Mortgage included in BR 2 yrs ago want to surrender,need advice.

[Lue]

Hi all! I filed for Chapter 7 almost 2 years ago under the old law in Colorado. I have 2 mortgages and did not reaffirm them. I have been current on them before and after the bankruptcy. My Chapter 7 is discharged but not closed. An accounts receivable that I had signed a payment agreement with the trustee and they are paying on it still, so not yet closed.

My question. I want to surrender my house. I have no equity, and the same model in my townhouse community is selling for $40000 less than I owe. And even they are not selling!

I thought about offering a deed in lieu of foreclosure. However, I have 2 mortgages, so not really an option? I have worked so hard to get my credit back, and now I am going to have a foreclosure on my record? Since my case is not closed am I to notify the trustee of my intent to surrend property without equity?

Here are my real questions. Do I need to keep insurance on the home until the foreclosure is finished? What do I do about the HOA? I am going to move out and rent a property that my boyfriend has bought for me. So I am not able to pay for the HOA. Do they still consider me responsible for the HOA until the property is transferred out of my name?

Please, help my minimize the damage to my credit. I am sick about getting a second hit on my credit. Are there any options for me besides foreclosure? A sale is not possible. I am way to upside down. I realize I am not responsible for the deficiency due to the Chapter 7 but need advice to keep my credit to the minimum of damage.

Thank you!!

Lue

[poorme]

You do have an interesting scenario! First - YES, DO maintain insurance in your name until the deed is transferred, whatever route that takes. Even though you will be vacating the property there will be 'others' around and that is just good advice you'll also hear from others. I can't answer the HOA question, is that escrowed in your payment or separately paid?

After two years time, the deed-in-lieu should be attractive to the bank, but there are two mortgages so as you state that's not a clear option. As to no equity - is the loan assumable? You might find a buyer willing to take over your payments with at least a 'small' equity payment to you (or at least cover your HOA fees!) but I'm thinking 'thousands' here so you might think about that as potential equity to yourself.

Hopefully, one of the real estate pros visiting here can lend more assistance.

[BassBoy]

Since you are old law, you can just walk away. I think whatever you do to let the home go, you're going to take a double hit on credit, unless you sell the home (and not a short sale).

You need to keep insurance on the home, and yes, you will need to pay the HOA until the title transfers.

[SinkingFast]

Generally speaking, as long as the Deed/Title is in your name, you are responsible. Attnys told us to be sure to keep up our insurance until the Lender took control of the property.

Foreclosure isn't gonna happen over night. It's a process. Depending on the State you live in, it can take from a couple of months to 1.5-2 years. Some States allow for a "Right to Sale" clause in the mortgage. That's a non-Judicial Foreclosure and generally goes fairly quick. Other States, the Foreclosure process is governed by Law and has to slog thru the Court. Those Foreclosures generally take much longer.

[Lue]

Thanks all for the comments. I will definitely keep the insurance up on the place. HOA is $100 a month, and not impossible to keep paying, but not easy either. But I will try to keep up with all.

I will try to rent it. Selling it is probably impossible. I will probably meet with my old bankruptcy attorney and see what he thinks as far as the deed in lieu. I wish they would do that, so I could this darn thing out of my name and avoid the foreclosure process. I hate to do this, but I am so upside down, and have an opportunity to rent a nice place that makes better financial sense and closer to my son's school.

Lue