Five years after bankruptcy, lender kyboshes borrower’s home purchase
Tribune Content Agency Q:
I filed bankruptcy in 2008. In November 2013, while in the process of purchasing a new home, I was informed that because there was no official foreclosure on the home in 2008, I cannot purchase another home for three years.
Apparently, the lender did not remove the home from my name after the bankruptcy. As it happens, I had actually filed Chapter 13 in 2005 and had it changed to Chapter 7 in 2008.
Do I have any options at this time? The house we would like to purchase is still on the market, and we need help. This is the only issue that came up with the loan. We actually had closing date set for Nov. 25, and this came up Nov. 21 Any help would be deeply appreciated. A:
It’s unfortunate that you didn’t check your credit history after bankruptcy to make sure that the loan had been discharged or to see any matters relating to your bankruptcy that affected your credit history. That would have been an early indication that you needed to tie up some loose ends.
It would seem that the discharge should have effectively removed you as owner on the property and for responsibility for the loan. However, even though you no longer owed the debt, you continued to own the home until title to the home transferred to your prior lender, was sold in a short sale, or was given to your lender in a deed-inlieu of foreclosure. Sure, you no longer owed the debt on the home, but you still owned that home.
If you owned the home during the bankruptcy and the lender did not move to foreclose on the home, the lender seems only recently to have foreclosed and obtained title to the home. For purposes of your credit history, the foreclosure or other process the lender went through to get title to the home seems to have occurred more recently than the date of your Chapter 7 bankruptcy. Many lenders start the clock running from the date they obtain title to a home via foreclosure or otherwise to then give you the opportunity to buy a subsequent property.
If the lender actually has failed to comply with the bankruptcy court process or has undertaken other actions that do not comply with the standards that the bank should have met, we can suggest a couple of actions, though none of them will resolve this overnight. First, if the lender is regulated by the OCC, as big national banks are, you can go to HelpWithMyBank.gov and file a complaint. Ask the OCC to intervene to straighten out the paperwork with the bank. You can also file a complaint with the Consumer Finance Protection Bureau (CFPB.gov) and ask for its help as well. If the lender is a state bank, you can go to the state agency that regulates lenders and ask the ombudsman to assist you in connecting with the lender to straighten out the paperwork.
You might also try to use the legal system against the lender. Consider either hiring an attorney to file a lawsuit against the lender or sue on your own in small claims court. Just filing a lawsuit might have the desired effect of getting the lender’s attention, at which point you might be able to straighten out the problem quickly.
Hopefully, one of these ideas will work and you’ll be able to buy a home sooner rather than later -but it may take more than a few weeks to get it done. Good luck.
(Ilyce Glink is the creator of an 18-part webinar and ebook series called “The Intentional Investor: How to be wildly successful in real estate,” as well as the author of many books on real estate. She also hosts the “Real Estate Minute,” on her YouTube.com/ expertrealestatetips channel. If you have questions, you can call her radio show toll-free (800-972-8255) any Sunday, from 11a-1p EST. Contact Ilyce and Sam through her website, www.thinkglink.com.)
(c) 2014 Ilyce R. Glink and Samuel J. Tamkin. Distributed by Tribune Content Agency, LLC.