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Home purchase after BK 7

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Anonymous
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Home purchase after BK 7

Hi all!
I know that for Fha loans the min waiting period is 2 years. We have a home that was financed with an fha loan. Bk 7 d/c 12/15. Mortgage was NOT reaffirmed. Just thinking ahead a little bit. If we wanted to purchase another home, would we have to wait 2 years or 3? Can we still sell our home the regular way? What happens if we just walk away from it? Just trying to explore all of our options. We were originally planning to pay and stay. However, my mom ended up coming to live with us and if we could, we would like to find another home that would better suit our needs. We can manage here for a few years comfortably if nec. But we would need to do some construction in order to accommodate her living here for long term. Not sure what we should do. Any suggestions?
Message 1 of 8
7 REPLIES 7
Anonymous
Not applicable

Re: Home purchase after BK 7

If we wanted to purchase another home, would we have to wait 2 years or 3? - Fha guidelines say after 2 years of rebuilding credit, or not taking on any new credit since BK you can purchase through them.

Can we still sell our home the regular way? - I would consult with a real estate agent, but you should be able to sell it the regular way or FSBO since if you're still  paying on the mortgage even if you didn't re afferm, you still are listed as the owners, only the bank is listed as lien holder/lender. You would still be able to sell it.

What happens if we just walk away from it? -If you didn't re affirm the loan in BK then you can walk away with no repercussions to you. You can maintain payments on the loan until you're ready to walk away from it, or sell it and stay in the property. You can also stop paying, and wait for them to tell you to get the heck out and live rent free for a few months (probably around 6mo to a year)

 

I would suggest possibly talking with a mortgage broker in your area or if someone can referr someone to you and ask them so you can plan. I know that you can only have one FHA loan in your name at one time, I'm not sure how that falls into a BK.

Message 2 of 8
Anonymous
Not applicable

Re: Home purchase after BK 7

I have heard of ppl staying in their homes and not paying until they are forced to leave.... But I never knew what happened after that. While we would enjoy the savings of 1500+ per month, we would definitely need a game plan in place... We don't have that much if any equity in our current home, so I don't know if selling it would benefit us anytime soon. I just don't know what ppl usually do in situations like these. Just want to make a smart decision. Thanks!
Message 3 of 8
Anonymous
Not applicable

Re: Home purchase after BK 7

If you filed it in your BK and didn't reaffirm they aren't going to do anything against you. The house will basically sit there till the bank gets around to selling it, 2 years or so down the road. You could always sell it if you wanted yourself, locate a flat rate realty company in your area. It's very easy, however you have to just handle all the phone calls from the agents. I just sold my mother in law's house using a flat rate realty company, and it saved her 20k in realtor fees. If you don't have any equity I guess you could walk away from it when you're ready. Just call the bank up and be like HEY FYI I won't pay you next month or whatever.. If you are paying and it's not reaffirmed keep good records of your payments since it most likely won't ever be reported on your credit that you continued to pay it. If you purchase a new home, you'll need proof that you made payments for the new loan.

Message 4 of 8
Anonymous
Not applicable

Re: Home purchase after BK 7

1. If the house was included in the bankruptcy then it is 3 years for FHA. 2. If the house was FHA it is 3 years from the date HUD pays the claim to your lender after the full foreclosure is completed. 3. Just bankruptcy with no foreclosure has the shorter wait times

There is a lot of info out there if you look for FHA handbook.

The biggest problem is if you walk away from your house and it was a previous government backed loan.
Message 5 of 8
0REDSOX7
Valued Contributor

Re: Home purchase after BK 7

Allow me to chime in here - since I literally just went through this these past few months.

 

1) If you included your FHA mortgage in your bankruptcy and did not reaffirm BUT HAVE BEEN MAKING PAYMENTS EACH MONTH, then your eligibility is two years from your discharge date.  If you have stopped paying your mortgage, then your eligiblity will be three years from when the bank forecloses on your current house.

 

2) Yes, if you have positive equity in your home, you can sell it via normal channels with a realtor or For Sale Buy Owner.  I suprisingly had over 25K in equity in my house and sold it and walked away with over 10K after fees and what not.

 

I would suggest speaking with a mortgage broker.  We used Guaranteed Rate and were awesome to work with.  The biggest issue you may face is getting your payment history to the new lender as it won't be reported to your credit report.

 

Hope that helps!

BK Discharge 2/11/14

Currently in the garden.
Message 6 of 8
Macbookguy
Established Member

Re: Home purchase after BK 7

If you just stop paying your mortgage and walk away you could be playing with fire. The bankruptcy discharge wiped out your responsibility to the lender and since you didn't reaffirm only the lien survived. Your lender will never report anything else to the credit bureau regarding this house - good or bad. The credit reporting stops.

In that case, how are you playing with fire? For the lender to foreclose and reposess your home, they still have to file a foreclosure suit against you. You can not be held personally liable for the debt and the lender is not entitled to a deficiency judgment, however you do have to be removed through judicial process. While the lender will not report to the credit bureaus that your account is in foreclosure, the foreclosure **can** appear in the public records section of your credit report. You already have a bankruptcy appearing on your public records and when a foreclosure is added you can expect another huge decrease in your credit scores.

Message 7 of 8
Anonymous
Not applicable

Re: Home purchase after BK 7

Since you did mention it is a FHA home loan check out CAIVRS and what it means to you.
Message 8 of 8
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