Mortgage Modification After Chapter 7 Discharge?

[jesd00]

Hi All,

I looked around for answers to my questions, but didn't find quite what I was looking for, so I have decided to post. I am wondering what the likelihood of getting a mortgage modification after a CH7 might be.

Most of you are probably wondering why the heck I would want to do such a thing when I could just walk. I have thought about that, however I am hesitant to do so for a few reasons:

1) I would like to purchase a new home in a few years. Having a foreclosure on my record would make this quite difficult, even if my credit scores recover significantly (The scores have recovered quite a bit - I am in the mid 600s even though I only received my discharge in August).

2) I currently get a pretty good tax deduction for the mortgage interest, which I would be giving up.

3) I would be paying just as much or more to RENT a comparable home.

4) I would still be on the hook for the $300/mo HOA fee until the deed changed hands.

The property is a 1,000 sq foot condo in a 40 year old building. It is currently worth $45,000 - $50,000. The current mortgage balance is about $93,500.

I want to find out if the bank would consider a modification to the principle so that I would have a chance at selling the place (in a traditional manner) in the next couple of years.

Anyone think this is in the realm of possibility?

Thanks for your input!

[nichole04]

I am trying to get my home loan modified right now. I was discharged in July and my mortgage company had me apply for the HAMP program. Unfortunately, we were turned down since our mortgage payment is less than 31% of his gross income. I am now trying to get them to do an in-house modification but I haven't heard anything back yet. Try applying for the HAMP modification and then go the in-house route if you get turned down. There is also another program called the HARP program but I think your loan has to be Freddie or Fannie backed. Did you reaffirm the mortgage? If not, then I don't think you can claim the mortgage interest since the mortgage company will no longer be reporting to the credit agencies and the debt has been legally discharged. I did not reaffirm my loan and they are still allowing me to apply for a modification but I am current on my mortgage payment which may or may not be a good thing.

[Pandora]

You would not have a foreclosure and a bk on your record - you've been discharged and did not reaffirm your mortage, you do not owe them anything at this point in time.

Here are some posts re: mortgage mod after discharge. But I would caution that not all mods after discharge may go this way - some lenders may try to get tricky, changing the org. note and put you on the hook again.

http://www.bkforum.com/showthread.php?63205-Can-Chapter-7-dishcarged-mortages-be-modified&highlight=loan+modification

http://www.bkforum.com/showthread.php?61000-Modification-after-bankruptcy-questions&highlight=loan+modification

What you're referring to here:

"The property is a 1,000 sq foot condo in a 40 year old building. It is currently worth $45,000 - $50,000. The current mortgage balance is about $93,500.

I want to find out if the bank would consider a modification to the principle so that I would have a chance at selling the place (in a traditional manner) in the next couple of years.

....is not possible in a loan mod, or none that I've seen anyway. You're talking about the lender forgiving a portion of your mortgage - most will not - and you cannot "cram down" a 1st mortgage. More than likely what will happen is a forbearance or balloon payment tacked onto the end of your note, payable in a lump sum or you'd have to refi it. So if your current payment cannot be sustained, a mod would bring your PITI and HOA fees (PMI will be separate and in addition to PITI/HOA) to 31%. If your balance of 93K has to be cut due to the 31% rule yet your income cant support the payment on 93K, they would forbear part of it without interest, but you would have to pay the balloon when it comes due. Either way you're still going to have to pay the org. balance of the loan.

Basically the balloon / forbearance amount becomes a "silent 2nd mortgage". You'd have to sell the house for what you owe to break even.

[tobee43]

well...all i can tell you is our bank contacted us AFTER the discharge AND the surrender of the house...it has been vacated now over 2 years and wanted to know if we wanted to reaffirm the mortgage...i'm like...excuse me????? you're a bit LATE...you think??

i said you know we have been out of the house for over 2 years and you want to reaffirm AFTER a discharged bankruptcy??? it clearly SAID surrender...

oh the bank said...we thought maybe you'd like to reaffirm....NOPE....you called my BLUFF the house is yours...NOW....including with this lovely house is the LOVELY BLACK MOLD....the NEW ROOF....don't forget the NEW SEPTIC system and leech fields...OH!!!!!!!! and the cracked foundation...which water flows through during the YES....ARE YOU SITTING...the NEW water table since the town changed the road and it now FLOODS directly INTO the house.....

it's YOURS NOW...enjoy!

sorry....yes, i think if you called the bank, i bet they would love to work with you...they most likely do not want your house!