Deed In Lieu after Discharge

[stanpendula]

Hello,

I had my discharge in July 2011. The case is still open, and only in February 2013 Bank of America filled a motion to have the house removed from BK estate. The motion was granted and since then I got 4 offers for loan modifications (ignored, because the property is abandoned for 3 years) and today I got a letter from BofA giving me some options for the house: Forbearance (not interested), Short Sale (why?) and Deed In Lieu of Foreclosure. They state that if I don't take any action, they might start the foreclosure on May 15th. [when filling Ch 7 I stated that I surrender the property]

My questions are:
1. what is the timeline for Foreclosure versus Deed in Lieu? (state of Arizona)
2. the mortgage debt was discharged in ch 7 (in credit report shows as $0) -- can they report to IRS any difference in $?
3. if the house is less than what I owe, can they ask for the difference? [common sense tell me 'No', but you never know]
4. theoretically, 2 years after the discharge I can get a FHA loan to buy another house -- but with a "fresh" foreclosure or DIL, what takes precedence for a bank: BK, Foreclosure or DIL? all of these have different timelines for a new prospective buyer.

Thank you

[justbroke]

1. what is the timeline for Foreclosure versus Deed in Lieu? (state of Arizona)

A deed in lieu would be much quicker. You just sign documents. However, lenders generally want the home to have been on the market for several months.

2. the mortgage debt was discharged in ch 7 (in credit report shows as $0) -- can they report to IRS any difference in $?

Yes they can, on a Form 1099-A/C. However, your filing of bankruptcy and discharging the debt, does not create a tax liability. Ask your tax preparer about IRS Form 982 if you should receive this 1099. (Your credit report should not change).

3. if the house is less than what I owe, can they ask for the difference? [common sense tell me 'No', but you never know]

No. In case you didn't see that... no! Once you discharged the debt, you closed their ability to seek a deficiency, if they were allowed to seek a deficiency.

4. theoretically, 2 years after the discharge I can get a FHA loan to buy another house -- but with a "fresh" foreclosure or DIL, what takes precedence for a bank: BK, Foreclosure or DIL? all of these have different timelines for a new prospective buyer.

You cannot get an FHA loan because you are still, technically, "in foreclosure". Until the home changes hands, you need to wait 3 years AFTER the home changes hands (the foreclosure sale is complete). At least those are the basic FHA guidelines. These guidelines can be loosened if you have a special circumstance which caused your bankruptcy/foreclosure.

For FHA, it's always the LATEST of the vents, so even a BK with foreclosure (at the same time) would wait at least 3 years from the foreclosure sale completion.

[stanpendula]

Thank you.

Bummer with FHA. But seeing that a new bubble is in the make now in Phoenix, I can wait for it to burst. A house now changes 4 hands until it is bought by a "regular Joe": big sharks buy it at trustee sale, resale to small sharks, resale to small investors, resale to "regular Joe". A 200k house is sold with 400k in a matter of 3 months, with 3 cash transactions and 1 loan. yay

Stan

[stanpendula]

I have to ask some more questions

BofA started the deed in Lieu process: they want financial documents, an appraisal, the house in good condition AND then they will try to approve me for a Deed in Lieu.
The fact that I surrendered the house in Ch 7 doesn't mean anything?
The fact that I filed bankruptcy doesn't help me at all?
After BK, my financial situation improved and BofA might not consider the Deed in Lieu. They totally ignore the bankruptcy. They are talking to me like my financial problems just started.

How to deal with these guys?

Thank you

[Floridagail]

BOA offered us the same, we told them to forget it. Our attorney told us they are moving all forclosures forward now so they should get your forclosed soon. We had some in Florida this week that started in 2004, make it to courthouse auction.