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Old 07-17-2012, 07:40 PM
1 posts, read 3,252 times
Reputation: 10


I am in a situation that i wish I wasn't in and didn't know if anyone had any advice or knowledge of the situation.

I divorced my husband in May 2008. Divorce granted him the home, including first and second mortgage. He was of course to refinance the loans in his name only within 2 years of the divorce. In October of 2009 I filed for Chapter 7 bankruptcy because I had taken a large chunk of debt and my ex-spouse decided to stop paying his child support and I couldn't afford day care without it. I have been living with my parent since prior to the divorce to help me support my two kids. My lawyer did have me include the first and second mortgages in my bankruptcy as a safety measure since my ex-husband was failing to get them refinanced and I told him I would be surprised if he was able to keep up the payments or keep the home nice to where I would want to take it back over.

Those fears did come true, my ex-husband is now in pre-foreclosure on his home. I was served a court summons concerning the foreclosure since my name is still on the mortgage. The summons clearly states that I had filed Chapter 7 bankruptcy and therefore no personal liability could be held against me for any loan balance. I have also read the mortgages and joint creditors are not held to divorce decrees and there is nothing I can probably do to keep this foreclosure from hitting my credit report (although I had it in my bankruptcy that hit my credit report back in 2009).

To make matters worse I have worked really hard the last 4 years to rebuild my credit and even have a decent credit score with the bankruptcy showing. I had started the process of purchasing a new home with an FHA loan, that I had gotten pre-approved for even with the bankruptcy since it was more than 2 years old. I put a contract on a home, put my $1000 earnest money down, paid for the appraisal and inspection, and was just getting the last of my paperwork to my lender when I was served with the summons about the foreclosure on my ex-husbands house.

Lender is still waiting to hear back from FHA Legal department to determine if this will kill my ability to qualify and close the FHA loan. I have been on pins and needles waiting for the response. I have prepared myself for the fact that it will change my qualification to Not Qualified.

Has anyone ever experienced this or have any knowledge about it? Should I call a lawyer to see if it is possible to not be named as a defendent in the foreclosure or is that just a waste of time and there is nothing they can do? Or is there any chance of getting my new mortgage approved through FHA?

If anyone has information or advice it would be appreciated.
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Old 07-18-2012, 09:04 AM
Location: Rural Michigan
6,343 posts, read 13,743,519 times
Reputation: 10538
I think your loan officer has the right idea - the loan has to be foreclosed to get your name, and the second mortgage's security interest off the deed. Even if you were to "deed back" your interest in the home, the second mortgage is a problem as well.

It isn't a punitive step by the lender, they have to do what they're doing. That said, there are some weird situations like yours that will require an exception to the rules that can only come from FHA. Normally, the bk and the foreclosure are happening at nearly the same time & fha's "clock" begins ticking when the loss is claimed in fha's system.
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