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Post-Bankruptcy Mortgage Questions

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Anonymous
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Post-Bankruptcy Mortgage Questions

I'm looking to purchase a new home post-bankruptcy and trying to get some advice on what I can best describe as a "unique" situation with regards to a new mortgage.

 

I filed a Ch13 in 2010, which was later converted to a Ch7 in February 2015 and discharged in May 2015. The debts discharged in the Ch7 included the mortgage. We never re-affirmed the debt and the mortgage company did not start to move for foreclosure until early 2017, yep almost 2 years after discharge (my attorney still shakes his head as to how it went this long). We do not want to keep this house (amount owed is way more than value due to market decline) and looking to purchase another home. Currently we’re working with the mortgage company to process thru a short sale, however who knows how long that will take and we want out of here and into a new home.

 

I’m trying to figure out my seasoning periods for getting a new mortgage:

 

2017 FHA Guidelines say 2 years after Ch7 Discharge and 3 years after Short-Sale/Deed in Lieu

 

2017 VA Guidelines say 2 years after Ch7 Discharge and for a Short Sale the VA does not recognize a short sale as a derogatory event.  If you are able to credit qualify for a VA loan, a short sale would not prevent you from being eligible for VA financing.

 

I’ve been working with a mortgage broker and she’s a bit stumped since it’s been 2 years and the bank still hasn’t foreclosed on the property, even though the mortgage was never re-affirmed. She recommended for now to keep with short sale plan until she can get more guidance on a situation like this, especially given some of the additional caveats listed below.

 

Since the mortgage was discharged in 2015 and has not been re-affirmed do the 2 years after bankruptcy discharge rules apply which would make me eligible for FHA and VA backed loans?

 

If not am I stuck doing a short sale, which could take a bit, to go into a VA backed loan?

 

Some additional caveats to this are:

  1. The mortgage does not appear anywhere on my credit reports and I have no liability to the debt.
  2. The original foreclosure by Country Wide was later determined to have “discrepancies” by BoA when they took over the loan from CW. They sent us a letter and small settlement check for this.
  3. The current mortgage bank that bought the loan from BoA in 2014 refused recognize we were in a bankruptcy for 8 months and returned payments to the Ch13 Trustee. They also would not honor a payment agreement we had with BoA during our Ch13 and claimed we owed 50+ months of payment differences. This is why we converted Ch13 to Ch7 after nearly 5 years and had mortgage discharged.
  4. My credit is high enough to easily qualify for FHA and VA. 
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1 REPLY 1
VALoanMaster
Valued Contributor

Re: Post-Bankruptcy Mortgage Questions


@Anonymous wrote:

I'm looking to purchase a new home post-bankruptcy and trying to get some advice on what I can best describe as a "unique" situation with regards to a new mortgage.

 

I filed a Ch13 in 2010, which was later converted to a Ch7 in February 2015 and discharged in May 2015. The debts discharged in the Ch7 included the mortgage. We never re-affirmed the debt and the mortgage company did not start to move for foreclosure until early 2017, yep almost 2 years after discharge (my attorney still shakes his head as to how it went this long). We do not want to keep this house (amount owed is way more than value due to market decline) and looking to purchase another home. Currently we’re working with the mortgage company to process thru a short sale, however who knows how long that will take and we want out of here and into a new home.

 

I’m trying to figure out my seasoning periods for getting a new mortgage:

 

2017 FHA Guidelines say 2 years after Ch7 Discharge and 3 years after Short-Sale/Deed in Lieu

 

2017 VA Guidelines say 2 years after Ch7 Discharge and for a Short Sale the VA does not recognize a short sale as a derogatory event.  If you are able to credit qualify for a VA loan, a short sale would not prevent you from being eligible for VA financing.

 

I’ve been working with a mortgage broker and she’s a bit stumped since it’s been 2 years and the bank still hasn’t foreclosed on the property, even though the mortgage was never re-affirmed. She recommended for now to keep with short sale plan until she can get more guidance on a situation like this, especially given some of the additional caveats listed below.

 

Since the mortgage was discharged in 2015 and has not been re-affirmed do the 2 years after bankruptcy discharge rules apply which would make me eligible for FHA and VA backed loans?

 

If not am I stuck doing a short sale, which could take a bit, to go into a VA backed loan?

 

Some additional caveats to this are:

  1. The mortgage does not appear anywhere on my credit reports and I have no liability to the debt.
  2. The original foreclosure by Country Wide was later determined to have “discrepancies” by BoA when they took over the loan from CW. They sent us a letter and small settlement check for this.
  3. The current mortgage bank that bought the loan from BoA in 2014 refused recognize we were in a bankruptcy for 8 months and returned payments to the Ch13 Trustee. They also would not honor a payment agreement we had with BoA during our Ch13 and claimed we owed 50+ months of payment differences. This is why we converted Ch13 to Ch7 after nearly 5 years and had mortgage discharged.
  4. My credit is high enough to easily qualify for FHA and VA. 

Hi DJ0808,

 

You need a new lender.

VA is going to be your best/only option. VA goes by the BK discharge date but FHA goes by the date the title to the home comes out of your name so a foreclosure or short sale or deed in lieu will cost you another 3 years. 

 

There are other potential issues.

What type of mortgage did you include in your BK, was FHA, VA or USDA? If it was any of the government backed options you're probably in the CAIVRS system.

It sounds like you still live in the home, right? If so, have you been making payments? If not some lenders will use that to deny a VA mortgage.

 

You need a lender that has experience with situations like this.

 

 

 

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
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