Re: Included Home in Bankruptcy and Still Shows Foreclosur
e on My Credit Report
10-10-2012 12:22 PM
I am not sure exactly. I was told from the loan officer that the records stated there was a foreclosure action against it in April 2010, but I think it was actually sold in a sheriff sale early this year. I just don't understand how the bankruptcy didn't cover everything; it is all very confusing.
The bankruptcy only removes your personal liability to repay the loan, which is a good thing. However, the bankruptcy does not do anything to remove the mortgage lien from the property.
In order for the mortgage lien to be removed from the property, the bank has to either go through the foreclosure process or the Deed in Lieu process or you, as the seller, go through the short sale process. The mortgage lien has to be officially removed through one of those three ways in order to "complete" the transfer of the home from you to someone else (the bank or another buyer).
If you decide to go buy something else, the new lender wants to see what happened to the last mortgage. The new lender will go from the transfer date to the application date to determine if you qualify for a new loan. Some lenders will give you a new mortgage after 3 years (mainly FHA). Others want you to have a longer time period (conventional).