deed in lieu and chapter 7

[JacaG]

We are in the process of filing chapter 7, have paid the fee and completed the paperwork so as soon as we hand it in we can file.
My question is about our mortgage, we don't want the house. I have contacted BofA and they told me to send in income, hardship letter etc to apply for the deed in lieu.
Should we wait to file Chapter 7 until we find out about the deed in lieu or just let the house foreclose? I am worried they will sit on the house for 1-2 years before foreclosing (the house is in AZ), if I can do the deed in lieu the clock will start ticking faster for us to buy again someday.
Can I even do a deed in lieu after Chapter 7 or once the foreclosure process starts?
The mortgage is an FHA loan- do banks typically foreclose faster on those loans so they can get paid- or is that not how it works?
Thanks.

[UpaCreekinCA]

Why not stay put even though you don't want the house, don't reaffirm the mortgage and "work" with BofA (they are horrible) after your Chap. 7 is over. It puts more money in your pocket by not having to pay rent and it will take them a min. of 9 months to foreclosure up to 2 years. Is this a 2nd home?

[JacaG]

We moved out of state 1 year ago, the house has been for sale since then with zero offers. Even the realtor is done with that house

[JacaG]

Does anyone have any advice? Or know if banks foreclose faster on FHA loans?

[daytona]

I'm confused as to why you care? A deed in lieu means you give them the deed and the problem is theirs...if you file CH7 and do not reaffirm then the problem is theirs...If you don't want the house the outcome is the same...

[JacaG]

I care because I've heard houses sit for up to 2 years waiting to foreclose and a deed in lieu will get the house out of our name faster so we can move on.

[bigtim6656]

This might help, My mom and dad is buying houses in our town at tax sales. They bought one house for 300 bucks, it needs abotu 20k to get it nice and is only 1200 square feet.

After looking up some info at the courthouse I searched yellowpages.com for the owner and he lived 1/2 block from the house. Dad and I went down and talked with him about the house.

They had filed chapter 7 had everything discharged, but their house they lived in at the time,which they still live in. They told me when they got done with their bk they where sent a paper to have their name taken off. They filed it out and sent it in. Well when the Champion mortgage found out the house was junk they let the house sit, It sat for 2 years with taxes and such building till it sold in the tax sale. When we sent out the notices required by law with received the notice for the finance company back due to a forward being out of date.

They let the house sit in the owners name after bk until we bought it and I am guessing would have until **** froze over. Since the redemption date is past and when my mom and dad get a tax deed they are going to call and see if the company will remove the lein so they can get a full deed. I do not see why they would not since has of friday they have no legal right to it in any way or form.

[despritfreya]

The home is in Az. A deed in lieu serves 2 purposes and 2 purposes only:

1. It saves BofA approximately $2,000.00 in Trustee Sale costs.

2. It takes the title out of your name.

There is only one reason for you to help save the bank $$$ and that is, the quicker you get the home out of your name the quicker your responsiblity for the HOA ends. Remember, YOU must pay all HOA dues that come due after you file Chapter 7 until such time as the title changes hands. It is in your best interest to do a deed in lieu, however, going through the hoops BofA is going to put out there simply may not be worth the effort.

Of course, if you are one of the lucky few in this State that does not have a HOA then saving BofA some money may not be what you want.

[JacaG]

Thankfully we don't have HOA dues,I only want all of this over and done with and am worried with the number of foreclosures in AZ my house will sit for 2 years and will have to wait 3 years after that to try and buy again.
Our mortgage is an FHA, wouldn't they want to foreclose faster on that type of loan? Or is the only way to get it out of my name in a decent time frame is to do the DIL?
Is a DIL easier before or after filing chapter 7- I could wait a month to file if its easier to do before chapter 7.

[despritfreya]

A DIL is at the lender's whim.

Doesn't matter if you sign before or after filing HOWEVER, once the bk is filed you will not have the authority to sign away your rights to the home until the Trustee abandons it from the bk estate. Even though there is no equity in the home, it is still an asset of the estate and, on the day you file, will be out of your hands to deal with until it is abandoned. Ask the Trustee to quickly file his/her Notice of Abandonment so that you can regain the ability to transfer title.

Practice pointer: If you do a DIL prior to filing make sure you disclose it in the "transfer" section of the Statement of Financial Affairs, question 10.

Best regards.

[JacaG]

Thanks for your input
So DIL after Chapter 7: could I be held liable for the balance or get a 1099 that I would have to pay taxes on because I would be signing another agreement or does the chapter 7 take care of that?

[despritfreya]

In response to

"could I be held liable for the balance or get a 1099"

No. The balance is discharged and while the lender may issue a 1099, there is no such thing as forgiveness of debt income for debts discharged in a bk.