Chapter 7 and Foreclosure

[Anonymous]

I have a question regarding how Chapter 7 and Foreclosure work togethor. I filed for Chapter 7 in October of 2006. Chapter 7 was Discharged March of 07. I had a home and we decided to include it in the bk. Prior to filing we had made our payments right up to filing. The house of course went back to the bank and was resold in December of 2007 (I just found this out when applying with lender for new home loan since we are now 2 years out of bk and our job and financial situation has improved). Is this considered a Foreclosure or part of the BK or both???

Now that we are 2 years out of BK discharge we would like to purchase home. Both scores are around 645 according to the lender we just spoke with and 2 Credit reports dont list Foreclosure they just list "Mortgage Company" and say "included in BK"... However the lender we just spoke with said one of the reports shows the Foreclosure being settled in December of 07.. which is 9 months from discharge of Chapter 7 BK and that we cant go FHA until Jan 2011 because of this and having to wait 3 years from foreclosure..

My big question is how can this be the case since it was included in BK and that was discharged in March of 07. How can I still show a Foreclosure in December of 07. Is there anything I can do to correct this or is it correct and we simply must look for conventional financing???

Any insight would be helpful

[BuckiRob]

You can contest the one CR that shows the foreclosure.  Provide a copy of your BK judgement when you file your complaint.  The reporting agency MUST contact whomever is listing it as a foreclosure and they MUST produce documentation that supports their position.  If they do not respond or produce the proof that the property was foreclosed on then the CRA MUST BY LAW remove the foreclosure judgement.

[Anonymous]

I have called about 8 lenders, Hud and a few mortgage brokers. I am in the same boat in that I included house in CHP 7 and am deciding to walk away so wanted to use the 2 year BK rule for FHA loan. All three credit reports show my mortgage as IIB. In talking with everyone even though the house will show as IIB the underwriter will ask and research and see the house was foreclosed therefore the 3 year foreclosure rules apply. This was according to a Hud representative and to an FHA underwriter who is a friend as well as most lenders I spoke with. So all signs point to 3 year from foreclosure sale date. You could maybe do a private mortgage but I am hearing 35% or so down plus a high credit score. In regards to convetional it is even worse with I belive a 5 year wait from BK.

[Anonymous]

We are also in the same boat.  However, we are still finding confusion on the 3 year date.  Some say it is 3 years from the BK discharge date and others say it is 3 years from the foreclosure final sale date.  I also was told we would not qualify for a conventional loan because you need to be at least 5 years removed from a foreclosure to do so.  I was not given an alternative with "if you put X% down, you will qualify."  It was either use FHA after 3 years or conventional after 5.

I come on here every night hoping that there would be a light at the end of the tunnel with this.  We have worked so hard to get back to good and to find out that all we can do is wait is frustrating.  By the time we are eligible again, something else will have probably came up with this housing issue that will hold us back for longer!

[Anonymous]

Thanks for the info.  This is what I have been searching for is information from anyone else in the same situation.  I am supposed to speak with the buider we are interested in working with today to discuss any options.  It sounds like you all have already been further down this road than we have so thanks for the information.

I will ask the LO today to check with an underwriter to see if cleaning up the 1 bureau that is showing foreclosure will matter once it gets to underwriting.  If it doesnt matter I will still work to get it cleaned up, but I will at least know what too expect.

1 thing that is so frustrating is that 2 of 3 bureaus showing mid to higher 600 credit and then TU shows 572 and they have LOTS of my information incorrect including many accts showing with lates that where a part of the BK in 07.  Its unbelievable to me that this information can be used to control so much of our lives, yet they dont have to be anywhere close to accurate.  Very frustrating...

I appreciate the information and I will update with how this turns out just in case it helps anyone else.

[Anonymous]

Good luck and if you learn anything different let us know as I am always looking for hope that I do not have to wait three years from foreclosure.

BTW yeah clean up the credit report as it will do wonders.  I am in the mid to high 600's 9 months after BK because I stayed on top of the bureaus to change everything to IIB.  Funny thing is with transunion it has been over three months since I asked them to change the info and instead of changing it they deleted it maybe that's why my score is so high with them.

[Anonymous]

Well we got our answer today and the lender verified that in Underwriting they would pull the mortgage doc included in bk and find the Foreclosure records.  The date that must be followed is the settlement date listed on the Foreclosure paperwork.  Regardless if that date is before or after the BK discharge.  I pulled the public records from my county online and for us that was a settlement date of 6/21/07...  Which means to go FHA we need to be 3 years out from that date...

I am glad that we have a definitive answer now, still not happy with the outcome or the huge discrepencies being listed from one Credit Bureau to another, but at least we know where we go from here and in just over another year we can look into purchasing.  In the meantime, I will be spending a lot of time correcting those reports..

Thanks to everyone who replied.. Again your help was appreciated.

[Anonymous]

When you say 3 years after sale of property do you mean when a mortgage brought it at the foreclosure sale or when someone brought it from the mortgage company.  Im waiting on an answer from an underwriter now. Do you know what a manual underwriter is?

[LindaLu]

what if the home went into foreclosure and quickly after it was suspended and ultimately dissmissed? will that show anywhere if it never got foreclosed on and you kept the home ? and/or decided one day down the road to see it for another home?