New Here and Looking for info

[Anonymous]

Hi everyone,

I am glad I found this forum.  I am new here and looking for info on what I should be doing so that in the next couple of years I can purchase a home.  Here is some background on my situation.  I was awarded the right to reside in the home after my divorce and was awarded 50% of the mortgage payments until the home was sold.  My ex decided not to pay and eventually filed Ch 13 7/15/2010.  We own the home as tenants in common.  I just filed chapter 7 and I am awaiting my discharge, it should be received by 8/29/11.  It was really devastating because I had hoped to sell the home and move to something affordable but I just couldn't make the payments.  Because my ex-husband was the primary borrower I had a very hard time even getting the mortgage company to talk to me about short saling, loan mods, anything.  I am expecting that they will foreclose once my bankruptcy is discharged.  Now I am preparing to rent again, but I would like to buy another place soon and I am really trying to work on saving money and putting together an action plan.  Has anyone been through something similar?  Any advice is appreciated.

[Anonymous]

While I don't have experience with that situation personally, the question has come up enough on here and other forums that I can provide some input. You will need to wait two years after discharge, and would be better waiting three or more. Since you can't do anything about your bankruptcy, and you may not be able to do anything about the potential foreclosure, focus on what you can control; focus on rebuilding your credit, saving a downpayment, and maintaining good employment. Start with secured credit cards, and secured loans, and ALWAYS make your payments on time. You will want to start as soon as you can, and you will want to keep them up indefinitely. You will probably want your downpayment to be larger, so it helps compensate for some of your credit pitfalls, and you will of course want a very good DTI to show you will have the means to afford the purchase.

Lastly, there is always land contracts and seller provided financing. If you can find a seller who will work with you, especially if they can report the payments to the credit bureaus, you will be a much better position to buy later on.

[ShanetheMortgageMan]

You'll probably be looking at 3-years until after your foreclosure sale date before you can purchase again.  The bank doesn't always foreclose on your home right away, it can take awhile.  You may want to talk to your BK attorney about what legal rights you would have to remain in the home after your BK is discharged (assuming the mortgage was included), I've heard of some people staying in the home for years after they stop making their mortgage payments and then finally the bank takes it back or is able to finally sell to a new buyer.  Tread carefully on that though.  Another option to expedite the foreclosure process is called a deed-in-lieu of foreclosure, where you ask the bank if they would just simply take back the home right away without going through the entire foreclosure process - it can be cheaper for the bank which is one reason why they may do it.  In your situation a deed-in-lieu wouldn't make the seasoning any shorter after the event, but the event may come sooner than if you just wait for the bank to foreclose.

So during those 3 years, do just as say592 recommended with establishing new credit, you'll want to have at least 3 trade lines with 12 months of credit history afterwards, you'll want to make sure you have no new late payments, collections, charge-offs, judgments, tax liens, etc. as that can "reset" the seasoning clock.  If you pay rent to a landlord, pay it by check so the history can be documented with a paper trail, if you pay rent to a property management company then the company can verify and that is usually enough, but it's still good to pay by check so you have your own paper trail in case of a disputed on time payment, etc.

[mauve]

If you're trying to delay / prevent foreclosure, you may want to do some research into "produce the note" - if you ask them to provide the original paperwork you signed and they can't produce it, they can't foreclose on you.  A lot of banks can't produce it.  Look into it, see if it's something you might consider.