Loan Mod while in Chapter 13

[Derick]

WOW, this forum is fantastic. I have been reading so many posts in the last 5 hours my head is spinning!!!

I will try to make my situation short;

In 08/2008 we had filed for chapter 13 due to a business failure. At which time I hired a bankruptcy attorney and a loan mitigation company. The loan mitigation company was such a waste of $3000 and now I am starting to feel my bankruptcy attorney is going to be a waste of money as well.

My main concern was to save my home. After 8 months of working with the bank and dealing with the bankruptcy, I learned that banks DO NOT modify loans while in bankruptcy. Neither my attorney nor my LMC ever advised me of this. My bankruptcy att. had my chapter 13 dismissed so I may save my home in hopes of modifying ( we could not afford the trustee payments athat included our mortgage). At this time the bankruptcy court had my mortgage wrapped up in my trustee payments which came to $5100.00 per month. Not achievable for us. After our chapter 13 was dismissed my LMC called and said they struck a deal with the bank and within a few days I had a “Stipulatory Agreement” in hand. I was to pay $3000 first payment then $2000 per month after that for six months which brought us to 09/2009, every payment was made on time and in full. I was finally sleeping again. But, in June of 2009 the IRS came knocking again and froze our accounts. Still able to make the payments to the bank I had to call our BKA again, dish out another $3000 to refile. The bankruptcy was back on track.

Now move ahead to 09/2009, I had sent my final payment in to Wells Fargo anticipating a loan modification. Never happened! Why, because I had filed for chapter 13 again. I really wished someone advised me that banks DO NOT do loan mods or cancel them once you were in bankruptcy. Now I know. However, I was actually blessed in a way to get an outstanding and very helpful woman at [name deleted by moderator] Credit Corp in the bankruptcy department who calls me. Yes, I said "who calls me"! As happy as I am with this young lady at [name deleted by moderator] who services the loan for Wells Fargo, I am in limbo once again. 140 days has passed and once again I was anticipating a loan mod only to find out that all loan mods in bankruptcy are on hold. I am totally beside myself. My bankruptcy attorney doesn’t return my calls anymore and I have no idea what I am to do. My wife will be having our first little one within days (totally unplanned) I am working 3 jobs and trying to still keep my business afloat.

Thanks for taking the time to read this short novel, it could have been longer, but I did go over it a few times.

Any help, advice would be very much appreciated at this point.
Thanks again for a great forum!!

[lrprn]

I am in limbo once again. 140 days has passed and once again I was anticipating a loan mod only to find out that all loan mods in bankruptcy are on hold. I am totally beside myself. My bankruptcy attorney doesn’t return my calls anymore and I have no idea what I am to do. My wife will be having our first little one within days (totally unplanned) I am working 3 jobs and trying to still keep my business afloat.

After reading your story, I'm left to wonder why you are trying to keep this house. No house is worth working three jobs just to break even. A house is just a thing, and things can be replaced later. Your family's peace of mind with much less financial stress is what is most important in the long run. Especially with a new baby on the way, you should consider rethinking your priorities.

Have you considered amending your plan to surrender the house, recouping your losses, and renting through your Ch 13 and for a few years after? Once the baby comes, that will increase your family size, likely reducing your monthly Ch 13 payments even more. Would this work in your situation?

Thanks again for a great forum!!

Although sometimes you may get advice here that you don't want to hear, we'll always be honest with you. We've all been where you are now to some degree. Sometimes it's hard to see the big picture when you've been committed to a certain approrach for awhile. IMHO it's now time for you to reassess. What would you tell someone in your situation who asked you for advice?

[justbroke]

My main concern was to save my home. After 8 months of working with the bank and dealing with the bankruptcy, I learned that banks DO NOT modify loans while in bankruptcy. Neither my attorney nor my LMC ever advised me of this.

Many servicers/lenders do modify loans while in active bankruptcy. I'm in the middle of mine now. I actually was approved before filing, but my filing interrupted it. They just sent me papers on a modification, unsolicited. The biggest part is that generally, the Bank will ask for a "limited" relief from the automatic stay (MFRS) so that they won't be in violation of the stay.

My bankruptcy att. had my chapter 13 dismissed so I may save my home in hopes of modifying ( we could not afford the trustee payments athat included our mortgage).

I'm not an attorney, but that sounds dumb, dumb, dumb. Your attorney should have just asked for a limited relief from stay (MFRS) so that you could modify. Why stop the entire Chapter 13???

I really wished someone advised me that banks DO NOT do loan mods or cancel them once you were in bankruptcy. Now I know.

Your modification wasn't permanent. If it was a permanent modification, they couldn't pull it back. A "trial" modification is just a temporary change in terms. The Bankruptcy changes that. I wish your attorney DID tell you that!!!

It reads like you're doing too much to save this home. How much do you owe and how much is it actually worth (Fair Market Value). I'm sorry that you've gone through this, but I learned this the hard way too, but posted about bankruptcy and (trial) loan modifications back in 2008 (July/August 2008).

[redyhws]

Are you sure you can't do a loan mod while in bankruptcy? Even if you just making "temporary, trial-basis payments", as long as your attorney allows for the bank to continue to work with you (i.e., a limited relief motion/consent), then there should be no problem. The bank may be trying to hang it's hat on something that doesn't have any merit, just so it doesn't have to do a loan mod with you.

[Skipper]

Are you sure you can't do a loan mod while in bankruptcy? Even if you just making "temporary, trial-basis payments", as long as your attorney allows for the bank to continue to work with you (i.e., a limited relief motion/consent), then there should be no problem. The bank may be trying to hang it's hat on something that doesn't have any merit, just so it doesn't have to do a loan mod with you.

If your mortgage is owned by Freddie Mac or Fannie May, you may have an option to modify under the "Making Home Affordable" program.

Try http://makinghomeaffordable.gov/

I hope this helps...

S

[Derick]

Thanks for your replies and help.

We have thought about walking from our home. In my mind, giving up my house is not really an option, we paid cash for it in 2003, ($315,000). I then took equity out to expand my business at the end of 2004 and now owe $248,000, home is worth $250,000 now. It was my own stupidity, especially since I have been in the real estate industry for 20 years and should have seen it coming.

All of your posts make excellent points and are much appreciated. I had no idea I could give the bank limited relief from the automatic stay. I plan on going to my bk attorney’s office tomorrow morning and sit and wait to speak with him to see where I may go from here, if anywhere.