Foreclosure while in Chapter 13

[DreamCrusher]

I hate to post a question that has already been asked and answered extensively. I have read several threads looking for an answer but couldn't find one that matches exactly to my situation.

I filled a BK 13 last year. Although the bank only now sends a monthly statement and not a bill, we have been making all mortgage payments on our home. We do not have a second on the house. The home is up-side-down by about 100K+/-.

We are struggling to keep up with this mortgage payment and wanted to refinance the loan or modify it to reduce the payment. While attempting to refi, a mortgage broker said he could do it if I could get the bank to report the payments that I have been making to them every month and on time.

The bank refuses to report the payments to the credit bureaus. I have been around and around with them about it. Wouldn't it make more since to report the payments so I can refi and they would be paid in full?

Second part of my question:
Since they are not reporting, why make the payment? What happens to my BK 13 if I stop sending the mortgage payment?

[lrprn]

The bank refuses to report the payments to the credit bureaus. I have been around and around with them about it. Wouldn't it make more since to report the payments so I can refi and they would be paid in full?

Reporting to the credit bureaus is completely voluntary - always has been. The bank has every right to decide whether to report to the bureaus or not.

It makes sense to you they would want to report so you can modify and continue paying the mortgage, but you have to realize that the bank makes their money back whether you pay them or not. That's why most banks continue to ignore requests for mortgage modifications. They have nothing to lose whether you pay the mortgage or not. They can sell the house to recoup some of what they are owed, and their own insurance covers any losses from the sale. They come out just fine whether you refinance or not.

Since they are not reporting, why make the payment? What happens to my BK 13 if I stop sending the mortgage payment?

To keep the house, you have to keep making the payments on your mortgage. Stop making the payments and eventually (usually after missing 2-3 payments) the bank will petition the bk court to foreclose on your home and auction it.

What you do at this point depends on whether financially you are able to keep the house or not. If the payments are more than 35% of your take-home pay, then you need to have a hard talk about whether it makes sense to keep the house or walk away, rent through your Ch 13 and for a few years after, then jump back into the housing market again.

[Billssuck]

DreamCrusher we too filed chapter 13 last year and have been making our mortgage payments on time. Since we filed, my husband got laid off and has since taken a job making about $800 to $1000 less per month than his previous job. We have only thought about a loan modification but I don't think they could or would reduce our payment by this much. So we are taking a hard look at modifying our chapter 13 to surrender our home since it right now is a money pit for us and will be after our chapter 13 is finished (home with expenses is now over 50 percent of our income).

I had a phone conference with my lawyer a couple of weeks ago and he told me to stop making my payments on my house if I plan on surrendering it. He said that since I'm making my mortgage payments outside of my chapter 13, that by missing my payments it won't cause my chapter 13 to get dismissed; the mortgage company would only commence with foreclosure. However, we have to have him file the chapter 13 modification to redo our expenses with renting and such and it will change our trustee payment. In our case, we will be able to make our expenses with renting and our reduced income equal to a trustee payment very close to what we are paying now. I haven't completely decided on surrendering but we have an appointment on May 5th to do the chapter 13 modification. The practical side of me knows it is best for our financial future to let the house go, but the emotional side is still playing games on me.

We are very fortunate in that I have a relative who has rental properties that I can rent from without any problem with my active chapter 13 and credit report. I wish you the best with what you decide!

[Flamingo]

To the OP...anytime you have financial problems during your Chapter 13, contact your attorney immediately. If you are struggling with your mortgage payment after being confirmed and making payments for a year, something is wrong; eithier your expenses have increased, your income decreased, or you are not budgeting to correctly get through your Plan years (the lifestyle change that needs to be done is the worst for everyone and is the cause of most plans failing). You may not be able to afford your home and you may just have to face that reality. Contact your attorney to revierw your entire situation. Do not stop any payments until you speak with your attorney.

[DreamCrusher]

Thank you for your responses.
I guess my question is, why wouldn't the bank want to report? Because they don't have to doesn't really make sense to me. OK, they don't have to but why not do it? If I'm sending them full payment, isn't it defamation to say that I'm not? Isn't there a Fair Credit Reporting Act or something? What are they afraid of me doing?

As far as our living standards, they have not changed. In a failed attempt to avoid the whole thing, we have been living like we were already in a BK for years before we filed. We changed our tax withholdings to "exempt" several times though out the year to make bills and now we owe thousands. There are child support issues. Not so much child support but travel expenses for visitation purposes and medical expenses. These expenses vary. To insinuate that we have not made the appropriate changes to facilitate our situation is insulting.

Does it make sense to stay in a house that is 100K up-side-down after already filling BK? What's the best way of getting out of it at this point? We don't even like the home. Given the last few years, it holds only bad memories for us now.

[LadyInTheRed]

Thank you for your responses.
I guess my question is, why wouldn't the bank want to report? Because they don't have to doesn't really make sense to me. OK, they don't have to but why not do it? If I'm sending them full payment, isn't it defamation to say that I'm not? Isn't there a Fair Credit Reporting Act or something? What are they afraid of me doing?

By not reporting, they are not saying that you aren't paying, they just aren't saying anything. Defamation requires something to actually be said. It sounds like you don't really want to keep the house. But, if you want to try to get the bank to start reporting, you could trying contacting someone in their executive offices. Don't know if it will help, but it could. If the bank is a large national bank, you may be able to find contact info for executives in the forums at loansafe.org which is all about mortgage modification.

[tigergem]

Perhaps you could just ask them for a letter of credit. This is a written status of your loan. Keeping the original safe and secure, perhaps you could use a copy of it to get your loan reported to the CRAs, or perhaps this letter alone would suffice for your other financing needs.

[jayalln]

I hate to post a question that has already been asked and answered extensively. I have read several threads looking for an answer but couldn't find one that matches exactly to my situation.

I filled a BK 13 last year. Although the bank only now sends a monthly statement and not a bill, we have been making all mortgage payments on our home. We do not have a second on the house. The home is up-side-down by about 100K+/-.

We are struggling to keep up with this mortgage payment and wanted to refinance the loan or modify it to reduce the payment. While attempting to refi, a mortgage broker said he could do it if I could get the bank to report the payments that I have been making to them every month and on time.

The bank refuses to report the payments to the credit bureaus. I have been around and around with them about it. Wouldn't it make more since to report the payments so I can refi and they would be paid in full?

Second part of my question:
Since they are not reporting, why make the payment? What happens to my BK 13 if I stop sending the mortgage payment?

Okay here is what happens sometime when you are under chapter 7 or chapter 13 bankruptcy some of your creditors stop reporting your payments to the cb until you receive your discharge.
Now if you are trying to refinance your property and you have a lender who is willing to do it I am sure there are some other avenues they can take. For one do you have proof you made these payments? If you do ask the refinance lender if they will take the proof you have that you made the payments such as cancelled checks or other receipts that you made payments. You can usually go online an log into your account and get a payment history from them as well. You just need to prove to the other company you have been making your payments. Just because they are not reporting it to the bureaus does not mean you can't prove it yourself.

If you really don't want to stay in the house you can ask your hardship discharge and tell your bk attorney you want to surrender the property you can also try converting to a chapter 7 if you qualify and surrender the house too. If you do one of these two things you likely won't be able to purchase another home for a couple of years. But once you are discharged you can start rebuilding your credit immediately. It usually takes 12 -18 months before your great is really strong again not to say your score won't go up in a shorter period then that. But after a period 12 to 18 months you will have pretty lengthy payment history.

I hope this helps some.

[1aliasfan]

Talked to my lawyer last week. Since we pay the mortgage outside the plan, technically we can do whatever we want, but he operates under the "tell the trustee everything and it causes less problems later" principal. I believe we are going to let the bank have it back, using the first missed payment for a deposit on another place and the 2nd missed payment as the 1st months rent. IF we stay until we HAVE to leave, the trustee may come after us for the extra money and it is not worth it. If we stay at the same rent, we don't have to do anything. If we are a couple hundred less, he said he would send and email to the trustee and recommend no change in order to offset the cost of the taxes (which I have to change anyway). Right now we are struggling with wanting a property in the country and an increase in gas cost, which the trustee may not allow. (he said the mortgage company would foreclose and if they did not break even, the remaining portion would be added to the C13 as unsecured and they would get their portion. We would not need to modify our payments.)

We are going to try to find a tenant in the meantime also. We can always get them in there and if they don't pay, evict then let bank foreclose.