Question About The New Fed/Mortgage Servicers Settlement

[markdel16]

According to what I've read about it, the only thing I'd qualify for (since I'm current), is the refinance to the lower rate. I'm at 6.75% 30 (22 to go) year fixed now.

I'm riding through the mortgage out of plan. If GMAC (Ally) contacts me about a refi and I go ahead with it, am I committing myself to the balance of the mortgage again? Shows as $0 on credit reports now.

I have 9 months to go in my 13, and if I can refi, I'll be able to come out of the BK in real good shape.

edit: ack, someone please fix the typo in the topic title, I can't edit it.

[NoMoreCards]

If you refinance, that is the same as a new mortgage and you would be liable for the balance of the mortgage.

[markdel16]

Ok, then it's easy to decide. I'd rather not be responsible for the $118k rather then saving a hundred bucks a month or so.

[momofthree]

If you're in a ch.13, you're liable for the mortgage regardless. It's only in ch.7 that your mortgage liability is discharged. As always, consult your attorney.

[catleg]

You can't cram down the principal balance of your 1st mortgage in a chapter 13.

[newbie2]

I'm riding through the mortgage out of plan.[/B] If GMAC (Ally) contacts me about a refi and I go ahead with it, am I committing myself to the balance of the mortgage again? Shows as $0 on credit reports now.

I have 9 months to go in my 13, and if I can refi, I'll be able to come out of the BK in real good shape.

.

There is no such thing as a "ride through" in a Chapter 13. You either give up the house in the plan, or you keep it. If you keep the house (keep paying) the mortgage debt is not discharged. It is only in a Chapter 7 plan that you have the option of continuing to pay (ride through) and have the debt discharged, as long as you don't reaffirm the debt.

[markdel16]

Now I'm confused.

My mortgage shows on my CR as IIB, with a $0 balance. It was my understanding that since I didn't reaffirm, I can walk at any time. If I wanted to sell, I would still be responsible for the loan balance, but anything above and beyond the balance would be mine.

[catleg]

I think GMAC is just being careful about the credit reporting.
Are they still sending you paper statements?
I assume you are still sending in payments.
Normally in a ch13 if you stop paying you'll get a Motion for Relief from Stay, not so much because they want to foreclose, but because it's a fee item they can charge you and make a profit.
But a 13 just helps you catch up with arrears on your mortgage, if you want to eliminate personal responsibility for the debt, you need a chapter7 discharge.

[LadyInTheRed]

According to the California Attorney General, borrowers who have been in bankruptcy or foreclosure in the last 24 months are not eligible for a refinance under the settlement. You also have to have no delinquencies in the past 12 months.

Catleg is right that Chap 13 does not discharge personal liability for a mortgage. But I believe if you surrender the home as part of the plan, the deficiency is discharged in the 13. Debtors in anti-deficiency states don't have to worry about the lack of discharge as long as their mortgage is non-recourse under state law (except that a later default will be reported on your credit report). But, it appears Pennsylvania is not an anti-deficiency state. Don't rely on the mortgage company's reporting to determine if your mortgage will be discharged. Check your plan. If the plan does not provide for the surrender of the home and your attorney has told you your mortgage would be discharged, ask your attorney about the exception to discharge under Bankruptcy Code Section 1328(a)(1).