Loan mod after chapter 7 discharge

[ld2366eh]

Has anyone out there ever had success on getting approved for a loan mod after you received your discharge? That is what we are hoping to do and I'm wondering if I'll have any luck. We should be discharged end of the month...

[btbeme]

Loan mods are an ever-moving target. But, as a whole, having a successfully discharged mortgage SEEMS to be something that gets the mortgage company's attention. It varies, but some loan companies recognize that you are now debt-free and likely less of a risk for default.

The bigger issue is what you intend to get from a loan modification. There are many discussions in these forums, but the bottom line is that the vast, vast majority of loan mods do one or more of three things - they lower your payment by dropping the interest rate, or increasing the loan term, or by back-loading the loan. Only very rarely will they ever cut the amount owed on a loan (a principle reduction). In other words, loan mods almost always focus on your monthly payment rather than the total amount owed (or paid over the long term). For some folks that is enough. Others look at the cost over the term of the loan when deciding whether to pursue or accept a loan mod.

It all depends on what YOU need, and whether the mortgage company will fulfill those needs with a mod. And, a direct answer to your question - yes, many people get a mod after a Ch 7.

[ld2366eh]

We are really behind on our mortgage payments, so for now, any mod would keep us in our house. We have large dogs (three) and know that renting will be difficult, near to impossible, so we only want to go that route if absolutely necessary. Our plan is to stay in our house 2-3 more years, then leave. We'd prefer to buy another home in a couple of years (our income may be able to support 2 mortgages for approval purposes), then either rent the one we are in right now, or short sale it after we close on a new home. Our goal right now is the lowest payment possible (for cash flow as well as future new loan approval purposes). We owe a boat load of money on our mortgage, between the past due payments and the shortfall for property taxes. We are hoping all of that will work to our advantage. Does this strategy seem stupid?

[DirkDiggler]

I tried to get a loan mod for a couple months after our discharge, but ultimately realized it was a waste of time and gave up and started pursuing a short sale, since our house was small and on a small lot and we could rent a house twice the size for $800-1000 a month less. But for some people it might be worth the hassle, especially if its been your house for many years, perfect size, and you want to stay. Good luck!

[ld2366eh]

Sounds like you got a great deal! I am going to keep all of my options open as well. We have an attorney for foreclosure defense pursuing a loan mod for us, and as another option I will test the waters on renting a nice house in our area. It sure can't hurt! I guess I won't know for sure that no one will rent to us, if we don't try. Won't start trying that too soon though. We want to build a small savings over the next few months since we haven't been paying our mortgage payment throughout this process.

[ValleYum]

Hi ld! Hope you don't mind the nickname LOL

I wrote about us renting a house with 4 pets in this thread: http://www.bkforum.com/showthread.ph...269#post588269

Maybe it will help you, too. I wish you good luck!

[ld2366eh]

Funny! Others call me LD as well. . I do remember your thread, and will definitely try that. I'll add to that willingness to provide monthly receipts for nail trimming. Problem with us is the types of dogs we own. We have an AmStaff, Rottie and Great Dane. They're are all people and dog friendly, but their reputations as a vicious breed supersede this. We are responsible pet owners, but that may not matter. And I understand it completely from a landlords point of view. Just covering their own asses. So we'll try it all and leave all of our options open.

[btbeme]

We have an AmStaff, Rottie and Great Dane.

You don't need to rent a house. You need a farm.

[btbeme]

Our goal right now is the lowest payment possible (for cash flow as well as future new loan approval purposes). We owe a boat load of money on our mortgage, between the past due payments and the shortfall for property taxes. We are hoping all of that will work to our advantage. Does this strategy seem stupid?

If you have mortgage lates on your credit file before you filed BK, those may well preclude you from obtaining a new mortgage, depending on the bank. Also, I can guarantee that you will have to pay all of the back taxes before closing a loan mod, as well as enter into a impound account for taxes and insurance as part of a loan mod agreement - the bank will likely not do anything unless you do.

It is too early to tell how banks will treat a loan modification for purposes of determining eligibility for a future mortgage. For instance, if your current bank backloads the loan with a balloon payment (resulting in a lower payment today), the new mortgage bank may well calculate your payment based on the total due, rather than by using the balloon payment "artificial" lower payment. Hard to say, but I believe mortgage banks will scrutinize a second home loan very closely in the future. Not that your idea would be impossible - just a difficult one where a lot of things outside your control would have to fall into place.

[ld2366eh]

[ValleYum]

Funny! Others call me LD as well. . I do remember your thread, and will definitely try that. I'll add to that willingness to provide monthly receipts for nail trimming. Problem with us is the types of dogs we own. We have an AmStaff, Rottie and Great Dane. They're are all people and dog friendly, but their reputations as a vicious breed supersede this. We are responsible pet owners, but that may not matter. And I understand it completely from a landlords point of view. Just covering their own asses. So we'll try it all and leave all of our options open.

We bought a $1m umbrella liability insurance policy - our landlords had requested copies of our renter's insurance and had requested a minimum of $100k in liability limits but they were pleased with our commitment to our pets with the umbrella policy. Maybe this would help too since you do have what some unfairly consider 'bully breeds'.

Another suggestion would be to call local animal rescues as they sometimes have lists of pet/breed friendly landlords.

Stay as long as you can!!! We were able to stay 2 years trying mods, etc. They offered a mod reducing our payment by a whopping $50/month. They lowered our interest rate to 3.9% from 5.75%, allowed pay-back of the insurance and taxes they had paid on our behalf over the last 2 years over a 5 year period and re-started the 30 year loan clock. It still just wasn't enough. So we said no thanks and started hunting for a rental then.

Frankly, we could still be living there now but finding the perfect pet-friendly rental both price and location-wise was not something we could guarantee finding if we had a finite deadline like a foreclosure would cause. We love renting our little yellow house (we also downsized and decluttered!) and it is worth the money to be happy and free of that albatross of a house.

LOL Our pets sent the landlords a Christmas ornament and have a nice bottle of red (Valentine) wine to deliver with February's rent! I am a schmoozer (aka: suck-up)!

Keep us posted, LD!!!

[ld2366eh]

Thanks for all of your suggestions! And I definately will! I'm on the boards everyday!

[drowning123]

If you have the right combination of income/debt ratio, you should be able to get a modification. Of course, there are other factors. I got a modification after being discharged. Good luck!