Waiting Period After Foreclosure And Bankruptcy
For those who are planning on buying a new home and qualifying for a new residential mortgage loan but have a prior foreclosure, deed in lieu of foreclosure, short sale, and/or bankruptcy, there are mandatory waiting periods prior for them to qualify for a residential mortgage loan. For a bankruptcy, the waiting period is two years from the date of the discharge date of the bankruptcy. For short sales, the waiting period clock starts the date of the HUD settlement statement. For foreclosures and deed in lieu of foreclosures, the waiting period starts from the actual date of the sheriff’s sale or the date the deed of the home was transferred out of the homeowners name into the name of the bank or mortgage lender and recorded in the county recorders office. This is so important. For deed in lieu of foreclosure, it is not the date you signed the deed in lieu of foreclosure papers and turned the keys in to the mortgage lender. That date is irrelevant. The actual date the deed was recorded in the county registry is when the waiting period clock starts ticking.
Foreclosure Part Of Bankruptcy
Many homeowners have included their mortgage loans as part of their bankruptcy petition and the foreclosure was part of their bankruptcy. When you have a foreclosure as part of your bankruptcy, the note will get discharged and you will no longer owe your note as well as any deficiencies, however, you need to make sure that the deed of the home is transferred out of you name and into the mortgage lender’s name. I still get countless of calls from potential mortgage loan borrowers who have waited the necessary waiting period requirement but the deed of their home that was part in their bankruptcy has yet not been transferred out of their name and is still in the mortgage lender’s name. For these folks, the waiting period has not even started yet and they need to get their name out and into the mortgage lender’s name asap and have it recorded in the county recorders office as soon as possible.
When you have a foreclosure as part of your bankruptcy, the waiting period after the discharge date of a bankruptcy is two years and it is three years from the recorded date of the foreclosure. The three year waiting period after foreclosure will apply since it is longer than the two year bankruptcy date. Many mortgage lenders are in no hurry to have the deed transferred into their names and are very aware that by not transferring the deed of the home out of the homeowners name and recording it hurts the homeowner and affects their waiting period. Maybe it might be a way of getting back to the foreclossed homeowner or just being mean, but most lenders are aware that not recording the transfer affects the waiting period after foreclosure to the foreclosed homeowner.
Keep On Top Of Having Deed Transferred
If you had a prior foreclosure or a deed in lieu of foreclosure, make sure that the deed has been transferred out of your name into your mortgage lender’s name and has been fully recorded because the waiting period after foreclosure will not start until this task has been fully executed. Also, never assume that the deed is transferred out of your name if a foreclosure was part of your bankruptcy. Remember that the waiting period after foreclosure does not begin until the deed is out of your name even if the foreclosure was part of your bankruptcy. Many bankruptcy attorneys did not follow up with their bankruptcy clients on having the deed out of their names and transferred into the mortgage lender’s name. Contact your mortgage lender and plead with them to get it transferred asap and follow up with it.
What If Lender Does Not Transfer Deed Out Of Your Name?
There are cases where a person’s filed bankruptcy and their foreclosure was part of their bankruptcy but the mortgage lender will not cooperate in getting the deed transferred and recorded to their name. I have seen cases where it was many years after the fact and the deed is still not transferred and recorded.
If a foreclosure is part of the bankruptcy, the mortgage note and deficiencies are totally wiped out and you technically own the home free and clear. In a way, it is stupid for the mortgage lender not to transfer the deed into their name. If the mortgage lender does not cooperate, mail them a certified letter stating the fact that they have 48 hours from the receipt of their certified letter that you intend on selling the home and keeping the proceeds if they do not transfer and record the deed into their name. This will shake them up and I am confident that the bank or mortgage lender will get their lazy butts in gear and have the deed transferred and recorded into their names asap. Technically, you have the deed to your home but no mortgage so you can sell the property and transfer and record the deed to the home out of your name to the name of the new buyer.
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