Sve my parents house

[melc68]

Hello I need some help deciding. In the last 12 month my parents have been struggling with making the mortgage payment. They are behind 9 month. Due to the economy, medical issues my parents have not worked in a little over a year. They are both retired mid and late sixty’s there income now is only social security. On social security they could not afford the payment that is why they felt behind.
The problem is we want to try to help save the house. However we are not sure if chapter 13 would be the option. My parents have no debt only the house.
• -Current House payment $1,450.00 includes taxes and insurance
• -Behind 9 month $13,050.00 as of today
Their income with social security is $1,750.00 a month . Is there anything that chapter 13 can do to help reduce the monthly payment and save the property?
• Property cost $145,000.00
• Currently Owe $122,000.00
• Currently the property is worth $112,000.00
Any advice will be helpful. Thanks

[despritfreya]

Unfortunately the bk court does not have the authority to modify a loan that is secured solely by a debtor's principal residence. The only thing a Chapter 13 can do is strip off a 2nd mortgage lien if there is no equity in the home after consideration of the 1st. It sounds like your folks only have 1 mortgage therefore, a modification through the Court is not in the cards.

In the context of a Chapter 13, your parents would have to resume their regular monthly mortgage payments at the full contracted amount the month after the case is filed. In addition to that payment, they would have to submit a Plan payment to the Trustee to cure the default and pay anything else that needs to be paid. The Plan payment would last between 36 and 60 months depending upon the specifics. Since their current income is only $300.00 higher than the house payment (PITI), unless the income is supplemented in some way, it does not appear they can afford to save the home.

The only way I see this working is if the lender, through some sort of modification, having nothing to do with a bk, will agree to reduce the monthly payments.

Your folks should at least sit down with a local bk attny to discuss any possible options.

Des.

[karm43]

Honestly, I think your parents would be in a better position if they let it go. They would have more money. Sounds like they are really struggling. Its hard my mother in law sold her house and live in a apartment, Its not easy on ss. Now she could live not worry about repairs taxes and everything else. She knows she made the right decision. She just could not make it with the house on retirement. Your parents are making ok money for their retirement their house is just too expensive, eve if they get help with the rears, How would they be able to pay that motgage every month, they would get behind again.

[tobee43]

des has hit the nail on the head here. really the only way is a possible modification with the lender. maybe, since inventory is so high in so many states, the lender may work with them.

however, the sad truth, and believe me i understand as we were generally in the same type of position. is it really logically and realistic for them on a long term basis to live with no DMI? the remaining $300 must cover medical, food, gas, utilities (heat water garbage etc) repairs ?? they would be stressed they entire lives with no income and basically trapped into a situation that has no way out.

my heart really goes out to you and yours. i know it's difficult to realize that downsizing may be the only answer best of luck to them and you!

[Flamingo]

The reality of the situation is your parents just cannot afford their home anymore. Chapter 13 is also referred to as a "Wage Earners" plan and I am not certain if your parents can carry out a Chapter 13 based on SS income only and no other income from a job. It appears your family wants to keep the house - is there family that can afford to step in and help out? If there is no debt other than the house, it might be a good idea to take the time and sit down with a BK attorney and also an estate attorney to see how this whole thing stands and if saving the home is possible. But the reality is they cannot afford their home on just their present SS income.

[keepsmiling]

Is there still such a thing as a reverse mortgage?
Wasn't that what they were designed for? or are they history, given the downward trend in housing?

[despritfreya]

Is there still such a thing as a reverse mortgage?

Not sure, but I think there has to be some equity in the home.

Des.

[df04527]

Yup - no equity - no reverse mortgage.

[catleg]

How does that mortgage payment breakdown between principal/interest/escrow? Do you have high property taxes?
If anything would help it would be a mod, and usually they roll the accrual into the new balance.
Chapter 13 won't really help them.