I desperately need advise

[xena]

We are filing in June and I need some advise. We owe 203K 1st Mortgage, 53K HELOC. House is worth 219K from zillow. It looks like I have equity on first but in really I'm under water about 37K. I wish I can NOT reaffirm my both mortgages but then will have a disposal income of about 2K. My 1st Mortgage is 1742.87 (fixed 7.125) a month and HELOC is 196 (variable rate) for now cuz of economy but at one point it was 490. If we reaffirm, then we'll have negative DI.

If say we do not reaffirm the HELOC. Can they foreclose if we stop paying? Any advise will be greatly appreciated.

[justbroke]

If say we do not reaffirm the HELOC. Can they foreclose if we stop paying? Any advise will be greatly appreciated.

By definition and law, yes they can. You pledged your home as collateral by granting the HELOC lender a security interest in your home. They, under the terms of your loan agreement and the "security instrument'" (usually a mortgage or a deed of trust), can enforce the note (the loan) by foreclosing should you not pay.

Will they? Probably not in this economy.

One strategy that is being used in Chapter 7s is to not reaffirm either mortgage and just continue paying the first mortgage. After the discharge, offer a settlement to the 2nd mortgage holder. Of course, you need to check all the financial data to make sure it's the right thing (to settle and keep the home). Some have had success with settlements averaging about 10% on a "discharged" second mortgage.

[btbeme]

If I, or anyone else, could read the minds of the mortgage holders, we would be instant gazillionaires.

Your bet (or hope) is that the Bank, that place with no red blood cells, compassion, heart, or warmth, would look at your lack of reaffirmation, compare it to your payment history, and come out with a decision to not foreclose.

If you intend to play "chicken" with the bank, you need to be willing to suffer the consequences of being the one who pulls into the ditch.

If you are, and are willing to literally bet the farm on your chances, I would make sure sure SURE to give the bank every reason to believe that you intend to continue your payments, uninterrupted and in full, regardless of your lack of reaffirmation.

Would they foreclose? Only if they felt they could get more out of doing so. Or unless they have shareholders that demand...or rules that say they should or must...or...

You get the picture. Can they foreclose? You bet. Will they? I tend to side with a lot of people here that feel that a stream of payments from a reliable customer with a good payment history is worth a lot more than rolling the dice on a foreclosure. Frankly, I think that banks are scared shitless to do anything more than cash checks that they are sent and hope for the best.

I'll be playing chicken with two banks in the near future - one on a second, one on a first (the first being a good $150k underwater, the second being a very poor business decision on the bank's behalf, which is probably why that bank no longer exists). I'll let everyone know how it all works out.

[btbeme]

Another note - if your first mortgage is at 7% or higher, I'd look seriously at renegotiating that as well. Stay current on payments, show them your CH 7 and how you intend to keep paying them in the future, and beg mercy.

If a bank knows that you will continue payments and are seeking relief to be able to do so, they will at least listen. If they have reason to doubt that you will be able to continue payments (a common mistake made by a lot of people pleading poverty), good luck.

Show them what you can afford. Ask for that payment via an interest rate reduction. And cross your fingers that they have common sense.

[geye]

We are filing in June and I need some advise. We owe 203K 1st Mortgage, 53K HELOC. House is worth 219K from zillow. It looks like I have equity on first but in really I'm under water about 37K. I wish I can NOT reaffirm my both mortgages but then will have a disposal income of about 2K. My 1st Mortgage is 1742.87 (fixed 7.125) a month and HELOC is 196 (variable rate) for now cuz of economy but at one point it was 490. If we reaffirm, then we'll have negative DI.

If say we do not reaffirm the HELOC. Can they foreclose if we stop paying? Any advise will be greatly appreciated.

Why would not reaffirming give you so much disposable income? Can you no longer count the payments?
Even if you couldn't count the payments, wouldn't you get to count at least the average housing cost in your area?


I was under the understanding that even if I didn't reaffirm, I still got to count the payments since I was still making the payments.

[xena]

Geye: I thought that the mortgage will no longer count in my monthly expenses if I don't reaffirm since I will no longer be obligated to pay the loan. I'm confuse, can someone please clarify?

[StartingOver08]

You do not have to reaffirm in order to count the monthly payments.

Discuss with your attorney the strategy that JustBroke spoke about. Are you current with your first?

Also, zillow values in my area run high. Do you know if the zillow value is accurate? I would get a CMA from an experienced Realtor to get a good idea of actual market value. They are free. Make sure the closed comparable sales have occured within the last 90 days.

[xena]

Sorry if I sound so ignorant but how do I go about getting a cma? Do I pretend I am selling the house? Please advise.

[justbroke]

Sorry if I sound so ignorant but how do I go about getting a cma? Do I pretend I am selling the house? Please advise.

Basically... yes! Just tell them it would be a short sale and your weighing your options!

[momofthree]

I agree about zillow being inaccurate. Zillow says my house is worth about $201k, but in reality it's worth closer to $160k.

[justbroke]

Zillow can be "correct" sometimes, but purely accidental and not because their automated valuation model is awesome! You see, even a stopped analog clock is "correct" twice a day.

[xena]

Thank you so much for all your advise.

Can you also help me with these? We are a family of 6. I am trying to fill out the form and I am running into some problems.

I went here http://www.justice.gov/ust/eo/bapcpa...anstesting.htm. I don't understand some of it.

So for family of 6....

Median Family Income = 92,590
Food Clothing & Other Items = 1895 what is that 5% of food and clothing???
Out-of-Pocket Health Care standards = 60 is this 60 per person or for family??
Housing and Utilities Standards = 1872 (Non-Mortgage = 651; Mortgage = 1221)
Transportation Expenses = 992

So are these the figure am allowed to put if say some areas I fall short? I know that I will have to use actual expenses especially if I am over national standard. Please, please help. I am a mess trying to fill out this form!!

[momofthree]

So for family of 6....

Median Family Income = 92,590
Food Clothing & Other Items = 1895 what is that 5% of food and clothing???

An additional 5% would be $70, but you must prove that you require this additional amount--normally due to special dietary limitations...

Out-of-Pocket Health Care standards = 60 is this 60 per person or for family??

per person, 6= $360/mo

Transportation Expenses = 992

Being allowed to claim this depends on your district and whether or not you have a car payment. Without a payment, some districts will not allow you to claim an ownership expense.

[justbroke]

momofthree has provided excellent help. I will only add that when you are over the median, you must stick to the "IRS Standards". There are areas on the Chapter 13 Means Test (Form B22C) that allow you to go over certain things. For example, there is both a line for telecommunications above the amount included int he non-rent/non-mortgage amount, and a line for Energy Costs for your home.

[xena]

Yes we actually have 3 car payments. We will not reaffirm one of the car payments.
I have 3 little children ages 1-7. Will I qualify for the extra then?