Ch 7 discharged_ Want to sell home that's under water

[MyFico_704]

we filed ch 7 2 years ago.  we're still paying on first mortgage.. not 2nd/3rd.  But those liens are still tied to property.  house is under water by 50k.  how can we sell and what will happen?

[ezdriver]

I assume that you did not reaffirm your mortgage in your bankruptcy case. If so, you can stop paying the mortgage and just walk away. Your name will remain on the deed until the mortgagor forecloses on the house. Alternatively, you could attempt a short sale but know that the mortgagor will have to approve any offer to purchase so you will need its cooperation.

[MyFico_704]

Thanks for your response.  No we did not reaffirm. 

If we just walk away then the bank (all liens with WF) will foreclose.  By foreclosing wouldn't that would hurt the credit we've rebuilt the last 2 years?  Chapter 7 followed by foreclosure would NOT look good..  We Have secured cc, 18 months car loan.  all paid on time.  Before care loan fico was around 670-680.

OR- can we do a short sale since the loans are already discharged in ch 7?  And would SS be reflected on credit if at all?

[StartingOver10]

If you walk away the only way to remove the mortgage lien from the house is: 1) sell the house - either a short sale or a regular sale as appropriate or 2) Deed in Lieu or 3) foreclose.

Since you have a successful Ch 7 with a discharge, the lender can not change the reporting of your mortgage tradeline from IIB to short sale or anything else. It will continue to read IIB.

If your market is recovering, like much of the real estate market throughout the country, it could be that you are in a position to sell it as a regular sale and keep the proceeds. If you are still underwater, than you would need to sell it in a short sale. The advantages of selling it, as opposed to letting the lender foreclose, is that the deed transfers much more quickly to the new buyer so you can start your countdown to recovery.

What is the real estate market like in your neighborhood? Have you had a new valuation done recently (last 30 days)? You can get a free CMA from a local experienced Realtor so you know where you are with your valuation and the mortgage lien.

[0REDSOX7]

Keep in mind if you sell it regularly (no foreclosure, short sale, deed in lieu), then your eligibility for a new mortgage remains two years plus your discharge date. If you do any of the others, your eligibility starts two years from the day the transfer of deed happens back to bank.