Approve for HAMP TRIAL before chapter 7 discharge, But did not ask for it.

[locolady]

I found paperwork from BofA, that FedEx stuck under the welcome mat on 1/18. It had been there four days I just happen to notice it today when I open the front door. Anyway it said I had been approved for HAMP on 1/17/2011. It says first payment due by or before 2/1/2011 for five month and then I'd be conditionally approve. The language is all 5 payments must be on time and take a home counseling class. Plus if they need any paper work I must send it to them in June. The modified payment is based on 31% of income that I filled on my BK 7 paperwork (which is the only place I can think they got it form) which is exactly $100 less than I'm currently paying. My loan is an adj rate but at at 5.375% and if HAMP is approve it will remain so but it will be fixed. Not really worried about my APR adj now and I don't think interest rate will go up before the 2012 election but some day it will.

Now this is where I need advice my BK 7 hopefully will be discharge around 2/10/2011. My current income is now about $700 a month more than what they use to get this payment. I now get 40 hours a week and OT. So in June if they ask for my pay stub based on the HAMP 31% formula I will not qualify for a reduction in my payment. My income will cover the original loan payment amount. But If I where approve it would be a fixed rate loan which is all I really want.
I'm already a no assets case and the trustee has filed that report last month. I have not made a mortgage payment for the last 3 month Nov/Dec/Jan. I'm not reaffirming the house as it is 100k underwater but I did plan on staying and paying. The rent in a comparable home in this area is only $200-$300 less than my mortgage payment. I figure might as well pay rent to myself as I've been here 7 years and made some nice improvement to the home. I will retire in 9 years then I really don't care as I will move back east at that time. I have been able to save my payment and was planning on call them next month and bring mortgage current after my discharge.
Now I'm not sure should I pay the trail payment which will mean if I'm denied I will owe 3 month past due of $1519 plus the $100 x 5 month difference in the trial payment amount and loan amount. Would a modification agreement changes my BK 7 discharge of the mortgage? Will signing a mod mean that I'm reaffirming if there is a forbearance of late fee and past due interest to the mod. I ask this because in the paper work there is a clause that they might do this or a balloon payment or extend the terms of the loan to make the number work. Has anyone else face this and if so how did you work it. Also I live in California so even if I did reaffirm there is still no recourse for a deficiency judgment right?

Also I 'm pro se so no lawyer to ask for advice..
Thanks for this forum, I've found it very helpful in many areas.

[tcreegan]

Hi locolady,

Loan modifications have numerous traps to watch for;

"make X payments, then we will see if you qualify for HAMP terms."
"you get X interest rate, but it goes up later."
"HAMP terms are only for 5yrs, then back to original terms"

With discharge approaching fast, be prepared for the reaffirm to not happen. And even if you can hammer out good terms, the BK judge may deny the reaff anyhow. Talk to the lender, find out what is going to happen in the BK, not reaffirmed.

I figure might as well pay rent to myself ....well to the mortgage company anyways

The other option is stay, don't pay. You stay in the house, drag out the foreclosure process as much as you can, take each mortgage payment and put it in the bank. Research your states foreclosure laws so you know exactly how the process works out so you can plan around it.

Well, past bedtime for this guy, maybe some of that made sense.....

Tom in Colo ......zzzzzzzz......

[Pandora]

... I ask this because in the paper work there is a clause that they might do this or a balloon payment or extend the terms of the loan to make the number work.

If its HAMP they're looking to do for you, then the standard is waterfall the interest rate (i.e., 2% years 1-5, 3% year 6, 4% year 7, and then fixed at whatever the current market rate is from year 8 forward. Ours is currently as above but come year 8, we're at 5%).

Next thing they look at if they cannot bring you to the 31% threshold is to "forbear" part of the loan, which will result in a balloon payment at the end of XX terms, but at 0% interest for the life of the org. note.

If still not working - then they can extend the loan terms out to a max of 40 years - with both the above also coming into play.

If all of the above have been tried - but still not feasible for the bank (or you), then its more profitable for the lender to foreclose on the house. Sad..but true.

For us, we received the waterfall rate from 2% to 5% at year 8 onward, a small balloon payment, and they extended our loan out to the 40 year mark. You have to look at the whole picture from year 1 until completion to see if you can manage all the terms set forth. If you cannot afford the increases as the rate adjusts during the 8 year course, then it's probably not in your best interest to accept the mod offer; as it stands, ours worked in our favor and can be sustained all the way through.

you need to ensure that there is a clause on there (should you accept the mod) that still releases you from any responsibility because you included the house in your Ch. 7 and didnt reaffirm. Many on here have done either HAMP or in-house mods after filing BK and the clause is still there that they can walk away at any time.