Posted on: 03rd Apr, 2009 11:58 am
What is process and consequences for family who went through bankruptcy [discharged in 2006]. The original home load was discharged. however we've been making the mortgage payment ever since. Unfortunately, it is on a 5 yr ARM [interest only loan] and will be converting to a higher interest rate in 2010. We have built up our credit score from the bankruptcy to 720. Should we purchase a home [that we can afford] one about 100,000 less than what we owe on the current one and put the current house up for sale? If it doesn't sell quickly, it may have to go into foreclousre.
Would we be in jeopardy of anyone coming after us for the current home after forclosure [that being said, that it was discharged in the bankruptcy]? ? Would the home we buy in the near future be in jeopardy?
What would happen to our credit?
Please help, We're so confused. We don't trust our original bankruptcy lawyer, as she was very adequate in taking all of our money, but didn't give us adequate information/ guidance about that horrible process.
Thanks
tuliee
Would we be in jeopardy of anyone coming after us for the current home after forclosure [that being said, that it was discharged in the bankruptcy]? ? Would the home we buy in the near future be in jeopardy?
What would happen to our credit?
Please help, We're so confused. We don't trust our original bankruptcy lawyer, as she was very adequate in taking all of our money, but didn't give us adequate information/ guidance about that horrible process.
Thanks
tuliee
hi tuliee!
welcome to forums!
did you file chapter 7 bankruptcy and reaffirmed it? if yes, then the lender will have the right to foreclose the property and come after you for the deficient amount. this will also effect your credit report.
with a credit score of 720, you would be able to get a conventional mortgage as well as fha mortgage. you can even try to refinance the mortgage at a lower rate. this will help you in saving the property as well as your credit.
feel free to ask if you have further queries.
sussane
welcome to forums!
did you file chapter 7 bankruptcy and reaffirmed it? if yes, then the lender will have the right to foreclose the property and come after you for the deficient amount. this will also effect your credit report.
with a credit score of 720, you would be able to get a conventional mortgage as well as fha mortgage. you can even try to refinance the mortgage at a lower rate. this will help you in saving the property as well as your credit.
feel free to ask if you have further queries.
sussane
No, we have not reaffirmed it.
So let me clarify my question....The bankruptcy shows on my credit report as a negative ding. And, if I have to foreclose on the house, several years later, it will be another negative ding? Even though the mortgage has been discharged? This is so confusing. We were hoping we could sell the house and buy a smaller, cheaper one. Shortly before we filed the bankruptcy, we re-fi'd our house to a 5/1/ARM interest only loan. It is a great rate, something like 5.17%. Can't really find a 30 yr fixed loan rate to beat that. However, the payment is way more than we can really afford. I can't image what it will go up to once you actually add prinicple to the interest.
So, even though the mortgage has already been discharged, a foreclosure will hurt us again, now 4 yrs later??? Why did we try to keep this house to begin with? It is now worth less than the amount we owe.
To make matters worse, it is a 2 story house and I have health problems and have much difficulties navigating the stairs. Really need to move to 1 story home. I am anticipating a total knee replacement in near future.
I have contacted the home load company & explained everything in detail They took all of my information and promised someone would call me back. This was over a month ago and they never did call me back.
It's obvious they have already discharged the mortgage and aren't interested in working something out with us.
We could currently buy a smaller, cheaper house and not have such a hugh mortgage payment. Was hoping that since the original home loan was discharged, we could start over fresh.
Any advice is greatly appreciated.
Tuliee
So let me clarify my question....The bankruptcy shows on my credit report as a negative ding. And, if I have to foreclose on the house, several years later, it will be another negative ding? Even though the mortgage has been discharged? This is so confusing. We were hoping we could sell the house and buy a smaller, cheaper one. Shortly before we filed the bankruptcy, we re-fi'd our house to a 5/1/ARM interest only loan. It is a great rate, something like 5.17%. Can't really find a 30 yr fixed loan rate to beat that. However, the payment is way more than we can really afford. I can't image what it will go up to once you actually add prinicple to the interest.
So, even though the mortgage has already been discharged, a foreclosure will hurt us again, now 4 yrs later??? Why did we try to keep this house to begin with? It is now worth less than the amount we owe.
To make matters worse, it is a 2 story house and I have health problems and have much difficulties navigating the stairs. Really need to move to 1 story home. I am anticipating a total knee replacement in near future.
I have contacted the home load company & explained everything in detail They took all of my information and promised someone would call me back. This was over a month ago and they never did call me back.
It's obvious they have already discharged the mortgage and aren't interested in working something out with us.
We could currently buy a smaller, cheaper house and not have such a hugh mortgage payment. Was hoping that since the original home loan was discharged, we could start over fresh.
Any advice is greatly appreciated.
Tuliee
Welcome tuliee,
Though your bankruptcy was discharged, the lender still holds the lien on the property. It would have been better if you would have reaffirmed it and paid off the dues. If the lender forecloses the property, your credit will be affected. This foreclosure will remain on your credit report for 7 years like any other negative item. Apart from this, it would also lower your credit score by 250 points. I would suggest you to speak to the lender about deed in lieu and check if he agrees to it or not.
Though your bankruptcy was discharged, the lender still holds the lien on the property. It would have been better if you would have reaffirmed it and paid off the dues. If the lender forecloses the property, your credit will be affected. This foreclosure will remain on your credit report for 7 years like any other negative item. Apart from this, it would also lower your credit score by 250 points. I would suggest you to speak to the lender about deed in lieu and check if he agrees to it or not.
Thank you, adonis. I appreciate your help. So, how much would a deed in lieu affect my credit?
Would a mortgage company even be interested in a deed in lieu after they already had to discharge it? [what benefit is it for them???]
[Seems as though I just can't make a fresh start of things, even several years post the bankruptcy discharge.]
Would a mortgage company even be interested in a deed in lieu after they already had to discharge it? [what benefit is it for them???]
[Seems as though I just can't make a fresh start of things, even several years post the bankruptcy discharge.]
Is reaffirming a mortgage load done during the bankruptcy process or after it has been discharged?
Hi tuliee,
A deed in lieu will lower your credit score by 250 points. Moreover, it would also remain on your credit report for 7 years. It will depend upon the lender whether he will accept your request for a deed in lieu.
You can reaffirm the loan after your bankruptcy is discharged.
A deed in lieu will lower your credit score by 250 points. Moreover, it would also remain on your credit report for 7 years. It will depend upon the lender whether he will accept your request for a deed in lieu.
You can reaffirm the loan after your bankruptcy is discharged.
Hi, my son is in the same situation as Tullie, facing foreclosure 4 years after bankruptcy. He has tried twice to refinance. the second time his home was appraised for less then 2 yrs prior. Since he owes more then the appraisal they want him to pay the $50m up front and they will refinance the balance. Bank of America told him that since he has been making payments (on time) for 4 years he could not qualify for a loan for a new home until "AFTER" the foreclosed home is sold. By then his credit score will be too low to qualify. Any one have any suggestions.
Your son is in a difficult situation. There is hardly much that he can do. If he has reaffirmed the debt and if he is unable to pay if off, then the lender will foreclose the property. He can apply to the lender for a short sale. This will help him to sell off the property and his credit score will be lowered by 75-100 points. However, he will have to pay the deficient amount resulting from the sale of the property.
Guest: Thank you for your response.
My son has had his house up for sale for 1 year, he did not reaffirm. Can the mortgage company come after him for any deficit if he walks away?
I owned a second home that has over $100,000 equity in it. Do you know if there is a procedure where as I can add him as a co-borrower? Would I have to refinance the balance to do that?
My son has had his house up for sale for 1 year, he did not reaffirm. Can the mortgage company come after him for any deficit if he walks away?
I owned a second home that has over $100,000 equity in it. Do you know if there is a procedure where as I can add him as a co-borrower? Would I have to refinance the balance to do that?
Hi pl!
Welcome to forums!
As he has not reaffirmed the mortgage, he is not personally liable to pay off the dues. However, if he walks away from the property, the lender will foreclose it and this may effect his credit.
Yes, in order to add your son as one of the co-borrowers, you will have to refinance the mortgage.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
As he has not reaffirmed the mortgage, he is not personally liable to pay off the dues. However, if he walks away from the property, the lender will foreclose it and this may effect his credit.
Yes, in order to add your son as one of the co-borrowers, you will have to refinance the mortgage.
Feel free to ask if you have further queries.
Sussane
my son has a copy of a reaffirmation that he signed with the primary mortgage company, however it was never entered with the courts as a reaffirmation. the primary mortgage company has his file still in their bankruptcy department. can the mortgage company go back now after 4 years and reaffirm through the courts? is there a statue of limitations if they can do this?
there is a second mortgage that was not reaffirmed. if he walks away can either come after him for any deficit.
thank you
there is a second mortgage that was not reaffirmed. if he walks away can either come after him for any deficit.
thank you
Hi pl,
It would be difficult for you to reaffirm the loan now as 4 years have already passed since the bankruptcy was discharged. However, I would suggest you to speak to the lender and check out if he could help you in this issue.
As the mortgage has been discharged, your son is not personally liable for the dues. So the bank won't be able to sue him for the deficient amount if he walks away.
Thanks
It would be difficult for you to reaffirm the loan now as 4 years have already passed since the bankruptcy was discharged. However, I would suggest you to speak to the lender and check out if he could help you in this issue.
As the mortgage has been discharged, your son is not personally liable for the dues. So the bank won't be able to sue him for the deficient amount if he walks away.
Thanks
I recently filed Chapter 7, I plan on reaffirming the first on my home, but not the second. Can the lender (which holds both the first and second) come after me later to collect on the second? Is there a statue of limitation on long before they can no longer come after you.
If you do not reaffirm your second mortgage, then you won't be personally liable for paying off the dues. The lender would still be holding a lien on the property. It would be totally the lenders discretion whether he would sell off the property to collect the second mortgage dues or he may forgive the mortgage. As far as statute of limitations is concerned, it varies from state to state. You need to contact your bankruptcy attorney and he would help you in knowing it.
My mortgage company sold my mortgage while if foreclosure. The house has sold and on my credit report the orginal mortgage company it says Transferred and on the new one it says Delinq. If I file bankruptcy can they still come after me? I currenly own a home that is payed off but I'm looking to purchase a bigger one.