Included Home in Bankruptcy and Still Shows Foreclosure on My Credit Report

[Anonymous]

Hello,

I went through a nasty divorce in 2010 and had to file banckruptcy which was completed and discharged by Sept 2010.  I am now financially stable and have a credit score of over 700 and looking to purchase a home (by myself). When appling for a loan I was told I couldn't get one right now because I have a foreclosure on my record from Chase dated April 2011.  How is this possible?  What are my options?  The home was included in the chapter 7 bankruptcy so I don't understand.  

Thanks for any information.

[llecs]

My input is marginal at best, but when did the house sell from the foreclosure?

[kg2011]

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. 

[chasmith]

Your BK discharged your financial liability.  The lender retained their security interest in the home, and the clock starts from the date the deed is recorded out of your name.  It seems unfair but that's how the game is played.  If the bank bought the house in at a sheriff's sale they may just be sitting on it, banks have reasons they prefer not to take title and we (borrowers) lose.

[StartingOver10]

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@kg2011 wrote:

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. 

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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).

[kg2011]

Thanks for the explaination. So how do I go about finding the exact dates I need to look at?  Would calling Chase be the best way or are these kept online somewhere?  Is there anyway to get a mortgage sooner?  

Any ideas or suggestions are welcomed.

Thanks again.

[StartingOver10]

Go to your public records section for your county. Check the dates and download a copy of the Certificate of Title (CT). This is the date that the bank took it back. In my county you can look it up under the address and go to the clerk of courts to get a copy of the CT. Your county might be similar.

[kg2011]

Great, thanks everyone for the information.  Not really what I wanted to hear but the truth is better than not knowing and living in the dark. At least I have an idea on where I need to go from here.  Hopefully I can get a home soon because I am tired of renting.

[Anonymous]

I will give a definite answer to your question in a few months. Having new custom home built with the blessing of the lenders broker. I have only small amount of money down. Builders gonna be mad at his broker if he can't get mortgage he said he could get. The loan denial won't be my fault. It took the bank over three years to foreclose on the house after Chapter 7 discharge. Should be a fun ride.

[StartingOver10]

Not every lender is the same. But the information that I have regarding VA loans is different. This is what I have on file from lenders in my area:

2 years from date f/c was completed and transferred back to the bank; 12 to 23 months if there are acceptable extenuating circumstances.

The good news for a VA loan after a short sale, if there were no late payments on the mortgage or consumer debts for twelve months prior to the short sale, AND the borrower is not taking advantage of market conditions, then there is no waiting period