“Even After Bankruptcy, Banks Cause Much More Harm”

When someone goes through bankruptcy and there is real estate included, the ability to be able to get a mortgage in the future has many variables. The shortest distance between two points is usually and FHA mortgage. There are some basic guidelines.

There are a number of variables that I will not get into this post, but as mentioned here are the basics: 

1) You must wait 2 years after the BK. 

2) You must have re-established credit, preferably 3 accounts that show up on the credit report and a minimum of 580 credit scores. 

3) No late payments after the bankruptcy. 

4) A minimum of 36 months past the completion of the short sale or foreclosure. 

The biggest issue is the number 4. Many institutions don’t complete the foreclosures immediately, as a matter of fact, sometimes it takes them years and there is no real way to force them to do it sooner rather than later. Many have even attempted to do a deed in lieu of foreclosure, but this seldom works either. 

A client of mine moved from Hartford CT to Sarasota FL. He has filed bankruptcy in 2008 and the home he used to live in is still in his name and the foreclosure has still not happened. There have been attempts by him and his attorney to get this completed. At one time the value of this property was $350,000, when he files bankruptcy and moved out the value at the time was $200,000. The property has since been vandalized many times and would probably sell for under $100,000. The property taxes are about $8,000 per year, which the bank keeps paying.

If there is any sense to this, someone has to explain it to me. My client is not alone there are tens of thousands of people in the same boat. Most have done everything they can do to be a homeowner again, but are just plain stuck.