Foreclosure Questions

[ilzhoefer]

Hello:

I have a few questions regarding a home foreclosure, located in NC, due to divorce and loss of job a few years ago.

1) Once the fc is finalized through the clerk of court, does one credit score drop even more? I had 2 years of lates (120 day late+) on this home trying to pursue a short sale (didn't work out), so I figure the damage is already done concerning the score.

2) Even though I live in a different state now than where the home foreclosure is, does the new state laws have any affect on me or am I bound by the state where the home is foreclosed on?

3) How long does a bank have to make a decision on whether to pursue a deficiency amount?

3a) When does the bank typically pursue for that amount? Right after the foreclosure or a year or two after?

4) If the bank doesn't issue a 1099-c is there any other way(law) other than bk to avoid paying the deficiency? Insolvency clause, etc??

5) When does the FC fall off of a credit report 7 years, 10 years??? Does the clock start after the first 30 day late or after it is finalized through the court?

[sunnysideup]

I could be wrong, but I think that a foreclosure doesn't really change much in way of credit score especially with 2 years of lates.  I could be wrong.  I do know that it takes about three years after a foreclosure before you can purchase another home, and usually after two years it doesn't impact you as much especially if you are trying to rebuild.  The foreclosure will be governed by the laws of the state that the property is in.  The deficiency question is complicated, but if you search google with these words, you will likely get some idea of what you are facing: deficiency-judgments-after-foreclosure-north-carolina.  That will also likely give you the answers to the rest of your questions. 

Foreclosure will stay on your report for 7 years usually.  I think it doesn't start until the ownership of the house transfers to the bank, but I could be wrong.  So sorry you are going through this!!!  We have been fighting off foreclosure for a while, but finally got a modification and they dropped it.  Unfortunately once they sell the house, things take a different turn and what happens after depends on the state that the property is in and who is handling the property - like if it's Freddie Mac, Fannie Mae, or a bank.  I'm not an expert in these things, so don't take my post as absolute......hopefully someone with more experience will come along and add to the discussion. 

[birjest]

I completed a deed in lieu of foreclosure, so I can speak from experience on the rollercoaster ride you are about to embark.  I completed my dil Feb 2009, the month the band signed off on accepting the property (retain all copies from bank, it will help in the future).  Around Jan 2012, I began to work with a developer on building a new home.  Because my deed in lieu, which is treated the same as an foreclosure was a VA home loan, I went with FHA.  Now, my home was in NC, I am buying in FL.  The lender wanted the copy of the letter, which you can go to the city or county record keeping site, to verify against my credit report. 

After March of 2012, I was given the green light to go forward with my FHA loan app.  Keep in mind, you can't have no late in the last 12 months of apping, and for me, I had no late for almost 3 plus years.  Long story short, my loan was approved with a mid score of 670ish.

As for the bank pursuing you, I am not up to par on that, but as for me, the bank sold my home for less than what I owe, but due to the The Mortgage Debt Relief Act of 2007, I did not have to pay tax on the difference (which is set to expire in December, unless President Obama extends it).  Your foreclosure will fall of in 7 years. 

[ilzhoefer]

I am still in the bid upset period as it is 10 days in NC. Right now my deficiency is about 161K.

If the bank does send me a 1099-c I might be able to write off this 'phantom income' due to the mortgage forgiveness act as it was my primary residence. Your right it will not be renewed after this year.

But if the bank does set out to sue me to pursue the deficiency amount, I'm toast. I mean I have no assets (no cash, no other houses), so I would have to file BK. Just not sure how desperate the bank is.