HAVE a foreclosure and a BK on your credit report. You will ONLY have the debt as Included in Bankruptcy.

The property taxes will more than likely be picked up by the bank/lender. Usually, homeowner's are 6 months or a year ahead in the escrow (your closings costs when you initiated the loan), so you probably don't need to worry about the taxes.

The plain and simply fact here is.....you're discharging the debt, so let the process go through the system as it should and don't sweat about how the debt shows up on your credit report and/ot how the bank takes back the home. Everything should report as it should and you shouldn't be responsible for some enormous amount of afterwards.

[RickInMich]

BassBoy,

I have two follow-up questions. You say that the foreclosure will not show up on the credit report. We, too, are surrendering our home. We were discharged in March. I had to dispute some late payments for Countrywide, which were indeed changed to "included in bankruptcy." I thought, however, that a foreclosure will show up eventually in the public records section.

Second question, we just got a property tax bill today. I know our payments were escrowed, and I think there may be enough to cover. But if not, we aren't responsible for those at all?

Thanks, Bassboy.

Rick