filed ch 7 in 2009 did not reaffirm question

[vamom]

I reside in VA.

I filed a ch7 in 10/2009 and I stayed in the home paying but never reaffirmed the home, I am looking to leave the home in hopes of purchasing a new home with enough bed rooms....

I contacted a mortgage company to see about financing...and what I need to do and he stated that home would go thru foreclosure and hurt my credit...

I am real confused....how can they foreclose on a home that I don't "owe" for ?, and if they do does that go on my credit..

I appreciate any answers that you guys could offer thanks!!!

[LadyInTheRed]

Welcome to BKforum!

The mortgage company cannot report your default on your credit report because the mortgage was discharged. So, it shouldn't hurt your credit rating. But, a prospective lender will see the foreclosure in public records and consider that. If you apply for financing before foreclosure, the prospective lender will want to see you have the income to pay two mortgages, regardless of the discharge.

The topic of qualifying for a new mortgage after a foreclosure on a discharged mortgage comes up all the time. Some say you can get a mortgage 2 years after your discharge. Some say you have to wait until 2 years after the foreclosure and the FHA guidelines seem to support that. Read through the threads in this subforum for the many discussions. Start with the sticky on FHA Credit Guidelines.

Regardless of FHA Guidelines and how sure people may be that you can qualify for a mortgage 2 years after discharge, regardless of the foreclosure date, each bank sets its own lending standards. There have been several people who said they got approved for a loan 2 years or more after discharge, but before 2 years have passed since foreclosure. Most are later disappointed when the loan goes through underwriting and funding is denied. There have been at least a couple who I don't think ever came back to say whether the loan funded or not. I don't remember ever hearing of somebody actually closing a loan less than 2 years after the foreclosure. So, whatever you are told and whatever pre-approval you may get, be prepared that the loan might fall through at the last minute.

Please let us know how things go. I would love to hear a success story by somebody in your situation!

[keepsmiling]

What's your equity situation? Can you just sell the house?
Have you been paying the mortgage? If so can you just stop paying and save up a pile of cash to pay for a new house? ( some people do manage to do this)