topic Re: BK or foreclosure rules, which apply? in Mortgage Loans

BK or foreclosure rules, which apply?

Anonymous — Mon, 23 Feb 2009 13:49:08 GMT

Hello I have tried to research this question but have gotten conflicting answers so I was wondering if anyone could help. I was discharged chp 7 in May 08. At the time planned to keep house but did not reaffirm. Have since decided to walk away. House shows as IIB on credit report.

This is the question, in order to get a conventional loan am I ok with 2 years from BK or will it follow the 3 years from foreclosure? I even asked a lender with countrywide and she was not sure. She told me to apply at the two year mark and see what happens. I was hoping someone on here would have an idea or was a lender that would know.

Re: BK or foreclosure rules, which apply?

Anonymous — Mon, 23 Feb 2009 15:52:55 GMT

A conventional loan is 4 years from bk and I think even further for foreclosure. Anyway point is they won't even consider you for conventioal at the 2 year point.

Re: BK or foreclosure rules, which apply?

Anonymous — Mon, 23 Feb 2009 19:58:04 GMT

It's three years from the date the house transfers out of your name.

We asked about getting an exception on that part only, due to the length of time the bank held onto the property after we filed BK and moved out, but no one would even consider it except USDA.

Re: BK or foreclosure rules, which apply?

Anonymous — Mon, 23 Feb 2009 20:03:06 GMT

I think your referring to fha being 3 years from the date the house is transferred out of your name. Conventional is definetly longer.

Re: BK or foreclosure rules, which apply?

Anonymous — Mon, 23 Feb 2009 20:06:00 GMT

We are in the process of getting pre-approved for a USDA loan and it will be 2 years since discharge in March. Our loan officer advised us that since the house was included in BK, we don't have to worry about anything and that it follows the two year mark. Our obligation to that home was cleared the day we got our discharge. He even spoke with his account rep at USDA and his underwriter has looked at our file and says it should not be a problem. I guess we will wait and see. We haven't found a home to purchase yet, but just wanted to be pre-approved first. We should know in a week or so as I have some paperwork to drop off for our LO on Thursday of this week. He said it would then only take a couple of days.

Re: BK or foreclosure rules, which apply?

Anonymous — Mon, 23 Feb 2009 20:11:00 GMT

We're going through USDA also - it's a lot easier for our situation.

Yes - the three years is definitely only for FHA, not conventional. Sorry I wasn't clear on that. Conventional is more like 5 years now.

Re: BK or foreclosure rules, which apply?

Anonymous — Mon, 23 Feb 2009 20:15:50 GMT

Our old home still hasn't sold. The bank is just sitting with it, which I don't understand at all. Why not auction it off? Anyway, I will post back and let everyone know, but our LO told us it doesn't matter as long as the house was IIB and we did not reaffirm. We could also go with a VA loan, but the funding fee is more than USDA, so we are trying that route first.

Re: BK or foreclosure rules, which apply?

Anonymous — Mon, 23 Feb 2009 20:20:32 GMT

USDA and VA seem to be the most flexible. That's why we're going USDA.

We filed BK7 in 10/05, bank got relief from automatic stay in 1/06, and house wasn't sold at auction until 11/07. (If we'd known it was going to take 2 years we wouldn't have moved out right away!)

Re: BK or foreclosure rules, which apply?

Anonymous — Mon, 23 Feb 2009 20:32:18 GMT

Sorry I guess I confused FHA with conventional. So with an FHA I could get a loan 2 years out of BK as long as I have the 3.5 down and pay the PMI? The Foreclosure will not show since it was IIB. I do not think i can do the USDA as I am in San Diego.

Thanks for all the responses and help.

Re: BK or foreclosure rules, which apply?

Anonymous — Mon, 23 Feb 2009 20:32:57 GMT

We moved out in 06/07 and it still hasn't sold to my knowledge. I would assume we would receive something when it does.

Re: BK or foreclosure rules, which apply?

Anonymous — Mon, 23 Feb 2009 20:47:38 GMT

It's still likely to be a problem for you. Even though our credit reports do not show a foreclosure, and even the mortgage tradelines that still appear on it don't state foreclosure, as soon as they see the mortgages I get asked about the foreclosure dates and when the deed transferred.

Our BK papers stated that our intent was to relinquish our interest in the property, but it still went through the foreclosure process to get rid of it.

Re: BK or foreclosure rules, which apply?

Anonymous — Tue, 24 Feb 2009 01:46:18 GMT

I just found out that they will be auctioning our old house that was IIB on April 16th. Not sure if we will need to wait until that is all done and the deed is transferred. It's okay if we do, but I am hoping we won't have to wait a long time. We were hoping to buy a home this summer as our lease is up on May 31st. I guess we will see what the UW says later this week.

Re: BK or foreclosure rules, which apply?

Anonymous — Tue, 24 Feb 2009 03:57:01 GMT

Post back and let us know how you make out.

Re: BK or foreclosure rules, which apply?

WannaHouse — Tue, 24 Feb 2009 06:54:39 GMT

@Anonymous wrote:
Hello I have tried to research this question but have gotten conflicting answers so I was wondering if anyone could help. I was discharged chp 7 in May 08. At the time planned to keep house but did not reaffirm. Have since decided to walk away. House shows as IIB on credit report.
This is the question, in order to get a conventional loan am I ok with 2 years from BK or will it follow the 3 years from foreclosure? I even asked a lender with countrywide and she was not sure. She told me to apply at the two year mark and see what happens. I was hoping someone on here would have an idea or was a lender that would know.

I do not know, but my BEST guess is that the foreclosure will be used. Since it was NOT included in your BK, and you did not pay it off, then it would be a debt after BK.

I am sure our experts will know better than me, but it makes sense to me that you would go by the foreclosure date.

Re: BK or foreclosure rules, which apply?

Anonymous — Tue, 24 Feb 2009 13:05:35 GMT

If your home was included in your BK and you did not reaffirm, then you have not ties to the home. As long as you didn't reaffirm and then walk away. We didn't reaffirm our home and at the time we filed, we weren't sure what we were going to do. We ended up walking away as well and everything shows IIB. I still don't know if it will be a problem for us, but our LO thinks it should be okay, since everything will be final mid April and we will no longer have our name on the deed. Good luck to you.

Re: BK or foreclosure rules, which apply?

Anonymous — Tue, 24 Feb 2009 14:22:28 GMT

By not reaffirming that means the house WAS included in bk.
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I do not know, but my BEST guess is that the foreclosure will be used. Since it was NOT included in your BK, and you did not pay it off, then it would be a debt after BK.

I am sure our experts will know better than me, but it makes sense to me that you would go by the foreclosure date.

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Re: BK or foreclosure rules, which apply?

Anonymous — Tue, 24 Feb 2009 14:39:53 GMT

Yes, as long as you didn't reaffirm that means that the house was included in the BK.

However, I would love for those in this situation to come back and report what actually happens with lenders; whether or not you get underwriter approval, etc.

If it was included in the BK, it's still a foreclosure but not a "debt after BK". I would love to hear that LOs are going off the BK date, but my experience is they're still going off the date the property was transferred.

Re: BK or foreclosure rules, which apply?

Anonymous — Tue, 24 Feb 2009 15:06:45 GMT

I think that is where the confusion lies. I spoke to one lender who said they would use the BK discharge date and another who said it would be the foreclosure sale date. It appears there is confusion concerning what date will be used. I too am hoping those that are in my situation can chime in nas to how underwriters are handling this.

Re: BK or foreclosure rules, which apply?

Anonymous — Thu, 26 Feb 2009 21:10:09 GMT

I just got off the phone with a HUD counselor and she informed me that even though the foreclosure does not show up on the credit report FHA would most likely find it when doing a search so I will need to use the stricter foreclosure rules. Lenders I have spoken to say they would use the BK date so who knows what will happen in underwriting

Re: BK or foreclosure rules, which apply?

Anonymous — Sat, 07 Mar 2009 20:52:55 GMT

Hi again. I am just posting back to let you know that my DH and I are pre-approved for a loan through USDA Rural Housing. What we were told by our loan officer is that the deed for our previous property just needs to be out of our name at the time of closing. We have a lease that is not up until May 31st, so we have a little time to work with. We are just starting to look at homes and so far haven't found anything in our area that we are too interested in. We will just sit back and wait for the right home to come along. Wish us luck!