Confused on mortgage after Chapter 7

[Officer737]

I was under the impression that a person could be eligible under FHA/HUD and USDA 24 months after discharge. I checked with a mortgage broker to ask some questions as I am coming up on 16 months post discharge and was informed that because I gave up my house in the BK it will be 3 years from the date the house was transferred out of my name. The mortgage was an owner finance house and it was deeded in my name with the seller as the lien holder and nothing was ever listed on my credit report about owning property or mortgage payments. It was listed on my "list of credtiros" in the BK as "lienholder, real property located at (the address with the value)". 

I am confused now.....

[CWESTL]

Your prior owner financed mortgage does not matter. The mortgage broker you spoke to is incorrect in reference to the waiting period for a FHA loan. Consult another lender and don't list the prior property as it is not listed on your CR, etc.

[Officer737]

Thank you, I was thinking the same thing. 

[ezdriver]

If you included your mortgage in your ch7 bankruptcy, the property will eventually be foreclosed. The fact that your mortgage was discharged does not me that your name ois off the deed. You will not be approved for a new mortgage until the property is foreclosed and off your name. Disposal of the property is the first item that you need to accomplish. Yes, one is eligible for a new FHA mortgage two years post bankruptcy discharge ... but how do you plan to get you rname off the deed prior to applying for a new mortgage?

[ezdriver]

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@CWESTL wrote:

Your prior owner financed mortgage does not matter. The mortgage broker you spoke to is incorrect in reference to the waiting period for a FHA loan. Consult another lender and don't list the prior property as it is not listed on your CR, etc.

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Please clarify your statement. If something exists that should be in the credit report but isn't on it for any reason, it is still required that a mortgage applicant disclose it on the mortgage application. What exactly are you suggesting that the OP not disclose?

[CWESTL]

Owner financed properties often don't proceed in the same fashion as a traditional lender when reclaiming/foreclosing on a property. The owner did not report the property terms (payments, balance, etc.) on the OP's CR. Did the owner reclaim the property via a court processed foreclosure? Was the property ever titled in your name?  If there isn't a court record nor a notation of the property on your CR I would not list it. I'm not suggesting you lie, but if information isn't noted anywhere I would not provide the information.

[ezdriver]

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@CWESTL wrote:

Owner financed properties often don't proceed in the same fashion as a traditional lender when reclaiming/foreclosing on a property. The owner did not report the property terms (payments, balance, etc.) on the OP's CR. Did the owner reclaim the property via a court processed foreclosure? Was the property ever titled in your name?  If there isn't a court record nor a notation of the property on your CR I would not list it. I'm not suggesting you lie, but if information isn't noted anywhere I would not provide the information.

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That's exactly what I thought that you were suggesting...and it would be illegal to not disclose it. The property will be foreclosed by the lienholder. The mortgage applicant is legally obligated to discose that fact. The lender will find the inforamtion in the public files as I guarantee you that the mortgage was recorded in the public files and the foreclosure would also be recorded in the public files.

Here's an unrelated simple example of what you are suggesting: You buy a car from me and I finance it but I do not report it to the credit bureaus. You apply for a mortgage and your application fail to list the loan/payments on the car because it does not show on the credit report. That would be illegal and you could be charged with committing mortgage fraud.

[Officer737]

The property was never foreclosed on as I signed the paperwork to return the property to the person and it was changed back into their name 6 weeks after my discharge. 

[ezdriver]

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@Officer737 wrote:

The property was never foreclosed on as I signed the paperwork to return the property to the person and it was changed back into their name 6 weeks after my discharge. 

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OK ... it was a voluntary return of the asset. If the lender was an institution, that action would be called a "deed in lieu" action. The transfer of ownership is still going to be recorded in public records which any new lender will find. Did you check your local public records to verify that the property is no longer in your name? You should if you did not. Very often private parties fail to complete that final step and it comes up ater when a title search is done to facilitate another sale of said property.

[Officer737]

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@ezdriver wrote:

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@Officer737 wrote:

The property was never foreclosed on as I signed the paperwork to return the property to the person and it was changed back into their name 6 weeks after my discharge. 

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OK ... it was a voluntary return of the asset. If the lender was an institution, that action would be called a "deed in lieu" action. The transfer of ownership is still going to be recorded in public records which any new lender will find. Did you check your local public records to verify that the property is no longer in your name? You should if you did not. Very often private parties fail to complete that final step and it comes up ater when a title search is done to facilitate another sale of said property.

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That is good info. I did actually follow up with it so I would know when it was transferred for property tax reasons and know that it has been fully transferred back to the original owner.