I filed individual BK7 back in 2009. There were two mortgage included but we "stayed and paid". Last year I began the process of settling the second mortgage because we were moving across the country and wanted to be able to sell the house. They finally agreed, they filed a lien release that shows they "received full payment and satisfaction of the same", and we have since moved. The old house is under contract now and will close next week most likely, which will satisfy the 1st.
On my credit reports, the 2nd mortgage trade lines are still showing Included in Bankruptcy as they should be. However, as an added twist - my wife did NOT file although she was on the 2nd. They incorrectly updated her trade line when I filed, which we disputed and it's been removed from 2 of the 3 CRAs. I've since disputed the third one again but it seems like a huge gamble as to how it will come back.
We are looking to buy a house in our new home state. The BK7 is seasoned enough for a conventional loan and we qualify credit and income wise.
I've been told by some that the settlement will cause an issue with underwriting and I'm a little worried. It wasn't a short sale, DIL, or foreclosure and no where on the URLA does it ask if you've settled recently.
Is this a show-stopper? Will the verbiage in the lien release be enough to move forward? Will getting this removed from that last CRA be sufficient to not draw additional attention during underwriting? We are looking to build and I don't want to get 8 months into this process just to find we can't close.