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Bankruptcy Mortgage Lenders

Bankruptcy Mortgage Lenders questions and answers

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Q: We are being sued! If we file for bankruptcy will our mortgage lender have to attend the hearing?
My husband is being sued for a car accident that he caused a year ago,for $100,000... we dont make alot of money and we recently bought our first home 4 months ago. If the plaintiff wins and we are not able to pay and he garnishes my husbands wages we will need to file for bankruptcy. Will our lender have attend the bankruptcy hearing and will this at all affect our loan with the mortgage lender? Thanks for your help! lol..landlord, no of course not. The accident happened over a year and half ago and no, he was not hurt, he didnt even go in an ambulance and his car only had a dent in it...he is suing us for emotional damage and "physicall therapy" and loss of work...he is a total fraud and hopefully we will win in court but just in case we dont, I was just wondering...stop being so judgemental

A: Your mortgage lender will not have to attend the hearing. I can't believe you bought a house knowing you hurt those poor people. Does your husband have no conscience at all? BTW, a bankruptcy will not let you rip those people off, that is not included, as well as the house.

Q: Finding a mortgage lender after bankruptcy?
Hi Everyone, my husband and I went through a ch 7 bankruptcy that has been discharged for a year now. We'd like to buy a home in the next 6-9 months and I am currently trying to educate myself on how to do it. We've been working hard to raise our score and have been succesful at it. So, my questions are: 1) Are there any mortage lenders that won't just run away screaming when they hear we have a bankruptcy? Better yet, a lender that we won't pay out the nose with in re interest rates? 2) What are the additional costs of buying a house? What exactly are closing costs; What other costs are there? Any input would be great! Thanks!

A: Go to http://www.daveramsey.com and on the right hand side is a link for ChurchHill Mortgage company. They have lenders that have home loans that are really even based on your credit score. Have a good stable job for 2 or more years and pay your rent on time for 2 or more years? You can get a home loan from things just like that. Doesn't matter what your credit score is.

Q: Where can I find a bankruptcy friendly mortgage lender?
Hi, I want to buy a house in WA state. My Ch 7 BK was discharged/closed October 15, 2005. My annual income is $104K (W2 verifiable) and my middle score is 676. I would like to get pre-approved for $250K and I have ~ 4% to put down. Credit report does not show any foreclosures. Does anyone have any idea where to shop for a lender? One more thing I just learned. Included in my bankruptcy was a home loan. I guess that means I have a foreclosure. Is it still possible to get a mortgage?

A: This is not that big of a problem. Many mortgage brokers can help. I would suggest going with a local lender in the area you are moving, though. Out of state lenders are often problematic for one reason or another and nearly always cause delays. A great way for you to get a good lender is to go to BNI.com. Find a chapter in the area you are moving to. Look up a Realtor member of that group and ask them who is the best lender for your situation. One other thought...compare what your loan would look like now, and what your loan would look like in October. You may or may not decide you want to wait until your BK has been discharged for 2 years. That does not mean that you cannot get creative with your Realtor and tie up the house sooner, but not close until after October. Extended closing with the right to occupy (and pay rent) between now and then, etc.

Q: Is it better to file bankruptcy or let your mortgage lender foreclose on you?
We have enough money to pay all our monthly bills except the mortgage. Which would hurt our credit less - filling bankruptcy on everything or letting our lender foreclose on our house.

A: If you have the money, please seek advise from a CPA or qualified financial planner for such a profound/important issue. With that said: BK and foreclosures are both very bad...if it's choice of a lesser evil then foreclosure might be preferable. If you are being weighted down by large debts and you could still hang onto your house if those debts are discharged, then BK might be the best route.

Q: What's the best way to find a mortgage after bankruptcy?
I claimed bankruptcy about 4 years ago and am not ready to purchase a home. What web sites or mortgage lenders should I target to obtain a loan? What should I expect as far as interest rates and fees?

A: I agree with Kute about your credit, between when you were discharged and the end of 7 years you have the best credit there is, since you can not file another bankruptcy during that time. Here are some links that you need to do research in. Once per year free credit report from all three credit reporting agencies: http://www.annualcreditreport.com/cra/index.jsp Answers to common questions on Bankruptcy*: http://www.consumerlaw.org/action_agenda/bankruptcy/content/BrochureRevised2006.pdf Using credit wisely after bankruptcy*: http://www.consumerlaw.org/action_agenda/bankruptcy/content/using_credit_wisely.pdf You should be able to find members in your area that will help you and guide you through the loan process here American Bankers Association: http://www.aba.com/Consumer+Connection/default.htm Mortgage Brokers Associaton: http://www.namb.org/namb/Default.asp Buena Suerte

Q: What happens to your mortgage if the mortgage lender goes into bankruptcy?


A: The lenders assets, including your loan, are sold to other lenders. You now owe the same amount under the same terms to another mortgage company. This is actually quite common even if the lender does NOT go bankrupt. My mortgage was sold by the original lender before I signed the paperwork. In the 4 years since, it has already been sold to a 3rd company.

Q: Does anyone know of a mortgage lender that will buy out a bankruptcy and/or foreclosure?
I am a mortgage broker in SC. I have two individuals needing help with this situation. One is in bankruptcy and has rolling 5's on his mortgage for the past year and a half. However, his ltv is at 55%.

A: Yes, you should be able to refinance this person with an active foreclosure with either Fremont, Option One, or World. However with a bankruptcy, your going to have more of a challenge. I do believe that World and OOMC will accept bankruptcies with in the 2 years, but you need to check on that. Contact me directly if you need assistance

Q: What happens to my mortgage if my lender files for bankruptcy?
There seem to be issues for Countrywide Home Loans and the "B" word seems to be surfacing in some news items and discussions. If something were to happen such as a lender going bankrupt, what happens to the mortgages? Would mortgages be sold off to other lenders and terms remain the same, effectively making the occurance transparent to mortgagees? Or are there risks to the mortgagees? And for what it's worth, whether or not Countrywide is at a real risk of bankruptcy or not, I'm just wondering in general what it means if such an occurance takes place. http://biz.yahoo.com/ap/070816/wall_street.html?.v=6

A: Your first instinct is correct. The mortgages would be sold to another lender and your terms would remain the same. Although it would be nice if they let you off the hook when the company went under!

Q: Are there any current subprime Mortgage lenders in NYS?
I have a credit score of 620 and my chapter 7 bankruptcy was discharged 5/08. Are there any subprime Mortgage Lenders is open in NY?

A: Even with your chapter 7 bankruptcy you might still find a lender that can be of assistance to you. It has been over 12 months. In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, which you can find one in your local telephone book. Make sure this mortgage broker or mortgage banker is able to do government loans such as FHA and VA loans if you qualify for one. He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate. The amount of your monthly debt payments you are required to pay as per your credit report and the amount of mortgage you can take on based on your income will determine the amount of house you will be able to purchase. When you speak with the mortgage broker you will need the following documents to complete the loan application, there will be others, but this will get you started. #1 One month of pay stubs for each person that will be on the mortgage. #2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment. #3 Two years of federal income tax along with the W-2 that match. Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased. Once he gives you this pre-approval you may now find a real estate agent to find yourself a home or he might have a referral. Now make sure before you get your pre-approval you and your mortgage broker go over all your options as to the mortgage programs you qualify for, the interest rate, monthly payments. If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan. You should select the loan that best suit your financial condition at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once. Make sure your mortgage broker explain all your options so you may make an intelligent decision. What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else. So select the best option for you and your financial situation. You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment. Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign. Your mortgage broker will now order an appraisal to show proof of the property value. The mortgage broker might ask for additional information or documentation, don't get all up tight this is normal, just supply the information or find the documents needed. After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home. Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you. I hope this has been of some benefit to you, good luck "FIGHT ON" FIRST TIME HOME BUYERS (SHORT VERSION) There are many things you should do, but the first thing you should do is contact a mortgage broker that does FHA mortgage loans and get pre-approved. This is the first step. Once you have your pre-approval then contact a real estate agent to look at house based on what you are qualified to buy. You will need proof of income so have available pay stubs, w-2, bank statements and other items your mortgage broker will require. He will inform you of what is necessary once you contact him. This pre-approval will tell you the amount of house you are qualified to purchase as well as the interest rate, monthly mortgage payments and other necessary things you need to know about your mortgage. I hope this has been of some benefit to you, good luck. "FIGHT ON"

Q: i've applied with mortgage lenders and still can't a loan with a past bankruptcy.what can i do?


A: WORK on your credit. If you have a bankruptcy in past, it's harder to get a loan. But if you show that you have excellent credit since then, that you pay ALL bills in full and on time, that you're not running up your credit cards, etc. you will find a lender. Give it some time while you build your credit and save for a down payment. Unfortunately most people who go bankrupt then go out and do the same stuff that got them in trouble before. Running up credit cards and paying only the minimums, not controlling spending, not living within their means, not saving, not being financially prudent. You need at least 3% down payment, and 10% is better with your bankruptcy in background. Avoid other debt--no new cars, no new furniture, no credit card balances. If you put down 20% you avoid PMI. So I'd say WAIT 6-12 months. BUILD your credit score. SAVE for down payment. Show that you can plan for your future and not fall back into making poor choices. YOU can do it if you want to and you work at it. Only YOU.

Q: Mortgage Lender filing for bankruptcy?
What happens if my mortgage lender files for bankruptcy? How will this affect my mortgage payments? Thank you

A: It won't affect your mortgage payments. This is how it works. If the mortgage lender files bankrupcy everyone gets fired except for a hand full of people that can service the loans while the CEO is busy finding another company to take over the loans. Worst case scenario, someone buys you loan and you send your check to a different place every month.

Q: I filed bankruptcy one year ago and I received a letter representing mortgage starting forclosure proceedings.
My bankruptcy was discharged in August 2007 which included my rental property. I received a letter from an attorney in Tennessee representing the mortgage lender stating they are going to forclose on the property. Will this affect my credit if the property was included in the BK. The attorney's letter stated something about a stay on the property, which gives them permission to take the property out of bankruptcy and try to collect the debt before the foreclosure. How will the foreclosure further affect my credit. Will the BK and the foreclosure both show on my credit report as a negative?

A: You need to get this attorney's letter over to your bankruptcy attorney. The must have petitioned the court and convinced the judge to remove the house from the BK proceedings. You need to get it added back in. Yes, the foreclosure will tank your credit.l Having both the foreclosure and BK ius a double whammy.

Q: Under what circumstances outside of a home owner's control (ie, lender bankruptcy) may a mortgage be called?


A: Due-on-Sale-Clause - A provision in a mortgage or deed of trust that allows the lender to demand immediate payment of the balance of the mortgage if the mortgage holder sells the home. One trend in the mortgage industry has been the virtual disappearance of assumable mortgages. This is unfortunate for homebuyers, since an assumable mortgage allows them to retain a below-market interest rate and avoid many closing costs, such as a credit check and appraisal. Except for certain FHA and VA loans, almost all mortgages now contain a “due-on-sale” clause which require that the mortgage be paid if there is a change in ownership. Typical “due-on-sale” language states that, “the Lender may, at its option, declare immediately due and payable all sums secured by the Mortgage upon the sale or transfer, without the Lender’s prior written consent, of all or any part of the Real Property, or any interest in the Real Property.” A reading of the language shows that the term, “due-on-sale” is misleading. In fact, the mortgage may be called in if there is any transfer of any interest in the real estate, and not just a sale of the property. Some examples may show how far reaching the “due-on-sale” clause can be. The most obvious example is a land contract, also known as a Contract for Deed. Since a Contract for Deed passes equitable title to a potential buyer, such a contract is a violation of the “due-on-sale" clause, even though the seller retains legal title. This entitles the Lender to call in their mortgage and demand payment in full. It is possible that even a long term Lease will allow the Lender to accelerate their mortgage, especially if the Lease contains an option to purchase. There is some case law indicating that any lease longer than three years will trigger the “due-on-sale” clause. But any Lease that contains an option to purchase will be sufficient to call in the loan if it contains an option to purchase the property, regardless of the length of the Lease. For tax and probate purposes, some people transfer their property into a Land Trust, also know as a Living Trust. These Trusts do not trigger the “due-on-sale” clause, if the current owners are also the sole beneficiaries of the trust. However, if you transfer your home into a Land Trust with your children as beneficiaries, the Lender may call in the loan. Also, the exemption for Land Trust only applies to owner-occupied homes, and no investment property. What if one spouse signs a Quit Claim Deed to remove their name from the Deed as the result of a divorce settlement? This is certainly a transfer in ownership. However, federal law prevents the Lender from demanding immediate repayment of their loan simply because two joint co-signors get a divorce. However, the spouse who signs the Quit Claim Deed still remains liable on the Mortgage, even though their name is no longer on the Deed. Lenders are entitled to know to whom they are loaning money, and to set terms and conditions. Moreover, the “due-on-sale” clause is now required by various federal agencies. While such a clause may hinder some real estate deals, they makes solid business sense. Basically the due on sale clause is a statement within the deed of trust or mortgage depending of the state you reside that says that if the the person who takes out the mortgage decides to sell the house then the mortgage or deed of trust given for collateral has to be paid in full. Note the due on sale clause is rarely called into play when transfering title or ownership by mortgage companies. Due On Sale Clause is on almost every mortgage note.

Q: How could record foreclosures and Mortgage Lender bankruptcies occur in the "booming" economy?
Is it because this inflated economy is funded my deficit spending and the bubble is due to burst?

A: Both lenders and borrowers are to blame. Interest rates fell to lows not seen for 45 years. This had the effect of putting more money in homebuyers hands because the same monthly payment could buy a lot more house. Demand for mortgages grew quickly (for new builds, purchases of existing homes, refinances and refinances with cash out). This lead to house prices going higher, in some parts of the country much higher. As demand for mortgages began to drop off (when mortgages bottomed out and started to increase) mortgage companies that had staffed up to handle the demand began to get "creative", doing such things as offering interest-only adjustable rate mortgages and loaning people more money than their house was appraised at. As mortgage rates increased home prices began to level off and in some areas decline. So suppose someone could reasonably afford $800 per month but they stretched and got a mortgage for $900 per month. They borrowed more than their house was appraised at, got an interest only loan with a variable rate. And their house is now depreciating in value. So then the rates go up and their payment is now $1,100. They can't make the payment. And they have little incentive to. They have no equity in the home (in fact they have negative equity). And they can't sell their house because they can't get enough for it to pay off the mortgage. And their payment is likely to go higher and higher while their house's price continues to go down.

Q: Questions about mortgage after bankruptcy. Can you help?
Details: My husband has a recent bankruptcy on his credit record (I was not included on bankruptcy). The bankruptcy is less than a year old. My credit is decent, but I have been a stay-at-home-mom and full-time student for the past ten months, therefore have no income of my own. My husband makes good money and has been current on our bills since the bankruptcy was discharged. Since the bankrutcy has freed up our finances, we can easily swing a house payment at this point. So, what are our chances of getting a mortgage? And do you have any suggestions for making us look as good as possible to the lender? Can I go on the mortgage since I don't have an income right now? Thanks!

A: You could ask advice from your bank...