What happens when you're foreclosed on? (Atlanta, Forsyth: foreclosure, mortgage, bad credit)

[johnishere]

Originally Posted by mrdkb

7 to 10 years. Where do we come up with this stuff. 3-4 years. I used to be an underwriter and trust me - when banks are lending you can get a mortgage 2 years after filing for bankruptcy - with a higher rate.

3 - 4 years? Where does THIS guy come up with this stuff. As neil0311 said, the OP didn't limit the effect of the post to whether they could get another mortgage (in 3 - 4 years IF banks are lending). The overall concern will be their credit rating overall. And "yes", while it once was true that you could get another mortgage 3 - 4 years after even a bankruptcy, HAVE YOU READ A NEWSPAPER LATELY? 12 months ago, many lenders were baselining 720 FICO before they would CONSIDER approving financing. Recently, some lenders have up'd the baseline to 740! Why do you think car dealers can't move cars? You've got PLENTY of people with "A" rated credit, been employed for 20 years solid, WITH $5K, $10K cash who can't buy a new car because their FICO is ONLY 700. As far as getting a mortgage in today's credit-locked market with anything less than a 700 FICO

Regarding credit history, 7 years is the correct time table that SIMPLE NEGATIVE items and legal judgments will remain on your credit report. Bankruptcies will remain on your credit report for 10 years. That will affect getting all sorts of financing as it will bring down your FICO, and more and more credit decision lending is becoming FICO driven, and less "discretion approved". ALSO keep in mind that many EMPLOYERS are using your credit report as part of their hire-audit process. Landlords and apartment owners also screen prospects based on credit report.... etc..... blah..... etc

Excerpt from the FAIR CREDIT REPORTING ACT [FCRA ~ Federal laws regarding credit reporting.]

§ 605. Requirements relating to information contained in consumer reports [15 U.S.C. §1681c]

(a) Information excluded from consumer reports. Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information:

(1) Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years.
(2) Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period.
(3) Paid tax liens which, from date of payment, antedate the report by more than seven years.
(4) Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.

.

[kaday]

There is such a thing as personal responsibilty these days isn't there? Every investment carries risk. I know banks aren't high on everyones list right now but really is it fair to saddle them with the loss? The attitude that if someone has to lose it may as well not be me is pretty disturbing. Buy a car now before your credit is trashed? What happens when they can't pay that bill? Walking away is extremely irresponsble and part of the mess we are in right now. Rent it out and pay the difference.

[noah]

While it isn't ideal in a divorce how about renting it for $1,200 and eating the $300 between the two of you, plus it will be a tax write off. May or may not be a better option then walking away. Remember in this case you will be slowly paying down the mortgage as well. Otherwise you may have to end up paying the bank $20k or even more because of the market they will be selling in plus you wreck your credit if that is important to you.

Originally Posted by loganvillechick

My friend is going through a divorce and neither she or her husband are able to afford their house on their own. So, their options are to live together (not happening) or try to sell. Well, their house has been on the market quite a while and of course, it's going nowhere. They owe about $20,000 more on it than it's worth in this economy. They can't really rent it for the mortgage payment - payment is about $1500 and the houses in their area rent for about $800 to $1200 max.

She and her ex are thinking of just walking away. What happens when someone gets foreclosed on? Do they get sued or does the loan company just sell the house for a reduced amount and that's it or what? I mean, I know their credit will be ruined, I'm just not sure of the legal ramifications.

They have a home equity line on the house, too so does it make a difference if you have 2 mortgages?

[mrdkb]

Originally Posted by johnishere

3 - 4 years? Where does THIS guy come up with this stuff. As neil0311 said, the OP didn't limit the effect of the post to whether they could get another mortgage (in 3 - 4 years IF banks are lending). The overall concern will be their credit rating overall. And "yes", while it once was true that you could get another mortgage 3 - 4 years after even a bankruptcy, HAVE YOU READ A NEWSPAPER LATELY? 12 months ago, many lenders were baselining 720 FICO before they would CONSIDER approving financing. Recently, some lenders have up'd the baseline to 740! Why do you think car dealers can't move cars? You've got PLENTY of people with "A" rated credit, been employed for 20 years solid, WITH $5K, $10K cash who can't buy a new car because their FICO is ONLY 700. As far as getting a mortgage in today's credit-locked market with anything less than a 700 FICO

Regarding credit history, 7 years is the correct time table that SIMPLE NEGATIVE items and legal judgments will remain on your credit report. Bankruptcies will remain on your credit report for 10 years. That will affect getting all sorts of financing as it will bring down your FICO, and more and more credit decision lending is becoming FICO driven, and less "discretion approved". ALSO keep in mind that many EMPLOYERS are using your credit report as part of their hire-audit process. Landlords and apartment owners also screen prospects based on credit report.... etc..... blah..... etc

Excerpt from the FAIR CREDIT REPORTING ACT [FCRA ~ Federal laws regarding credit reporting.]

§ 605. Requirements relating to information contained in consumer reports [15 U.S.C. §1681c]

(a) Information excluded from consumer reports. Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information:

(1) Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years.
(2) Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period.
(3) Paid tax liens which, from date of payment, antedate the report by more than seven years.
(4) Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.

.

I have been an underwriter for years so I know what I am talking about.
READ AND LEARN:
You are basing your analysis on current lending/credit standards by banks, which in effect actually has decreased the value of good credit. This situation is only temporary - if you believe the country will turn around. Given the temporary status of "low value" good credit - why should a person care to maintain something (credit - that could cost them tens of thousands of dollars to maintain via the mtg) that has lost value. Further, in time (3-4 years), her credit will go up - probably during the same time when credit standards are loosened and credit is more accessible - assuming the country turns around. The point is - it maybe too expensive (i.e. the mtg, opportunity costs) to maintain the credit rating, which has alrerady lost value as you have pointed out. So walk away now (short sale or mail in the keys); take the credit ding; don't worry about your credit score because credit scores and credit access are currently being calibrated to the economic environment; maintian a job and all other credit obligations for the next three to four years and if your current score is lets say 700 and drops to 450, in 3-4 years it will increase to the low 600's. I read thousands of credit reports (for the mis-informed) and have seen several scores in the 600's and even low 700's with a foreclosure that's 3-4 years old. Again if the foreclosure is the only ding do not lose sleep over it or worry about these folks on here crying about personal responsiblilty. Conservatives/republicans always do that and they are the most crooked people.

[mrdkb]

Final thought: Years ago, before the credit boom, my younger brother filed for bankruptcy (he didn't have to but it was the American way; that is before Bush changed the bakruptcy laws during the the easy and seductive-credit for-everyone-market). He got a mortgage TWO years later. With 3% down. I have personally underwritten mortgages for borrower's that have a bankruptcy or a foreclosure and another mortgage is granted as long as there are no credit impairments or lates in the last 24 months. My guess is that over the next few years this number may change to 36-48 months. WHO CARES!!!!

[mrdkb]

Georgia is of course on the List - Thanks Metro Atlanta (GWINNETT, COBB, FORSYTH, CHEROKEE, FULTON, ETC...) for terrific planning.

*** THIS: MAIL IN THE KEYS!!!

One in five U.S. mortgage borrowers are underwater



By Jonathan Stempel
Reuters - A foreclosed home is shown in Corona, California in this December 18, 2008 file photo. One in five ...


NEW YORK (Reuters) - One in five U.S. homeowners with mortgages owe more to their lenders than their properties are worth, and the rate will increase as housing values drop in states that have so far avoided the worst of the crisis, a new study shows.
About 8.31 million properties had negative equity at the end of 2008, up 9 percent from 7.63 million at the end of September, according to the study, released Wednesday by First American CoreLogic. The percentage of "underwater" borrowers rose to 20 percent from 18 percent.
Another 2.16 million properties could go underwater if home prices fall another 5 percent, the study shows.
First American said the value of residential properties fell to $19.1 trillion at year-end from $21.5 trillion a year earlier, with half the decline in California. Forty-three U.S. states and Washington, D.C., were included in the study.
While states such as California, Florida and Nevada were particularly stressed, the study showed worrying signs of deterioration in relatively healthy parts of the nation.
"The economic slowdown is broadening," said Sherrill Shaffer, a banking professor at the University of Wyoming at Laramie and a former Federal Reserve official. "As more people lose jobs, it will be more difficult to sustain the levels of pricing and home ownership, and that is a big factor driving down housing prices in more parts of the country."
Arizona, California, Florida, Georgia, Michigan, Nevada and Ohio remained the most stressed states, with 62 percent of underwater borrowers and just 41 percent of mortgages.
Other areas, though, also face more stress. Connecticut, for example, saw a 25 percent increase in homes with negative equity, while Washington, D.C., had a 44 percent increase.
"Even I continue to be surprised at the tentacles of this financial and economic debacle," said Robert MacIntosh, chief economist at Eaton Vance Management in Boston. "More people are being laid off, resulting in reduced income and therefore less consumption. That leaves fewer people with money to buy homes, and the mentality is that people believe they should wait six months rather than buy now. Less demand means falling prices."
Roughly 68 percent of U.S. adults own their own homes, and about two-thirds of these have mortgages. Many economists expect the nation's unemployment rate to rise above 9 percent before the recession ends, up from January's 7.6 percent.
CALIFORNIA, NEVADA UNDER STRESS
California had 1.9 million borrowers with negative equity at year-end, more than any other state, followed by Florida's 1.28 million. About three in 10 borrowers in both states were underwater.
By other measures, Nevada was the most stressed, with 55 percent of owners having negative equity and borrowers on average owing 97 percent of what their homes are worth. About 28 percent owe more than 125 percent of their homes' value.
Michigan had 40 percent of its homeowners underwater, while Arizona had 32 percent.
New York fared best, with just 4.7 percent of borrowers with negative equity and an average 48 percent loan-to-value ratio, though this could change as employment and bonuses slide in the financial services industry.
According to the S&P/Case-Shiller Home Price Indices, prices of U.S. single-family homes slumped 18.5 percent in December from a year earlier, the biggest drop in the 21-year history of the data.
Many lenders are taking steps to keep borrowers out of foreclosure. The Obama administration has backed legislation that could broaden powers of bankruptcy judges to modify mortgages for troubled borrowers. Among major lenders, only Citigroup Inc has supported such a plan.
MacIntosh expects housing prices to keep falling until "well into" 2010. "There is no magic bullet or magic arrow here," he said. "It is a question of trying to come up with ideas and seeing what happens. It could take a long time."
First American CoreLogic is an affiliate of title insurance and real estate services company First American Corp.

[AcidSnake]

Originally Posted by mrdkb

Final thought: Years ago, before the credit boom, my younger brother filed for bankruptcy (he didn't have to but it was the American way; that is before Bush changed the bakruptcy laws during the the easy and seductive-credit for-everyone-market). He got a mortgage TWO years later. With 3% down. I have personally underwritten mortgages for borrower's that have a bankruptcy or a foreclosure and another mortgage is granted as long as there are no credit impairments or lates in the last 24 months. My guess is that over the next few years this number may change to 36-48 months. WHO CARES!!!!

Makes perfect sense to me. How can anyone argue with this logic?

[mrdkb]

Originally Posted by AcidSnake

Makes perfect sense to me. How can anyone argue with this logic?

Thanks


I am amazed at the folks on here talking about personally responsibility when the mortgage crisis in metro atlanta is primiarily linked to an excess suppy of homes (i.e. Ronald Reagan thinking on the suppy side stuff) that was approved via building permits by republican-conservatives (i.e, Gwinnett, Cobb, N. Fulton, Forsyth. etc....). IDIOTS. And now they want this poor gal to walk the walk of personal responsibility. F- That!!!. I recently spoke to a realtor in a subvision with homes that once sold in to $600k-$700k range and she told me that the banks FORGAVE the builders who could not sell the homes and defaulted on the loans - and then took possession of the properties. That bank was then taken over by another bank. NO CREDIT DING; NO DEFICIENCY BALANCE; NO NOTHING. And I'm sure the original bank executives/board (which was local to GA) walked away with there retirement $$$, cash, and houses. So you idiots are going to lecture this poor women about personal responsibility. Well it is personal responsibility. She is responsible for herself. Just like when a bank forecloses on a property and the sells/auctions it off it .50 cents on the dollar, negatively effecting entire neighborhoodss/subdivisons while receiving taxpayer money. IDIOTS!!!!

[jjbradleynyc]

Originally Posted by mrdkb

I have been an underwriter for years so I know what I am talking about.
READ AND LEARN:
You are basing your analysis on current lending/credit standards by banks, which in effect actually has decreased the value of good credit. This situation is only temporary - if you believe the country will turn around. Given the temporary status of "low value" good credit - why should a person care to maintain something (credit - that could cost them tens of thousands of dollars to maintain via the mtg) that has lost value. Further, in time (3-4 years), her credit will go up - probably during the same time when credit standards are loosened and credit is more accessible - assuming the country turns around. The point is - it maybe too expensive (i.e. the mtg, opportunity costs) to maintain the credit rating, which has alrerady lost value as you have pointed out. So walk away now (short sale or mail in the keys); take the credit ding; don't worry about your credit score because credit scores and credit access are currently being calibrated to the economic environment; maintian a job and all other credit obligations for the next three to four years and if your current score is lets say 700 and drops to 450, in 3-4 years it will increase to the low 600's. I read thousands of credit reports (for the mis-informed) and have seen several scores in the 600's and even low 700's with a foreclosure that's 3-4 years old. Again if the foreclosure is the only ding do not lose sleep over it or worry about these folks on here crying about personal responsiblilty. Conservatives/republicans always do that and they are the most crooked people.

Great information! Thanks for giving us the "inside scoop!"

[jjbradleynyc]

Originally Posted by mrdkb

Thanks


I am amazed at the folks on here talking about personally responsibility when the mortgage crisis in metro atlanta is primiarily linked to an excess suppy of homes (i.e. Ronald Reagan thinking on the suppy side stuff) that was approved via building permits by republican-conservatives (i.e, Gwinnett, Cobb, N. Fulton, Forsyth. etc....). IDIOTS. And now they want this poor gal to walk the walk of personal responsibility. F- That!!!. I recently spoke to a realtor in a subvision with homes that once sold in to $600k-$700k range and she told me that the banks FORGAVE the builders who could not sell the homes and defaulted on the loans - and then took possession of the properties. That bank was then taken over by another bank. NO CREDIT DING; NO DEFICIENCY BALANCE; NO NOTHING. And I'm sure the original bank executives/board (which was local to GA) walked away with there retirement $$$, cash, and houses. So you idiots are going to lecture this poor women about personal responsibility. Well it is personal responsibility. She is responsible for herself. Just like when a bank forecloses on a property and the sells/auctions it off it .50 cents on the dollar, negatively effecting entire neighborhoodss/subdivisons while receiving taxpayer money. IDIOTS!!!!

LOL...you make a great point!