Ch 7 and escrow account

[owoody]

Not that I dont have enough on my own plate to deal with ,but have a question for my Brother.

They filed a 7 in May and 341 went fine.They are keeping the house.They went through modification and are paying a 0% loan for a couple years.The mortage company now wants $ 5000.00 for the escrow account and they don`t have it.They are threatning to lift the stay and they are not discharged yet.Will that hold up their discharge?

[helpmeout]

The bank has to give your brother a breakdown of the escrow account, what's in there, what went out and why the increase is needed.

Your brother also needs to find out what the state's law is about escrow accounts. Where I live, the mortgage company had to have a certain amount in it. And when they needed more to cover a shortage, they gave me the option of paying it at once or over a certain period of time.

Your brother may want to reconsider keeping the house. I don't think that it will hold up the discharge.

[tcreegan]

some details

Hi, some details.....

Did your brother sign loan modification papers AFTER or BEFORE he filed for BK?

If he signed BEFORE he filed the BK, he is not legally liable for the debt. He can stay and the lender will leave him alone as long as he stays current on his payments. Fall behind (like not paying escrow or when that 0% jumps to 7% or whatever) and they can foreclose at their discretion. But he can walk away at his discretion.

If he signed AFTER he filed the BK, and did not cancel within 60 days, he is bound by the terms he signed. Read the fine print to see if he is required to make a lump-sum payment to escrow or can do it in monthly payments (like most people)

Most lenders have clients pay a monthly amount into escrow. This is adjusted slightly as taxes go up or insurance premium changes. You should definitely tell him to ask the lender directly about making monthly payments.

Pushing this payment on him, threatening to lift the stay, this all smacks of intimidation tactics. If he did not sign papers after the bk filing date, they might be trying to force him into signing a new contract post bk (so he is legally liable for the debt. They can sue him if they foreclose and the sale doesn't cover the amount owed. He has to come up with the difference)

If he signed after the bk file date, they have a new agreement in their hands and I can see no reason to slam him with the big payment and threaten to lift the stay. Makes no sense.......unless they are having second thoughts and are going to force him out for some reason.....

Hope this helps,

Tom in Colo