Best Way To Buy A New House While Underwater After Bankruptcy & Hamp W/ Heloc


LoanSafe Member
Jul 7, 2015
We have outgrown our current home and need to move to a larger one, but my townhouse is worth about $150,000 and I owe about $375,000 on it. Any advice on the best way to move would be appreciated.

There are lots of restrictions about how many years must pass after bankruptcy, foreclosure, DIL, etc. before you can get another mortgage. Currently I do not run afoul of any of these. It would probably be best to keep it that way until I have closed on the new house.

The "Uniform Residential Loan Application" asks the following two questions. Currently I can answer "No" to each of them. It would probably be best to keep it that way until I have closed on the new house.
Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?
Are you presently delinquent or in default on any Federal debt or any other loan, mortgage, financial obligation, bond, or loan guarantee?

So basically I'm thinking it would be best to find and close on a new house before doing anything drastic with my old one, however, the bankruptcy means I have no personal liability for the mortgages on my existing property. My mortgage company has made it clear that they consider my payments to be voluntary. They don't even send me monthly statements. I'm wondering if I even need to list the current mortgages on the application, and if I were to stop paying if I would be considered delinquent or in default.

I did a HAMP modification on my 1st mortgage, and expected to do 2MP on the HELOC, but Citibank did not automatically contact me as I expected them to, and when I called them, after being transferred a number of times, they stated that because the HELOC is in charge-off state (they are not charging me any fees or interest and not pursuing collection) it does not qualify for 2MP. They will not release the lien and want to be paid off when the house is sold.

My credit score is around 710. Due to the bankruptcy, neither of the mortgages show recent activity and will be removed from my credit report soon due to 7 years having passed.

November 2005 $200,000 refi from CitiMortgage
October 2007 $124,000 HELOC from Citibank
August 2008 I stopped making debt payments
September 2010 I filed for chapter 7 bankruptcy
January 2011 Bankruptcy discharge
July 2014 HAMP modification permanent
October 2014 1st mortgage transferred to Seterus
August 2015 Both mortgages will fall off my credit report

Currently owe:
234,000 Seterus Interest Bearing Principal Balance
17,000 Seterus Deferred Principal Balance
124,000 Citibank HELOC

Thank you in advance for any assistance you can provide.

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
Southern California

It could be possible to get a new mortgage depending on several qualifying factors. Any lender that you apply with for a new home loan will ask for the mortgage history on your previous mortgage regardless if it shows no activity. This subject will definitely come up very soon.

There are lenders will offer you a new mortgage one day after bankruptcy and or foreclosure. My understanding is that you would need a 680 FICO score or above which you have and you would also need anywhere from a minimum of 20 to 30% down payment to purchase the new home. For some people that is a lot of money and for others it is not a problem.

There is also the FHA Back to Work Program that offers loans one-year after foreclosure and or bankruptcy. They do not care so much about the credit score as much as to why you had the foreclosure or bankruptcy. To qualify you have to prove that it was the result of a drop in income that cause the financial difficulties.