Loan Mod while in Chapter 13--Has anyone been successful?

[djdebz]

Hi, everyone.

We are almost one year into our Chapter 13. Our primary mortgage is 50% of our take-home pay. I was granted an authorization from our bk attorney to work on a loan mod with GMAC. I have been trying to get a mod with them since March of this year. After talking with about everyone I could at GMAC, it is not going anywhere and they flat out told me I will not get a loan mod with them because I am "current" with my payments; if that were to change, it could make a difference, but they cannot guarantee anything.

I am not willing to be late, since it will put my entire family in jeopardy. I have written 2 senators in RI and a senator in Massachusetts. We are not eligible under the HAMP program.

My question: has anyone ever asked their bk trustee or judge for a loan mod on their primary residence and been successful? I know that this is not a law, but has anyone simply asked for a cramdown on their current residence and gotten it?

I am considering doing this, but I don't want to risk making anyone angry and have them cancel my plan.

Any thoughts or suggestions on this would be appreciated.

Deb

[JimKutkowski]

Judges don't have the authority to modify a mortgage, otherwise they'd be doing it in this economy. If you don't qualify for HAMP, there should still be another program with GMAC that can modify your mortgage.

I've gotten Mods inside of C13s.

[djdebz]

Hi, Jim.

GMAC said there is absolutely nothing they can do for me since I am current. This is from someone in the administrative department and one of the mitigation specialists whom I first spoke with back in March.

I do have a phone interview with NACA, and my local housing authority said they may be able to help, but cannot guarantee anything.

We made much more money when we bought the house 9 years ago, have been through illnesses, and are just getting by like most other people.

Our home is worth about $70k less than what we owe, and, again, GMAC cannot talk to us unless we are 4 months behind; we cannot do this since the bankruptcy court will approve the foreclosure.

Any other thoughts with regards to asking the trustee or the bk judge about modifying would be appreciated. Other people must be asking.

Thanks again.

[ConfusedinOC]

Why wouldn't you qualify for the HAMP modification? From what I have read you can have your payments lowered to 31% (Principal, Interest, Tax and Insurance) of your monthly gross. There is a limit on the loan amount though.

[justbroke]

Remember everyone... all these programs (HOPE and HAMP) are voluntary as to the lender participation. They do not have to participate or even offer you anything. In actuality, many lenders just offer you something under their own program.

As for getting a modification inside a Chapter 13, it can be tricky, but if you have an attorney, you could possibly get this done. There are issues with not only the automatic stay, but with any junior liens (which could cause subordination issues).

Our home is worth about $70k less than what we owe, and, again, GMAC cannot talk to us unless we are 4 months behind; we cannot do this since the bankruptcy court will approve the foreclosure.

What the Court would do is approve a "relief from the automatic stay" meaning that the lender may take whatever actions under State non-bankruptcy law. This could include foreclosure, but also could include offering you a forbearance, modification, or other program to get you back on track. The funny thing is, that in order to get a modification while in a Chapter 13, many lenders require that they get relief from the automatic stay so as not to be snagged by a technicality.

Work through and with your attorney. They can readily tell you how feasible a modification in your case would be. They can also tell you what the local rules are around having a modification to your loan while in active bankruptcy.

[djdebz]

GMAC told us we definately did not qualify for the HAMP, even though our payments are approx. 39% of our gross pay. The bank said several times that "we cannot afford the new payment". Wouldn't the new payment be lower?

Also, my bk attorney told me that he could not help with a modification since it is "not law yet". I figured if anyone has asked their judge directly for a mod due to hard times, if there was a success with a judge driven modification, even though it is not law yet.

I am hoping the law passes, since after many, many attempts with GMAC, they are not willing to help at all.

My loan is backed by Fannie Mae.

Thanks again, everyone.

[justbroke]

Also, my bk attorney told me that he could not help with a modification since it is "not law yet". I figured if anyone has asked their judge directly for a mod due to hard times, if there was a success with a judge driven modification, even though it is not law yet.

Two things. First, no bankruptcy judge can modify a mortgage that secures a primary residence of the debtor(s). That's the law. Won't get any judge to step on that.

As for your first thing, the reason I sent you to your attorney was not to ask about a modification within the BK process, but whether they'd assist you in designing something for your lender (GMAC). From what you just wrote, reads like your lawyer wants nothing to do with it. Anyhow, perhaps he can recommend a real estate attorney... should you wish to pursue.