topic Re: Foreclosure/BK confusion...question in Mortgage Loans

Foreclosure/BK confusion...question

mommynurseto3 — Sat, 26 Jan 2013 19:04:14 GMT

This is going to sound extremely complicated but I am hoping that someone may have an answer for me.

Long story short, my husband had his identity stolen during 2005 when anyone with a pulse could obtain a mortgage. They were friends of someone in his family and he was initially interested in purchasing some real estate so he had filled out an application for pre approval. He then changed his mind when he found out what they were selling. Fast forward to 11 months later, we began recieving calls from Countrywide that we were delinquent with the mortgage on two buildings he knew nothing about. We fought in court to clear his name but after 13,000, we had to give up and filed BK. That was filed in 2009. There were two properties included. Neither of them were ever "ours" and we never lived in them, never had any acct numbers, etc.

So now we are hoping to buy a home this summer. It has been almost 4 years from BK. We have been successful at removing a lot of the old accts that were included in bankruptcy. Credit scores are doing better.

All of the loans related to those mortgages are now owned by BofA. On his credit report, it states "included in bankruptcy". Under public records, there is only BK mentioned, no foreclosure. Since these initially became deliquent 7 years ago, they are due to fall off his report this summer(this is what is says on the experian report). I called BofA after getting some great info on this site to ask if they would show a goodwill gesture and removed the accts a few months early. Well, to my surprise, after a lot of digging, I am finding out that one of the buildings hasn't ever been foreclosed!!! FOUR YEARS after the ch 7 BK and 7 years after first deliquency. What a nightmare.

So my question is, how on earth can we go about getting a mortgage this summer? I am fully aware of the 3 years post foreclosure rule BUT I am wondering what will happen since this is not on his credit report and it is actually due to fall off due to the SOL by the time we apply. Has anyone ever heard of anything like this? I am not even quite sure how to find out if it has foreclosed. The properties are in Cook County IL and when I searched the recorder of deeds sight I found a bunch of info with the pin numbers of these properties but I don't know how to read them.

One says "deed" and has another persons name as the grantee in 2010. I am assuming foreclosure proceedings were done by then. For the other property, something named "release" was recorded in 2012 with my husband listed as the grantee and the year before "assignment" was recorded with a mortgage company as the "grantee". This is so confusing and our BK lawyer never mentioned any of it.

Just wondering how this will be viewed to a mortgage broker and in terms of an FHA approval if it's not on the report or the public records.

thanks for any input.

Re: Foreclosure/BK confusion...question

Anonymous — Sat, 26 Jan 2013 19:40:02 GMT

While it seems difficult to understand, it really is pretty simple.

You filed BK and those items (homes) were included in the BK. You abide by the BK rules on waiting period according to the type of BK.

The only other thing that comes to mind quickly is depending on the type of loan that was included in BK, for example FHA, if you plan on purchasing through FHA you would have to meet their requirements on previous owned homes included in BK.

When you decide to purchase, spend some time with your LO and or Broker, they will guide you in the right direction. You can do this over the phone, so you should be able to receive different opinions and compare what is best for you and your family.

Re: Foreclosure/BK confusion...question

Anonymous — Sat, 26 Jan 2013 21:32:57 GMT

I believe there is a waiting period for both the BK and the foreclosures. You could be in trouble since most lenders won't approve you until 3 years after the foreclosure sale. So if the lenders searches and finds your name as the last owner to property and that the property is in foreclosure still and hasn't foreclosed, depending on when it finally forecloses, you could have to wait at least 3 years. If someone took out this mortgage in your name, your name must be tied to the property and in the public records system somewhere. Perhaps you should do some more digging there. Go up to the county clerk's office if you have to.

Is it possible it was a short sale?

Re: Foreclosure/BK confusion...question

Anonymous — Sat, 26 Jan 2013 21:38:46 GMT

@Anonymous wrote:
I believe there is a waiting period for both the BK and the foreclosures. You could be in trouble since most lenders won't approve you until 3 years after the foreclosure sale. So if the lenders searches and finds your name as the last owner to property and that the property is in foreclosure still and hasn't foreclosed, depending on when it finally forecloses, you could have to wait at least 3 years. If someone took out this mortgage in your name, your name must be tied to the property and in the public records system somewhere. Perhaps you should do some more digging there. Go up to the county clerk's office if you have to.

Is it possible it was a short sale?

They filed BK and no foreclosure.

A Bank or Lender is not allowed to file a foreclosure on someone who filed BK with said property included in the BK.

That is one lawsuit waiting to happen.

Re: Foreclosure/BK confusion...question

Anonymous — Sat, 26 Jan 2013 21:54:25 GMT

I don't believe that to be true. I included my first house in Ch 13 and it was still foreclosed on. It wasn't on my credit report but it was in the public records. I was told had to wait either 2 or 3 years depending on which occurred later, the BK discharge or the foreclosure sale.

Re: Foreclosure/BK confusion...question

Anonymous — Sat, 26 Jan 2013 21:57:41 GMT

Two different things Chapter 13 and Chapter 7

Re: Foreclosure/BK confusion...question

Anonymous — Sat, 26 Jan 2013 22:01:34 GMT

I don't know that they are that dissimilar when in comes to the waiting time after the foreclosure sale.

Re: Foreclosure/BK confusion...question

Anonymous — Sat, 26 Jan 2013 22:04:57 GMT

Do some research so we dont go back and forth...

Re: Foreclosure/BK confusion...question

Anonymous — Sat, 26 Jan 2013 22:19:10 GMT

I can do that but I have read of others having this issue when they filed Chapter 7. But they probably filed after the foreclosure, which is why they got a foreclosure. I guess if you file Chapter 7 before the foreclosure, you don't get a foreclosure? The thing is common sense tells me that if you file a Ch 7 before the house goes into foreclosure, the house will still go into foreclosure as they don't sit in limbo after you file a Ch 7. Foreclosure precedings still begin and your name being transferred off the deed is still recorded as public record. Unless you are trying to say the lender won't care about the foreclosure sale because it was a Ch 7 they filed instead of a 13?? That doesn't seem very fair to those who filed a Ch 13 so they could at least pay back some of their debts.

I understand I can research but this forum is a form of research as it is a place to learn from others. I am not that interested in the topic to do more research.

Re: Foreclosure/BK confusion...question

Anonymous — Sat, 26 Jan 2013 22:31:32 GMT

@Anonymous wrote:
I can do that but I have read of others having this issue when they filed Chapter 7. But they probably filed after the foreclosure, which is why they got a foreclosure. I guess if you file Chapter 7 before the foreclosure, you don't get a foreclosure? The thing is common sense tells me that if you file a Ch 7 before the house goes into foreclosure, the house will still go into foreclosure as they don't sit in limbo after you file a Ch 7. Foreclosure precedings still begin and your name being transferred off the deed is still recorded as public record. Unless you are trying to say the lender won't care about the foreclosure sale because it was a Ch 7 they filed instead of a 13?? That doesn't seem very fair to those who filed a Ch 13 so they could at least pay back some of their debts.

I understand I can research but this forum is a form of research as it is a place to learn from others. I am not that interested in the topic to do more research.

Not saying the rules are not the same. The way it is handled is different. You can purchase a home before being discharged with a Chapter 13 filing as long as you follow the proceedings, conditions and its approved. You cant purchase a home with a Chapter 7 with the same scenario as it doesnt pertain to a Chapter 7 filing.

Your common sense tactic makes sense and is pretty much how it is determined. If you were foreclosed upon before filing you have a foreclosure. If you file before the foreclosure then you do not have a foreclosure.

Once you file BK Chapter 7 and discharged no Creditor, Lender included in the BK can come after you for any debt owed, that was included in the BK. Filing a Foreclosure after the Filing for BK would be coming after debt previous owed.

Re: Foreclosure/BK confusion...question

Anonymous — Sat, 26 Jan 2013 22:39:02 GMT

I thought that just applied to the debt owed. But when the foreclosure happens, it happens because the bank has to go though the process to get the home out of the person's name that filed BK 7, and the records pertaining to that are filed as public record. So it sounds like you are saying the lender will ignore the public record because the person wasn't financially liable for the house when it went into foreclosure?

Re: Foreclosure/BK confusion...question

Anonymous — Sat, 26 Jan 2013 23:03:23 GMT

You can put it that way, but I dont think its really about ignoring. Their policies and requirements can change as fast as the INK dries on paper. lol

When you file for BK the home is already granted back to the Lender, unless other arrangements are made, in which case none of this applies.

The technicality is the home is foreclosed on during this proceeding, what the Lender does as far as when they transfer information is on them, and wouldnt impact the person who filed BK.

There are many reasons why this happens but mainly its there to help and protect the consumer. For example, you file BK, Bank sits on property for x amount of years, because the housing market is low or whatever the reason, it takes them 5 years to proceed with the foreclosure, should the consumer be punished because the Bank was doing whats in their best interest?

While filing BK you still have a waiting period to purchase a home and that waiting period is considered when a mortgage is included in the BK. If you include a Government Insured Home such as FHA for example, you have to also go by FHA requirements to purchase another FHA insured home after filing BK and included your FHA mortgage in the filing.

Re: Foreclosure/BK confusion...question

mommynurseto3 — Sat, 26 Jan 2013 23:42:49 GMT

Thank you both for your opinions! I am really hoping we do not have to wait 3 years from whenever they decide to foreclose. As I mentioned, the first delinquency was 7 years ago...they are due to fall off this summer. Our BK was 4 years ago and they weren't FHA mortgages. It wouldn't be fair that we have to wait so long bc they have taken this long to sell/foreclose.

Re: Foreclosure/BK confusion...question

Anonymous — Sun, 27 Jan 2013 01:48:04 GMT

Okay. Thanks for explaining it further. It sounds like OP has a good chance of getting a mortgage and that is the good thing.

Re: Foreclosure/BK confusion...question

Anonymous — Sun, 27 Jan 2013 02:06:20 GMT

Umm... being someone who filed Bankruptcy and had a Foreclosure happen AFTER the bankruptcy on a home that was included in my bankruptcy .... yes it does happen this way. Just because you include a home in a bankruptcy does not transfer it back to the lender. The only thing the bankruptcy does is get rid of the loan ... the deed of the home is still in your name. Hense people that do "ride throughs" where they include their home in the bankruptcy and then stay in the home and keep paying on it. So, in my case for buying a home I had to wait 2 years post my discharge and then 3 years post my foreclosure date (the date that the home transferred out of my name). This is the rule for most lending. For conventional I believe its 4 years post foreclosure date and programs like Navy Federal's 100% mortgage requires 7 years.

I was able to get preapproved before my 3 years post deed transfer but I am not allowed to close before the foreclosure is completely 3 years post. This is for FHA.

But, for the OP... if the actual deed was never in their name then the foreclosure should never have been attached to them. But I find it wierd that they came after the OP for the mortgages but the homes were not actually in their name? Maybe I'm just misunderstanding the posts.

Re: Foreclosure/BK confusion...question

Anonymous — Sun, 27 Jan 2013 02:12:55 GMT

You got it almost right. They had their identity stolen and a friend of a family member took two mortgages out in their name and they tried to fight it in court but eventually had to file bankruptcy when the lenders came after them for the money after the thief defaulted.

Re: Foreclosure/BK confusion...question

Anonymous — Sun, 27 Jan 2013 02:35:57 GMT

Gotchya... but I guess I'm confused how you take out a mortgage in someone else's name but the deed is in another name? Are you allowed to put anybody's name on the deed that you want?

Re: Foreclosure/BK confusion...question

mommynurseto3 — Sun, 27 Jan 2013 02:55:20 GMT

I never said the deed was in someone else's name. The two buildings were put in his name fraudulently during a time when it was very easy to get a mortgage. We fought for a few years to "prove" identity theft but ultimately it became too expensive and we had to move on. This included the choice to file BK.

I read up on this more today and it seems that either a foreclosure or a bankruptcy will take place but not both in terms of credit reporting and publi records. On his credit report under public records there is no foreclosure listed and the mortgages say discharged in bankruptcy. When I checked with the recorder of deeds, there are a few things recorded but none that actually say "foreclosure". There are mostly just documents between mortgage companies listed.

We are now so confused as were not told about this when we filed 4 years ago. I don't know where I can find a straight answer. Any suggestions?

Re: Foreclosure/BK confusion...question

mommynurseto3 — Sun, 27 Jan 2013 02:57:52 GMT

Also, I don't see how it is fair that the bank has taken 7 years to foreclose and now we will have to wait an additional 3 years whenever they actually get around to foreclosing?? That would span over a decade. Something isn't right. I must be missing something or not understanding the legality of this.

Re: Foreclosure/BK confusion...question

Anonymous — Sun, 27 Jan 2013 03:03:49 GMT

Have you talked to a broker about this? I would go see a broker and bring his credit reports and have a frank discussion with him. Tell him everything that happened and he will look at your credit report and hopefully pull the public records up on the house since it is free (I would bring a printout of the public records you found on the house just in case) and then he will discuss with you your options. Your situation is very unique so you may need to talk with 2-3 brokers and then put the pieces together to come up with a path to homeownership.