Credit union will not subordinate - chapter 13 time

[BOBBY1269]

Hello all,

i stopped paying my credit union heloc 2 months ago as i am preparing to file chapter 13 as our heloc wholly unsecured and i wanted to strip it.

I am 5 months ( $10000.00 ) behind in my 1st mortgage with wells fargo , they contacted me and wanted me to do a modification that would put my arrearages in the back of the loan , i said ok lets try it - did the paperwork made the 3 forebearance plan payments.

Got a call from wells fargo today saying the credit union will not subordinate and will not sign off on the modification and they will not be able to approve a permanent modification and that they are going to accelaerate the loan.

I should have known better but i thought if i got the modification , things would be a bit easier - called my attorney , he said just wait for the accelertion letter and he is going to file a chapter 13 .

He said the credit union probably just screwed themselves because now all my payments will be for the wells fargo arrearages ( secured ) and the credit union will get nothing , my attorney said my estimated chapter 13 payment is 225.00.

My attorney said it is easier to just straighten this all out with a chapter 13 and forget about a modification - just file the 13 then go back to the original loan terms on the 1st mortgage and we'll strip the 2nd and move on wit life .

Do you agree with attorney ? I realize its a done deal now , but should have entered into a forbearance plan or just do what i am going to end up doing anyway - your thoughts ?

Thanks
bob

[justbroke]

As you have discovered, a modification of a property's 1st mortgage that has subordinate liens, is subject to re-subordination of those junior liens! There is no way the first will subordinate themselves to a 2nd, 3rd, 4th, lien... as it makes no sense to.

If your home's value is worth less than the balance on the first mortgage, then you could be able to strip the Credit Union's HELOC (2nd) in a Chapter 13. The CU will hate you for this and if you have other credit products or accounts with them... you'll need to move them before filing! This is due to the infamous "cross-collateralization" of all your accounts at the CU.

A forbearance isn't going to fix the problem. It will only delay it! A Chapter 13 is the best tool to cure arrears and to potentially "void" (strip) junior liens on an underwater property!

[BOBBY1269]

Thank you so much , i know this is the way to go , why i got involved in a possible modification with wells fargo was stupid , but all will work out , yesi know the credit union will hate me , but its not my fault the house is underwater - the credit union is being real nasty with me and my wife - callimg all the time - so to a degree i can hardly wait to strip the heloc for all the torment they have been giving me and my wife.

Thanks again your in put onthis and my other posts have been very helpful!!!

Bob

[justbroke]

Do you have any other accounts at the CU? If so, you may need to do some bankruptcy "pre-planning" and get some things adjusted. Work with your attorney; it reads as though they understand your case and have your best interest at heart.

[BOBBY1269]

Hi ,

no we do not have any other accounts with them , however we filed a chapter 7 / 6 years ago after i lost my job and they we in the chapter 7 for about for about 30000.00 , but the heloc remained because it was secured to the house at that time so with us telling that a chapter 13 is looming they are really pissed off at us , but my income has been reduced and a cha[ter 13 is very much needed i feel like a creep , but what can i do .

I tried to refi with them , but they would have nothing to do with it - heloc is at 9.75 % and we owe about 38000.00 , they said because we filed chapter 7 that we already got our * gift * from them , so they are really pissed , my attorney says - just ignore them

your thoughts ?

Thanks again - goog talking to you

bob

[justbroke]

Yes, just ignore them. They would just as soon leave make financial decisions not to your benefit. Remember, a CU is a member institution and they are probably both the nicest and meanest when it comes to lending and defaulting, respectively!

This is a financial decision. You need to do what is financially right for you. When a bank, or any entity, lends money to someone, they do so at a risk. They took a risk and it turned out that they may not make as much money. They did make some money over the years on your HELOC.

As for your Chapter 7 being a gift... I don't understand that statement at all.

[lillymarlene]

Bob, I really felt like a "creep" when I had to let my credit union go, too. I really enjoyed banking there, but owed them about $2,000 on a credit line. So I had to move my banking elsewhere.

Like JB just said, "You need to do what is financially right for you." Good luck.

[BOBBY1269]

Thank you both for the encouraging words- i do feel like a creep , but then again i have to do whats right for my family , i even feel worse at work - nobody knows what i am going thru and you have to put a smile on every day - knowing you 2 breathing down your neck is easy , sometimes i just fell like staying in bed , but i know better days are coming ---

as far as the " gift " remark goes it was meant that because they lost money in the chapter 7 6 years ago ( credit cards ) they figure they will not help in anyway in a modification - but in the long run i will bve getting another gift fron the cu - i wish they were not so nasty to me because i really do feel bad - but the more they piss me off the more i want to get to chapter 13 bankruptcy court to strip the lien /

i have pride - i did not want it to be like this - but millions do it and i have to do it - i have no choice .

Thanks again for all the support it make it easier.

Bob

[Jf24]

The CU will hate you for this and if you have other credit products or accounts with them... you'll need to move them before filing! This is due to the infamous "cross-collateralization" of all your accounts at the CU.

Will find out this week on home value that will determine if I go 7 or 13. I have 1st and 2nd mortgage and 1 cc with the same credit union (Navy Federal). Would cross-collateralization affect me by stripping the 2nd? The 1st is on time and 2nd is 1 month behind so far. They are the biggest nag of them all.