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**HHM** · 03-23-2007, 09:40 AM

Regarding Mortgages and Bankruptcy.

The mortgages companies are going to report your mortgages to the CRA's as IIB (Included in BK) because you filed BK, it is as simple as that. What you have to understand is what the legal implications are for Mortgages in BK.

What gets discharged vis-a-vis a mortgage, is your "PERSONAL" obligation on the mortgage. However, the Mortgage companies maintain their "LIEN" on your house, and if you stop paying them, they can FORECLOSE. But, by discharging your personal obligation, you would not be liable for any balance owed to the mortgage company in a foreclosure scenario if the mortgage companies could not sell the house for what is owed them. Thus, that is why they report mortgages the way they do on your credit report, because your credit report is your "PERSONAL" credit history...so, you have no obligation on the mortgage, but, your home, is still obligated on the mortgage (so to speak).

But make no mistake, if you stop paying your mortgage (both 1st and/or 2nd), they can, and probably will, foreclose and you will lose your home.

The problem you are facing is that you probably can't get a better deal than you already have, mainly because you are less than 2 years from your discharge date...so the only programs you have available to you are going to be SubPrime. All you can do is shop around, but you would probably end up in another crappy ARM, but it might buy you some time to get your credit back into shape to get a conventional loan in a few years.

**SinkingFast** · 03-23-2007, 09:57 AM

You didn't say whether or not you Reaffirmed either mortgage during BK. I'm guessing since you did not say so, you did not Reaffirm. Either way, BK is most likely the reason your mortgages are not reporting "Paid as Agreed. Discharged in BK". Even people who've filed Reaffirmations are having the same problem.

Basically, I think you've lost your best leverage to rework your loans. Once your BK was discharged, you lost the ability to negotiate with your Lenders.

During your BK, when you're working out a reaffirmation agreement, everything is up for grabs. Most people just reaffirm the terms of the original agreement. But you can actually negotiate with a Lender during the reaffirmation process.

You can change the interest rate from a variable or adjustable to a fixed amount. You can negotiate lots of things in a Reaffirmation if you ask and the Lender agrees.

The problem you have is your BK is Discharged. Without filed Reaffirmation agreements, the original terms of the contracts stand. So if you have a balloon coming, that stands as written in the original agreement.

Chances are not good that you will be able to recast your mortgages with your current Lenders. BK will be huge deterrent to either Lender working with to recast the loans.

Pretty much your only options are to refi or let the house go in Foreclosure.

Refi may be tricky. You didn't say when the balloon is scheduled to hit, but you're gonna need 2 years for a refi to be doable. You'll need 2 years post BK before you can refi without using a subprime market loan.

The other option is to let the house go in Foreclosure and move to a Rental. Ride out some time while you rebuild your Credit and wait for the regular lending market to open back up. Usually, within 2-3 years, you can seek out Traditional home financing again.

**BANKRUPTINVA** · 03-23-2007, 12:08 PM

Thanks for your help-sorry the first post was so long.You are correct- I did not re-affirm the debt. The lawyer and the mortgage company of course said I didn't need to, since I was and am current. The loan goes up to 9.99% int only as of August. I'm in a panic. Spent the whole day going back and forth with both lenders. They all try and tell you -that a loan modification is not possible but if you search long enough -you will find documents supporting the fact that these companies will, especially in this current situation with sub-prime and big name lenders all over the news with over 2million home owners facing foreclosure in the next year. Ditech has forwarded my request to the investor. Obviously they know it makes no sense to play hard ball because if I walk away they get nothing- the first mortgage takes it all- I believe they are going to work it out. After hours of dealing with the 1st mortgage company who says they don't do it, finally got a rep to admit they could do it, but it's up to the investor. I am writing up my request now and faxing it for the investors review. STRESSFUL situation- sure things are better after ch7, but still owing 342k -seems stupid not to walk away ,but DW emotionally attached to the house.

I am one month since my discharge, should I reopen the case and attempt to get reaffirmation agreement and change my terms? Has anyone had any experience with re-opening their case, does that subject me to other creditors coming back with objections or having to go through the process of showing income again and all that?

**SinkingFast** · 03-23-2007, 12:54 PM

First of all,..............

What that Rep told you is true. It's totally up to the Investor.

The "Lenders" you pay your payments to are simply "Loan Servicing Agents". They collect your payments and perform Admin duties associated with your loan on behalf of the Investor.

The only way to get any relief is for the Investor to agree to a compromise. If your Loans are backed by a Federal Gov't agency, I wouldn't hold my breathe that they will negotiate with you.

We went around with Freddie Mac to stall Foreclosure on our house. We had a Contingent Offer from a very qualified buyer and Freddie Mac wouldn't wait for our buyer to sell their house.

Definitely go thru the process. If you have a "private" investor backing your loan, they might negotiate. Fannie Mae, Freddie Mac, FHA, etc,......... Those programs don't budge. They have rules and guidelines and that's that. The taxpayers pick up the tab for their inane "we must stick to the rules" line of thinking.

You could pay the fee to reopen your BK but there's not guarantee the Court will approve hearing your motion. You could be out some big bucks in filing fee and attny's fee to write up the Motion only to have the Court say "No! We won't hear it! Your arguement does not have Merit." And even if you were to get your BK reopened, there's no guarantee the Lenders will negotiate with you for better terms in Reaffirmation Agreements.

At this point, with your personal liability for both mortgages Discharged, you're better off waiting to see what happens. You may get a substantial pay increase that will cover the payment increases. Or, your job may go south leaving you unable to pay your house payments. With the way things stand now, you can walk away from the house fee and clear at any time.

**BANKRUPTINVA** · 03-23-2007, 02:17 PM

Thank you for taking the time to answer me. Neither of my loans are FHA/Fannie Mae/Freddie Mac- They are both originated and serviced by the original lender-but of course are back by investors and they seem to be private investors. I found evidence- actual modification doc's online through another companies website showing proof that ditech does modifications through their loss mitigation department. Again not until the loan is 3 months past due. (normally)..I also found this online- (probably just for the press)

http://www.gmacsolutions.com/article6.htm

I hope we can find a solution-this was hard enough, we only wrote off 30% of our total debt- the rest is all sitting here in this house- does tempt you to walk away and be 2500 per month better off- house isnt worth any where near what we owe...
Has anybody worked out a loan modification on here?

**SinkingFast** · 03-23-2007, 04:05 PM

That page/article does make it sound like they will work with you, but the reality is far from the rosey picture depicted there.

We attempted to work out a mutually agreeable plan with CountryWide.

The first step is what you've been told. A plea to the Investor.

The Investor will agree or disagree to hear what you have to offer. If the Investor agrees to listen to your proposition, there's a second hoop you'll have to jump thru.

This is the part you haven't been told yet,.......... You're gonna have to provide all your financial information again. Income and Expenses. Just like when you originally applied for the Loan, only this time, it's in reverse.

There's a hidden danger with disclosing this information the Lender won't tell you about. If you took on your Loan recently,........ Say within the last couple of years,............ You could be giving the Lender ammo to use against you. If you haven't suffered a job loss or disability, or some other life altering event,........... The Lender can take the new information, turn it around, and say you fraudulently took a loan you knew you could not afford to repay.

So you've got to be very careful in dealing with the Lenders yourself.

Once you get thru that, you have to have a good, solid proposal for repayment of the Loan. Something the Investor will find appealing.

And after all that,.............. It's totally up to the Investor to accept, reject, or modify your proposal.

It can be done. When I first joined, there was a Member here who worked in the Mortgage Lending Industry. That Member was employed by one of the Country's Largest Mortgage Lenders. She PM'd me with lots of information about how to handle our situation. That's how we managed to stall our Foreclosure Sale 2 months. With all the haggling back and forth.

In the end, we didn't have the funds to make payments. In your case, you may be successful. Most especially since you are wanting to make payments.

**HHM** · 03-23-2007, 11:37 PM

The main challenge you face is the fact that you filed BK. Doing mortgage workout agreement can be done (that is essentially what we are talking about here)...but the workout agreements presume you still meet the underlying lending criteria for the loan you have, which, because of the BK, you probably don't.

I wish I had a suggestion for you. Taking into consideration SinkingFast's advice, you could try.

As I mentioned in another post, you may have to accept the plain FACT that the house is not worth saving...if there is NO equity, why bother, all your doing is trying to preserve a large liability. Honestly, I'd take a two pronged approach, (1) put the house on the market through a realtor, and (2) try to do a loan workout agreement to stall foreclosure so you can at least attempt to sell.

**NYCountry** · 03-29-2007, 01:08 AM

My Chapter 7, 341 isn't until April 9th but I have received offers on my reaffirmation requests. One is a home equity line of credit which I am now paying 9.50%. They offered me a new loan at 7.25% interest and to change the loan to 15 years. (It was due next year.) I also had a home equity loan through HSBC in which I was paying almost 22%. They just sent me a reaffirmation offer of 9 1/2 %. Both payments will be much lower than I am now paying. I couldn't believe my luck. I asked both institutions what hoops I have to jump through and both said none. No red tape, no new closing costs, etc., etc.

**HHM** · 03-29-2007, 07:10 AM

Originally posted by NYCountry View Post

My Chapter 7, 341 isn't until April 9th but I have received offers on my reaffirmation requests. One is a home equity line of credit which I am now paying 9.50%. They offered me a new loan at 7.25% interest and to change the loan to 15 years. (It was due next year.) I also had a home equity loan through HSBC in which I was paying almost 22%. They just sent me a reaffirmation offer of 9 1/2 %. Both payments will be much lower than I am now paying. I couldn't believe my luck. I asked both institutions what hoops I have to jump through and both said none. No red tape, no new closing costs, etc., etc.

You did it the right way; what most debtors fail to realize is that the Reaffirmation Process that takes place "during" your BK is the best time to work this stuff out. Unfortunately, the original poster of this thread is past discharge. The reaffirmation process is an opportunity to negotiate with your mortgage lenders, and in the present climate, more and more people could benefit from using the reaffirmation process to recast their mortgages.

**NYCountry** · 03-29-2007, 08:36 AM

I was leery of anything I did as I filed my own Chapter 7. So far so good.

**BANKRUPTINVA** · 03-30-2007, 11:37 AM

I've contacted my slacktorrney to see about re-opening the case. My discharge is just over a month old and I need to do something about this situation. Can't walk away from the house for many reasons. You can't take 5 kids and go sleep in the car- or take 5 kids and 4 dogs , 2 cats and 6 fishes and go anywhere-...

This mortgage is going to blow up in 7 months-IF I had only known to re-affirm and get new terms- I was told I couldnt..

**HHM** · 03-30-2007, 08:04 PM

Originally posted by BANKRUPTINVA View Post

I've contacted my slacktorrney to see about re-opening the case. My discharge is just over a month old and I need to do something about this situation. Can't walk away from the house for many reasons. You can't take 5 kids and go sleep in the car- or take 5 kids and 4 dogs , 2 cats and 6 fishes and go anywhere-...

This mortgage is going to blow up in 7 months-IF I had only known to re-affirm and get new terms- I was told I couldnt..

It is not a forgone conclusion that you would get new terms...you can't force the bank to agree to any new terms through the reaffirmation process, but it is the best opportunity to try. Unfortunately, I doubt reopening would do much good at this point.

**SamanthaJones** · 03-31-2007, 07:45 AM

Even if you could get a revised mortgage-

It would not be much better than whay you have now. You have two of the worst mortgage situations I've ever seen. Might want to reconsider spedning $2500 every month on a house you cannot afford, and may lose anyway- even in SIX months you'd have saved $15,000 in mortgage interest....that would fund quite a rental, no? But anyway- is your rate a given to raise every six months, or based on a margin? If based on a margin it might not be as bad as you think. Have you read all the pages of fine print in your note?

**SamanthaJones** · 03-31-2007, 09:29 AM

Good article about reffirming a mortgage:

bklawyer.com, the blog dated march 31, 2007.

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