Foreclosure...

[stonewall22]

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Just a VERY little about my situation. My wife and I bought a house 3 years ago, before the market tanked. I will be starting medical school in the fall, so our income will drop to nearly nothing. We put $5000 into our home to try and make it more attractive to potential buyers, and were willing to walk away from the home allowing interested buyers to simply take over payments, meaning we'd sacrifice our down payment to get out of the house. We tried for a year to sell and never even received a single offer.

My primary interest is in the Army National Guard program, and I know on the application it asks if you are (or ever have been) 90+ days behind on payments. We've fought to keep the house, but foreclosure appears to be practically the only thing we can do at this point.

Would having a foreclosure prevent me from joining the military? Thanks!

 

[DogFaceMedic]

No, but you need to explain it properly. Bankruptcy is far worse because it is a bad red flag for security clearances. THe number one, by far, reason people compromise American security, sell secrets, or steal, is bad debt from bad spending habits. Foreclosure in this market is not necessarily from bad habits, it is bad luck. I pray good luck finds you soon.

 

[stonewall22]

No, but you need to explain it properly. Bankruptcy is far worse because it is a bad red flag for security clearances. THe number one, by far, reason people compromise American security, sell secrets, or steal, is bad debt from bad spending habits. Foreclosure in this market is not necessarily from bad habits, it is bad luck. I pray good luck finds you soon.

Thank you for the response.

 

[IgD]

You have to be eligible for a secret security clearance to become a medical officer. Bad debts can impact eligibility. I don't know what the rules are but would recommend you look into this...

 

[IgD]

Here is what I found:

Before starting the process of filling out the SF-86, you should be aware of things that can cause denial of your clearance
To prepare for filling out the SF 86, and the investigation and interview that will follow, you should review the Disqualifying Conditions in DoD Directive 5220.6.

Here are some of the Disqualifying Conditions:

"Guideline B, Foreign Influence"
"An immediate family member, or a person to whom the individual has close ties of affection or obligation, is a citizen of, or resident or present in, a foreign country" [E2.A2.1.2.1]
"Guideline C, Foreign Preference"
"The exercise of dual citizenship" [E2.A3.1.2.1]
"Possession and/or use of a foreign passport" [E2.A3.1.2.2]
"Guideline F, Financial Considerations"
"A history of not meeting financial obligations" [E2.A6.1.2.1]
"Inability or unwillingness to satisfy debts" [E2.A6.1.2.3]
"Guideline G, Alcohol Consumption"
"Alcohol-related incidents away from work, such as driving while under the influence, fighting, child or spouse abuse, or other criminal incidents related to alcohol use" [E2.A7.1.2.1]
"Guideline H, Drug Involvement"
"Any drug abuse" (see above definition) [E2.A8.1.2.1]
"Illegal drug possession, including cultivation, processing, manufacture, purchase, sale, or distribution" [E2.A8.1.2.2]
"Guideline J, Criminal Conduct"
"Allegations or admission of criminal conduct, regardless of whether the person was formally charged" [E2.A10.1.2.1]​

 

[DrMetal]

The keywords above are "history" and "debts" (plural).

If the foreclosure is the only ding on your credit report (albeit a big ding), and if you're honest about it in your security application, you should be ok to get a secret (or even a TS/SCI) clearance.

I've been the divo of a couple of sailors who (unforunately) lost their security clearances, so I have some background here. They lost it not b/c of their bad credit, but b/c they lied or weren't forethcoming about it on their security applications (btw, there is an appeals process, through which we were eventually able to secure back their clearances. It involves going to DONCAF in DC and pleading their case, good times!).

Anyway, the moral of the story is: Be very honest on the application, be forethcoming. Even if not asked directly "Have you ever had a foreclosure?", voluntarily divulge that and explain what happened (as you did above, and with more detail). The security gods will appreciate your honesty and frakness. They'll process your app quickly and get you cleared.

But if you fail to divulge that, they'll easily pick it up from your credit report and ping you pretty bad.

Same goes for any other legal issues . . I've seen people with DUIs get their clearance re-newed b/c they were honest about, explained themselves, and demonstrated redemption.

[the caveat to this is the case of really really bad credit: ie multiple foreclosures, 6-figure credit card debt, bankruptcy. In this case, you can be as honest as you want, you still wont get cleared . . .and that's probably a good thing, in the interest of national security.]

 

[Octagonecology]

The keywords above are "history" and "debts" (plural).

If the foreclosure is the only ding on your credit report (albeit a big ding), and if you're honest about it in your security application, you should be ok to get a secret (or even a TS/SCI) clearance.

I've been the divo of a couple of sailors who (unforunately) lost their security clearances, so I have some background here. They lost it not b/c of their bad credit, but b/c they lied or weren't forethcoming about it on their security applications (btw, there is an appeals process, through which we were eventually able to secure back their clearances. It involves going to DONCAF in DC and pleading their case, good times!).

Anyway, the moral of the story is: Be very honest on the application, be forethcoming. Even if not asked directly "Have you ever had a foreclosure?", voluntarily divulge that and explain what happened (as you did above, and with more detail). The security gods will appreciate your honesty and frakness. They'll process your app quickly and get you cleared.

But if you fail to divulge that, they'll easily pick it up from your credit report and ping you pretty bad.

Same goes for any other legal issues . . I've seen people with DUIs get their clearance re-newed b/c they were honest about, explained themselves, and demonstrated redemption.

[the caveat to this is the case of really really bad credit: ie multiple foreclosures, 6-figure credit card debt, bankruptcy. In this case, you can be as honest as you want, you still wont get cleared . . .and that's probably a good thing, in the interest of national security.]

I believe this is unfortunate. In this economy there are thousands of bankrupcties and foreclosures everyday that effect good decent hardworking people.

Im in a similar situation I was laid off from work and my g/f who I was sharing a condo with (in my name) ran off with someone from work. I had to let the condo go to foreclosure and will possibly have to file bankruptcy. I had no choice. I am applying to the military programs but fear I will get denied which is a shame because I believe I would make an excellent military doctor.

 

[DrMetal]

Im in a similar situation I was laid off from work and my g/f who I was sharing a condo with (in my name) ran off with someone from work. I had to let the condo go to foreclosure and will possibly have to file bankruptcy.

Whoa! Man, you need a drink. I recommend irish whiskey: smooth, right to the point.

Well, I don't know exactly where they draw the line between "bad-but-forgiveable credit" and "bad-unforegiveable credit". And for some communities, medical/staff etc, they may be more foregiving (you're not going to have much access to class material anyway).

So, even in your case, if you're honest and clear about your situation, you could still get cleared for a secret clearance (TS would be harder, but who cares . . .I can't think of a situ where a doc really needs a TS clearance anyway). I wouldn't let this deter you; tell your recruiter about it too, so he/she knows how to prep your application. Also ask your recruiter if you can speak with their command's security manager (called an 'SSO'). If you'd like, PM me your contact info and I can inquire about it too with my SSO.

 

[Octagonecology]

Whoa! Man, you need a drink. I recommend irish whiskey: smooth, right to the point.

Well, I don't know exactly where they draw the line between "bad-but-forgiveable credit" and "bad-unforegiveable credit". And for some communities, medical/staff etc, they may be more foregiving (you're not going to have much access to class material anyway).

So, even in your case, if you're honest and clear about your situation, you could still get cleared for a secret clearance (TS would be harder, but who cares . . .I can't think of a situ where a doc really needs a TS clearance anyway). I wouldn't let this deter you; tell your recruiter about it too, so he/she knows how to prep your application. Also ask your recruiter if you can speak with their command's security manager (called an 'SSO'). If you'd like, PM me your contact info and I can inquire about it too with my SSO.

Wow, thats nice of you. I appreciate it.

 

[The White Coat Investor]

Just a VERY little about my situation. My wife and I bought a house 3 years ago, before the market tanked. I will be starting medical school in the fall, so our income will drop to nearly nothing. We put $5000 into our home to try and make it more attractive to potential buyers, and were willing to walk away from the home allowing interested buyers to simply take over payments, meaning we'd sacrifice our down payment to get out of the house. We tried for a year to sell and never even received a single offer.

My primary interest is in the Army National Guard program, and I know on the application it asks if you are (or ever have been) 90+ days behind on payments. We've fought to keep the house, but foreclosure appears to be practically the only thing we can do at this point.

Would having a foreclosure prevent me from joining the military? Thanks!

I'm sorry you're having to go through this.

I find it interesting to see people blame others or "the market" for their financial issues. You overpaid for a house. Then you tried to sell it for more than it was worth. While it may seem gracious to you to "sacrifice your down payment", in reality, that was already gone by that time whether you wanted to sacrifice it or not. Any home can sell if you drop the price low enough. You clearly weren't willing to sell at market value. That's your choice, but if you aren't willing to sell you have to make the payments.

You also apparently got into a home without an income secure enough to make future payments. I assume you were considering going to medical school or something 3 years ago since you're now looking at the national guard program. People who are students or are planning to be students in the near future probably aren't in a secure enough position to be buying a home, especially in the middle of a housing bubble (don't kid me that you never heard that term in 2006, San Diego had already been going downhill for a year by then and most of the rest of the country was peaking that summer. I bought a house that year and was very aware of the bubblicious nature of housing.)

Everyone seems to be a victim these days. This is absolutely nothing personal against you, because I hear the phrases you're using every day in real life and on the internet and everyone nods their head and agrees, "Yeah, you got screwed." Well, I disagree. Don't buy a house without 20% down. Don't buy a house you're not going to be in for a long time. Don't buy a house without the means to make payments on it for a long time. Don't pay more than a house is worth. Not sure how much it's worth? How much would it cost to rebuild it? How much can it be rented for? If the rent isn't anywhere near covering a mortgage for 80% of its value, you've got to consider that maybe you're paying too much.

Sure, some people truly had something unfortunate happen to them. They were laid off and unable to get a job for a long time, or disabled and their disability insurance refused to cover them, or their spouse ran off on them or whatever. But it seems like most people just made a few bad financial decisions, spurred on by unethical realtors and mortgage brokers. Common bad financial decisions:

1) Putting nothing down
2) Buying a house when only planning to be in it a few years
3) Buying a house without being established in a career
4) Running up a bunch of consumer debt
5) Buying a house without adequate life/disability/liability coverage
6) Buying too much house

What the heck was ever wrong with renting? Something goes wrong, you walk away, lose a couple hundred bucks deposit, and go live in an apartment for a while while you reboot.

Anyway, rant over. And of course nothing personal toward you, just some general observations about dozens of similar situations I have heard about. Good luck with your career goals and starting over financially. Better to make big financial mistakes when you're young. I doubt this little thing would keep you out of military medicine.

 

[IgD]

Stonewall, have you tried renting your house? Maybe you could cover the mortgage payment.

 

[punkiedad]

I'm sorry you're having to go through this.

I find it interesting to see people blame others or "the market" for their financial issues. You overpaid for a house. Then you tried to sell it for more than it was worth. While it may seem gracious to you to "sacrifice your down payment", in reality, that was already gone by that time whether you wanted to sacrifice it or not. Any home can sell if you drop the price low enough. You clearly weren't willing to sell at market value. That's your choice, but if you aren't willing to sell you have to make the payments.

You also apparently got into a home without an income secure enough to make future payments. I assume you were considering going to medical school or something 3 years ago since you're now looking at the national guard program. People who are students or are planning to be students in the near future probably aren't in a secure enough position to be buying a home, especially in the middle of a housing bubble (don't kid me that you never heard that term in 2006, San Diego had already been going downhill for a year by then and most of the rest of the country was peaking that summer. I bought a house that year and was very aware of the bubblicious nature of housing.)

Everyone seems to be a victim these days. This is absolutely nothing personal against you, because I hear the phrases you're using every day in real life and on the internet and everyone nods their head and agrees, "Yeah, you got screwed." Well, I disagree. Don't buy a house without 20% down. Don't buy a house you're not going to be in for a long time. Don't buy a house without the means to make payments on it for a long time. Don't pay more than a house is worth. Not sure how much it's worth? How much would it cost to rebuild it? How much can it be rented for? If the rent isn't anywhere near covering a mortgage for 80% of its value, you've got to consider that maybe you're paying too much.

Sure, some people truly had something unfortunate happen to them. They were laid off and unable to get a job for a long time, or disabled and their disability insurance refused to cover them, or their spouse ran off on them or whatever. But it seems like most people just made a few bad financial decisions, spurred on by unethical realtors and mortgage brokers. Common bad financial decisions:

1) Putting nothing down
2) Buying a house when only planning to be in it a few years
3) Buying a house without being established in a career
4) Running up a bunch of consumer debt
5) Buying a house without adequate life/disability/liability coverage
6) Buying too much house

What the heck was ever wrong with renting? Something goes wrong, you walk away, lose a couple hundred bucks deposit, and go live in an apartment for a while while you reboot.

Anyway, rant over. And of course nothing personal toward you, just some general observations about dozens of similar situations I have heard about. Good luck with your career goals and starting over financially. Better to make big financial mistakes when you're young. I doubt this little thing would keep you out of military medicine.

was actually gonna post similar thoughts earlier, but did not have the b**ls and didnt want to be the only one.........I decided to go the non trad pre med route over three years ago. First thing I did was sell the big house and buy a more moderate house. When interest rates just went down during q4 last year, I locked in and refinanced at 4.5% for 15 years. So, by the time I am done with residency the house will be almost 1/2 paid off. Didn't refinance until I had my control number for ASR program, as I was also loooking at HPSP and didn't want to refi if I was going to have to move and do a military residency somewhere.

Not trying to point fingers either, but I saw those ads for the pay option ARM mortgages. I think a lot of people put themselves into shaky positions. Even if people could afford the house they are in, whatever happened about planning for contingencies? I don't want to rant either, but look at it from the other side, some people did all th right things. I am sure my wife would have loved to stay in our big new house and the kids would love the pool we used to have, but it was not the responsible thing to do. My family sacrificed in order to allow me to go to medical school and achieve my dream. Now the mortgage CRISIS causes a need for a bailout and I have to pay for that too???? I get very curious when I here the word VICTIM h in these cases. Sometimes I feel like a victim for doing the responsible thing.

rant over.........OP. Did you try calling your lender? I know you have to by humble, but realize, they do not want to own your house anymore than you do. And, now there are programs that may help at least until you can get out from under it. Otherwise, look at a non trad route like an auction online? I have also hear of people doing raffles and such. I would not rule anything out. Also, as far the the ASR program for the National Guard, I would get your paperwork in ASAP if you are considering. There is a wait list, but hopefully there will be 200 spots opening up on OCT 1st, but that funnell is filling up daily. It took me 6 months to get my packet done, but if you have everything working simultaneously you could get it done quicker. Feel free to PM me if you want any guidance to get stuff in the funnel to help make things move more quickly.

 

[notdeadyet]

A foreclosure is a blight on your application but probably not a deal killer. Make sure it's one of the only red flags and you'll probably be fine.

If it sets off an interview, DO NOT claim victim status. Buying a house when your combined income will soon be "nearly nothing" is a bad judgment call. It's definitely forgivable, but trying to give the impression that you're blameless (or god forbid uttering the phrase "it's not my fault") will do you more damage.

Be accountable for your mistake, indicate the steps you're taking to rectify it, show how you are moving forward in a way that it won't be replicated, and demonstrate that this one bad call is an anomaly and not part of a pattern that they need to worry about.

Best of luck. Fess up, do a mea culpa, and you'll probably be fine.

 

[stonewall22]

I'm sorry you're having to go through this.

I find it interesting to see people blame others or "the market" for their financial issues. You overpaid for a house. Then you tried to sell it for more than it was worth. While it may seem gracious to you to "sacrifice your down payment", in reality, that was already gone by that time whether you wanted to sacrifice it or not. Any home can sell if you drop the price low enough. You clearly weren't willing to sell at market value. That's your choice, but if you aren't willing to sell you have to make the payments.

You also apparently got into a home without an income secure enough to make future payments. I assume you were considering going to medical school or something 3 years ago since you're now looking at the national guard program. People who are students or are planning to be students in the near future probably aren't in a secure enough position to be buying a home, especially in the middle of a housing bubble (don't kid me that you never heard that term in 2006, San Diego had already been going downhill for a year by then and most of the rest of the country was peaking that summer. I bought a house that year and was very aware of the bubblicious nature of housing.)

Everyone seems to be a victim these days. This is absolutely nothing personal against you, because I hear the phrases you're using every day in real life and on the internet and everyone nods their head and agrees, "Yeah, you got screwed." Well, I disagree. Don't buy a house without 20% down. Don't buy a house you're not going to be in for a long time. Don't buy a house without the means to make payments on it for a long time. Don't pay more than a house is worth. Not sure how much it's worth? How much would it cost to rebuild it? How much can it be rented for? If the rent isn't anywhere near covering a mortgage for 80% of its value, you've got to consider that maybe you're paying too much.

Sure, some people truly had something unfortunate happen to them. They were laid off and unable to get a job for a long time, or disabled and their disability insurance refused to cover them, or their spouse ran off on them or whatever. But it seems like most people just made a few bad financial decisions, spurred on by unethical realtors and mortgage brokers. Common bad financial decisions:

1) Putting nothing down
2) Buying a house when only planning to be in it a few years
3) Buying a house without being established in a career
4) Running up a bunch of consumer debt
5) Buying a house without adequate life/disability/liability coverage
6) Buying too much house

What the heck was ever wrong with renting? Something goes wrong, you walk away, lose a couple hundred bucks deposit, and go live in an apartment for a while while you reboot.

Anyway, rant over. And of course nothing personal toward you, just some general observations about dozens of similar situations I have heard about. Good luck with your career goals and starting over financially. Better to make big financial mistakes when you're young. I doubt this little thing would keep you out of military medicine.

I'm not sure I was claiming victim status here, and I wasn't planning on medical school at the time. When I purchased the house I was making close to $100k, and the monthly payment amount to about 1/5 my income. I didn't over buy, I bought less than I could "afford." I didn't intend for my plans to change, but life is dynamic, change occurs.

However, you make some points I agree with. Few people seem willing to take responsibility for their own circumstances.

Anyway, my credit is high score is high, nearly 800, so there's no history of bad spending, and I have no consumer debt, so based on what's been said it seems a thorough explanation of my situation will likely get me past this.

 

[rotatores]

I'm not sure I was claiming victim status here, and I wasn't planning on medical school at the time. When I purchased the house I was making close to $100k, and the monthly payment amount to about 1/5 my income. I didn't over buy, I bought less than I could "afford." I didn't intend for my plans to change, but life is dynamic, change occurs.

However, you make some points I agree with. Few people seem willing to take responsibility for their own circumstances.

Anyway, my credit is high score is high, nearly 800, so there's no history of bad spending, and I have no consumer debt, so based on what's been said it seems a thorough explanation of my situation will likely get me past this.

Sorry to hear about your situation! But I feel like I need to bring up the obvious...have you considered not going to medical school and keeping your current job that brings in 100K (+) per year? This will allow you to keep your house and keep your credit. I'm sure you could defer your acceptance for a year! Some things are more important than medical school. When we decide to get married and have families we are obligated to make certain sacrifices...and sometimes that means not pursuing our goals at a certain time. Just something to consider!

 

[punkiedad]

I'm not sure I was claiming victim status here, and I wasn't planning on medical school at the time. When I purchased the house I was making close to $100k, and the monthly payment amount to about 1/5 my income. I didn't over buy, I bought less than I could "afford." I didn't intend for my plans to change, but life is dynamic, change occurs.

However, you make some points I agree with. Few people seem willing to take responsibility for their own circumstances.

Anyway, my credit is high score is high, nearly 800, so there's no history of bad spending, and I have no consumer debt, so based on what's been said it seems a thorough explanation of my situation will likely get me past this.

Great to hear you actually took the posts to heart and did not get defensive. I do believe most try to give factual replies that are relevant and helpful here, though you do get the occasional b**l buster......anyways, after reading your reply, it looks like, on the surface, you should not be looking at foreclosure anyway. By my calculations it sounds as if your pmt. is like 1600-1700 per month. If you take out loans that cover living expenses. I am guessing your wife is not working due to being in school herself or maybe kids? Either way, I would explore every single option before walking away. These things will not just cause you to have to explain to the military but may really haunt you for a long time. Additionally, with so much of this going on, I wouldn't be surprised for banks to make a bigger 'example' of foreclosure records in the future. It really sounds like you may have other options. Talk to your financial aide office at school. Can they up your COA? Even without an adjustment, you are like 600-700 per month under. If you have kids that your wife stays home with, can she babysit a couple others? Did you talk to your lender? I hear some of them were extending the mortgage terms out longer or even reducing some rates.

If all is accurate, you should have many options to at least consider rather than bailing. Either way, best of luck to you and your family.

 

[stonewall22]

Great to hear you actually took the posts to heart and did not get defensive. I do believe most try to give factual replies that are relevant and helpful here, though you do get the occasional b**l buster......anyways, after reading your reply, it looks like, on the surface, you should not be looking at foreclosure anyway. By my calculations it sounds as if your pmt. is like 1600-1700 per month. If you take out loans that cover living expenses. I am guessing your wife is not working due to being in school herself or maybe kids? Either way, I would explore every single option before walking away. These things will not just cause you to have to explain to the military but may really haunt you for a long time. Additionally, with so much of this going on, I wouldn't be surprised for banks to make a bigger 'example' of foreclosure records in the future. It really sounds like you may have other options. Talk to your financial aide office at school. Can they up your COA? Even without an adjustment, you are like 600-700 per month under. If you have kids that your wife stays home with, can she babysit a couple others? Did you talk to your lender? I hear some of them were extending the mortgage terms out longer or even reducing some rates.

If all is accurate, you should have many options to at least consider rather than bailing. Either way, best of luck to you and your family.

My payment is actually a little lower than that. I am actually working on ALL the options you just listed; however, at the end of the hall is the possibility of foreclosure. I'm trying to get it rented, and working with my lender to see if any type of loan modification might be possible. I'm fighting to not lose the house for two reasons: first, I made a commitment to pay off a loan, just letting the house go I feel like is dishonest. And second, I don't want to "do my part" to continue to weaken a weak economy. One of the challenges I'm facing is that I'm not behind on my payments and never been late. So, when I have spoken with my lender they're like, "Uh, you're not in trouble." Unfortunately, most programs to help are geared to those who have already defaulted on their loans.

Foreclosure is a last resort. My post was mostly exploratory in nature as nothing else has worked out yet; however, I'm still not close to deciding that foreclosure is what's going to happen, but when the money runs out, and I have to choose between food and paying my current rent, and paying a mortgage for an empty house, I'm not left with much choice.

 

[notdeadyet]

My payment is actually a little lower than that. I am actually working on ALL the options you just listed; however, at the end of the hall is the possibility of foreclosure. I'm trying to get it rented, and working with my lender to see if any type of loan modification might be possible. I'm fighting to not lose the house for two reasons: first, I made a commitment to pay off a loan, just letting the house go I feel like is dishonest. And second, I don't want to "do my part" to continue to weaken a weak economy. One of the challenges I'm facing is that I'm not behind on my payments and never been late. So, when I have spoken with my lender they're like, "Uh, you're not in trouble." Unfortunately, most programs to help are geared to those who have already defaulted on their loans.

Foreclosure is a last resort. My post was mostly exploratory in nature as nothing else has worked out yet; however, I'm still not close to deciding that foreclosure is what's going to happen, but when the money runs out, and I have to choose between food and paying my current rent, and paying a mortgage for an empty house, I'm not left with much choice.

Sounds like you've got your head on straight about the situation. I wish you the best of luck getting this resolved as painlessly as possible...