WILLY

BK7 vs. Homeownership

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My wife and I filed chapter 7 approximately a year ago. What type of home loan could we be eligible for? After 2 years from discharge, can we purchase a home without much trouble? We owned a home during the discharge but were able to keep it and then sell after the discharge date and pocket the proceeds. Would this help? HELP!!

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My wife and I filed chapter 7 approximately a year ago. What type of home loan could we be eligible for? After 2 years from discharge, can we purchase a home without much trouble? We owned a home during the discharge but were able to keep it and then sell after the discharge date and pocket the proceeds. Would this help? HELP!!

Hi Willy

I was a loan officer for 10 years - you do not have to wait 2 years to refinance after a chapter 7 discharge, those are for fannie mae loans. You can refinance a chapter 7 a day after discharge.

A chapter 13 can be refinanced before discharge since it's on a payment plan for 3-5 years from filing date. You can get a chapter 13 refinance as little as 12 months from filing, not discharge and you can payoff your chapter 13 in the process if you have enough equity in your home. I remember I wrote several loans paying off open chap 13's.

You may be able to get a mortgage sooner, but your terms (i.e. interest rate, etc.) will not be as attractive as it would be if you can wait 2 years. Considering that you'll be paying that interest for up to 30 years, it definitely saves you a lot of money if you can wait long enough after the discharge to get a good interest rate.

One thing you should do is get a copy of your tri merge credit record (one that shows your scores). Review it for any mistakes you can disbute off. Since you are in a chapter 7 now, use this time to rebuild your credit.

On your installment debt (home, car, etc). Send extra with your normal month payment, after several months you are reported as being more responsible and your score can go up.

Good Luck

:)

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What about buying a new house before the 2 years is up..we are in our house that was included in the bankruptcy and we just got a notice on the door that the bank wants to inspect the property. How much time does this give us? What about a land contract? we are currently three months behind on the mortgage. Thanks

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What about buying a new house before the 2 years is up..we are in our house that was included in the bankruptcy and we just got a notice on the door that the bank wants to inspect the property. How much time does this give us? What about a land contract? we are currently three months behind on the mortgage. Thanks

Hi Charm

As I explained above - yes you can purchase a home before 2 years, but you are most likely to pay a high interest rate. You should wait, rent out an apartment. That way you will save more in the long run.

Discussing your house that was included in the bankruptcy. This means you are in a chapter 13, making payments to the trustee? Did you go late on the trustee payments?

By the bank sending over an appraiser to inspect the property. This could be a sign your lender is going to sell your property (or at least to confirm the value).

If you are three months late on payments to your trustee, they can start a trustee's sale of your home. In the state of Michigan it is both Non Judicial and Judicial. Ultimately your home will be sold, whether through a trustee or by a sheriff. Once this happens you will no longer own the property and you must move.

By filing bankruptcy automatically stops most actions against your and your property. I have worked on cases where the lender filed paperwork to remove a home from bankruptcy protection (it happens often). They can file a Relief of Stay, they have to show the courts that their interests in the property is not "adequately protected. Lenders can frequently get relief from the stay to foreclose on property in which the homeowner has no equity or where the property is not insured.

In Michigan - lenders are not required to do a judicial foreclosure. You can receive a notice of a sheriff sale of the home, normally within 30 days. Then in three to five years, under the Possible and Practical state guidelines, you are going to receive a deficiency judgment.

A deficiency judgment is for the difference between what you owed on the property and what the bank sold it for.

Right now you are on thin ice that is cracking! You are running out of time. Once you are two weeks before the sale date and knowing the fact you already filed bankruptcy, very few attorneys would take on your file (at least honest attorneys). I strongly suggest you need to have a Mortgage attorney if you still want to stay in your home.

..

Edited by 2ndTimeAround

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We filed a chapter 7 so we owe them nothing. Our case is a little complicated. When the bk discharged the bank offered us a modification they told us that it would be reported on our cr and we could back on track. Fast forward to November. Got a copy of my hubbys cr and found out that they hadn't been reporting our payments and that the rep lied to us and found out that our payments were never going to be reported because the modification they set up didn't alter the terms of the loan(meaning we didn't sigh new loan docs) it is and was still showing up as discharged through bk. so my hubby and i decided to bank the $ that we were paying them to get another house. We are 3 months behind on paying them, are they going to start the preceeding all over, the attorney that did our bk said that we had about 6 months from the sheriffs sale date (which we haven't received yet) just weird that someone actualy came by. We were thinking of doing a land contract. there are quite a few houses in the area.What are your thoughts

Hi Charm

As I explained above - yes you can purchase a home before 2 years, but you are most likely to pay a high interest rate. You should wait, rent out an apartment. That way you will save more in the long run.

Discussing your house that was included in the bankruptcy. This means you are in a chapter 13, making payments to the trustee? Did you go late on the trustee payments?

By the bank sending over an appraiser to inspect the property. This could be a sign your lender is going to sell your property (or at least to confirm the value).

If you are three months late on payments to your trustee, they can start a trustee's sale of your home. In the state of Michigan it is both Non Judicial and Judicial. Ultimately your home will be sold, whether through a trustee or by a sheriff. Once this happens you will no longer own the property and you must move.

By filing bankruptcy automatically stops most actions against your and your property. I have worked on cases where the lender filed paperwork to remove a home from bankruptcy protection (it happens often). They can file a Relief of Stay, they have to show the courts that their interests in the property is not "adequately protected. Lenders can frequently get relief from the stay to foreclose on property in which the homeowner has no equity or where the property is not insured.

In Michigan - lenders are not required to do a judicial foreclosure. You can receive a notice of a sheriff sale of the home, normally within 30 days. Then in three to five years, under the Possible and Practical state guidelines, you are going to receive a deficiency judgment.

A deficiency judgment is for the difference between what you owed on the property and what the bank sold it for.

Right now you are on thin ice that is cracking! You are running out of time. Once you are two weeks before the sale date and knowing the fact you already filed bankruptcy, very few attorneys would take on your file (at least honest attorneys). I strongly suggest you need to have a Mortgage attorney if you still want to stay in your home.

..

Edited by charmgoodcredit
forgot something

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We filed a chapter 7 so we owe them nothing. Our case is a little complicated. When the bk discharged the bank offered us a modification they told us that it would be reported on our cr and we could back on track.

Fast forward to November. Got a copy of my hubbys cr and found out that they hadn't been reporting our payments and that the rep lied to us and found out that our payments were never going to be reported because the modification they set up didn't alter the terms of the loan(meaning we didn't sigh new loan docs) it is and was still showing up as discharged through bk. so my hubby and i decided to bank the $ that we were paying them to get another house.

We are 3 months behind on paying them, are they going to start the preceding all over, the attorney that did our bk said that we had about 6 months from the sheriffs sale date (which we haven't received yet) just weird that someone actually came by.

We were thinking of doing a land contract. there are quite a few houses in the area.What are your thoughts

It is good to hear you have an attorney, but what is he doing? Your attorney should be doing the negotiating with your lender, that's what you are paying him for right?

You mentioned he handled your bankruptcy. The difference between Mortgage Attorneys and Bankruptcy attorneys, is like the difference between an Eye and Foot doctors

In my office last night - one of my associates was explaining this, he said a person with a foot problem went to the eye doctor. Got glasses, now he can't see two feet in front of him.

Point make sure you are getting the right legal representation to expect the best results. Going to your bankruptcy attorney, your are paying him to save your home by filing BR. When you met with him first, did your ask him how many bankruptcies he has done? How many Modifications completed. How many cases has he actually worked one on one with your lender?

As for your credit - this is the best website on the internet, your can learn to repair your own credit. Once you understand what credit is it is easy. Plus with a good credit score it becomes easier to live. However right now your credit score is last on your priority list.

I can understand about your husbands credit report, I had a similar situation years ago my credit took a noise dive into the 400 range. To get action, it took me nine months calling my lender up to ten times a day. Finally got a letter I was not responsible for the six months of late payments reported on my CR. Sent that letter in to three CB's, in two weeks my score was back in the 600's.

When a lender say's "they are going to clear up their mess they created on your report". I cannot count how many people have told me that.

Ultimately it needs to be you to take matters in your hand and make sure what gets report is correct, and anything incorrect, you need to take steps to cleaning your report up. Again this web site is packed full of information on others cleared their reports.

This morning talked to a man about a Deed In Lieu, they have a house in Clinton Township, MI. Two months ago spoke to them about a modification, since they had a low rate away and were not late. I told him they was no benefit in doing a mod. Now they are two months behind and cannot afford the home. Discussed doing a DL because of the benefits are better rather then doing a short sale, and definitely better then letting the house go into foreclosure.

As for my thoughts? I really don't know the entire situation. A land contract (unless a home is already on the land)? Honestly take a look in the mirror. Are you organized enough to build a house by purchasing land? You're having trouble managing a house that is already built, how organized would you be in building a home?

I am not making fun of you, just telling the truth (again I don't know your situation). Giving what you mentioned so far, save your money and let the house go the right way. Tell your attorney your want a DL, instead of a short sale. Make sure there is wordage protecting you from your lender taking any recourse in the future. In your state under Possible and Practical guidelines, your lender will do a deficiency judgment.

FYI - I spoke to a person in Detroit MI. The government stimulus package is coming in and fixing up houses, a $80k budget for each house. Then they are trying to sell them for $25k, that's our government at work for you...:rolleyes:

Find a home at the right price - then beg, borrow, sell blood, get enough money to buy a home free and clear.

Good Luck.....:)

..

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2ndTimeAround - a "Land Contract" is also known as a Contract for Deed in some areas of the country. There may be other names too! It is a regular house on a parcel, but the seller takes installment payments in a written agreement. The property remains in the name of the seller until the buyer pays off the entire agreement. The agreement typically runs 3 to five yrs with a lump sum due at the end (balloon payment). Usually the pay off comes in the form of a refinance. The most common reasons some buyers purchase a property this way is to fix the price and to have the payments go toward the purchase (rather than rent) until the buyer has time to repair their credit or have a closing on another property. This is a contract that must be drawn up by a good real estate attorney because the seller usually has a mortgage on the property that is not paid off until the buyer makes the final payment. There are pitfalls to this type of contract both on the seller side and the buyers side, so an excellent attorney is essential. All these types of contracts are completely custom - the seller and buyer agree to terms acceptable to both, as long as the terms are legal. The actual transfer of the deed does not occur until the final payment, but the buyer does get an equitable interest in the property. This is not the same as a seller holding a PMM because of the underlying mortgage(s) on the property.

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...... I really don't know the entire situation. A land contract (unless a home is already on the land)? .

Denita

Thank you for explaining what people do in other states - the way I interpreted a "Land Contract" is a contract between a seller and buyer of real property. From what I have worked with, it didn't include a home. That's why I listed unless a home was on the existing property.

When I was a L/O - wrote loans in Florida where people brought land through "rent to own contracts". Paid on it for a period of a year. In which they built a house on, then refinance and paid off the owner of the land. Most people with Modular homes get their property that way (did two loans in GA this way).

It is really hard to go to a bank and ask for a loan on just land. The method I describe above allows people to build their dream home where they want through the cheapest way of financing.

You are correct about a Contract for Deed. Recently I worked with a homeowner in LA who had 400- credit. The company she signed with built a home, after she put $20k down for the property. After the home was finished, the company was going to finance her loan for the property (she showed me paperwork indicating that). Since the bank lost there financing ability and could not get her into a loan. Her house that was built sits empty. Now the tax people are coming after her - it's a big mess.

Another situation about a contract for deed. I spoke with a young lady in Texas. That over the last year she has been renting to own. Now that the values are starting to go up, the owner wants to keep the property. People can victim to these kind of scams, where they a thinking they are making payments towards a down payment.

Last week I spoke a home owner with an opposite situation in Nevada - she has tenants that are renting to own. Her tenants received foreclosure paperwork on her house. The owner lost her job and cannot afford to make the payments any longer. Now the tenants stopped making the rent payment- again a sad story. Have another case exactly like this here in New York.

Speaking to people every day facing foreclosure, it's hard not to get involved.

Gary....:)

Edited by 2ndTimeAround
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