Question about Mortgage Post BK Discharge/Not Reaffirmed

[stevie2012]

As many of you know, my BK was discharged in August 2013. I chose the "stay and pay" option for my mortgage, which is with Wells Fargo. My statements I get now say "for information purposes only…if you choose to make a voluntary payment…" My credit report also shows the mortgage "included in bankruptcy."

For the time being, I chose to stay and pay in the condo because with the mortgage/HOA fees, I am paying less than I would renting in the area in which I live.

A friend of mine did the same thing but she hasn't made a mortgage payment in months. She said that WF told her they will not even start foreclosure until she has missed FOUR payments in a row (120+ days in arrears). So essentially, she said, the bank will do NOTHING if she just sends them a mortgage payment once every three months to keep it < 120 days past due.

Does this sound correct? Because I would have absolutely no problem doing that - it will help me save money!! Yes, I know I have to stay current with the HOA fees; otherwise, that will accelerate the foreclosure.

Now do not get me wrong, I am not looking to move or get foreclosed on. However, I cannot - in any way, shape or form, see me living in this condo until 2035 which is when my loan matures.

What I am trying to do is to pay as little as possible every month without having to have my property foreclosed on. Thanks for any advice/information.

[stevie2012]

Also - I noticed that WF cannot charge me any late charges any more if I pay after the 15th of every month.

How is the interest affected post BK? I ask because I when I did my taxes I noticed my mortgage interest was way less this past year than the year prior. A friend of mine told me interest stops but I do not see how that is possible.

Anyway information would be helpful regarding my questions.

Thanks in advance.

[catleg]

I agree with the timeline, in essence. I can tell you that Wells Fargo is not holding back any foreclosure cases in NJ, instead they have made themselves the "crash test dummy" for the new improved judicial foreclosure process in NJ.
In my case, my first missed payment was April, missed April, May, June, July, August (chapter 7 discharged during August) then started getting offers to "help" from the bank during late Aug/Sept/early Oct but I chose not to respond since in my opinion I would not qualify for any relief. So foreclosure suit was filed in October, served to us first week in Nov, and currently our time for an answer (extended, per my written request to plaintiff attorney) is just run out so I expect to see some action in a few weeks. We are planning to move in a few weeks but i expect we could stay until April-June at least if I wanted to play the "fight a losing legal battle " game. I've looked up cases in the NJ courts online and when the defendant does not object in any way they are moving through in about 8 months (assuming the bank is competent and the paperwork is clean). That's 8 months from the filing of the lawsuit, which is about 6 months after you stop paying, maybe less if you are not in BK (or maybe more, since they may think they've got a better shot of keeping you on the gerbil wheel).

The thing about missing 4 payments is cumulative, if you pay 1 month after missing 3 you're still 90 days late so that doesn't help.

The bad news is, yes, your tax form will report a LOT less interest paid on the mortgage and will, in effect, leave you owing more in taxes in April! The good news is that for whatever reason, WFC reported that we paid our full 10k in property taxes last year instead of the 5k that "we" paid before escrow ran out and then "they" had to pay the other 5k, so you win some you lose some.

[stevie2012]

I really don't understand the tax thing/interest paid and why it's so much less. This process is pretty confusing.

I'm just looking to pay the least amount as possible and still stay in the condo as I really don't see myself fulfilling the contract…So my thing is, if I can pay them one payment, skip three payments, pay them one payment…all that to avoid a foreclosure I would rather do.

Thanks for sharing your experience though. I'm in FL so I know foreclosures are horrendous here.

My friend hasn't made a payment since February 2013 and her Ch 7 was discharged same month as mine.

Any other insight, responses to my original questions from others would be appreciated.

[keepmine]

Odd about the interest as well.
I filed in 05 and didn't reaffirm. I've noticed nothing unusual on the yearend statements.

[LadyInTheRed]

I really don't understand the tax thing/interest paid and why it's so much less. This process is pretty confusing.

Every mortgage payment includes interest. If you only pay your mortgage once every 3 months, you will be paying less interest. That means you wont have as much interest to deduct on your income tax return. But, I would think that the money you save on mortgage payments would be higher than the decrease in your tax deduction.

The fact that your friend is paying only every 3 months very well may not be why the bank hasn't foreclosed. I suspect she is wrong that the bank will not eventually foreclose. If you only pay your mortgage once every 3 months, you will be in constant default and will quickly be 120 days in arrears. The bank can foreclose at any time. Even if your friend is correct and it is not their current policy not to do so, policies change.

If you want to be sure to avoid foreclosure, keep making your payments on time. When you are ready to move. Stop making all payments and save money until they foreclose.

[LadyInTheRed]

Also - I noticed that WF cannot charge me any late charges any more if I pay after the 15th of every month.

How is the interest affected post BK? I ask because I when I did my taxes I noticed my mortgage interest was way less this past year than the year prior. A friend of mine told me interest stops but I do not see how that is possible.

Your friend is wrong that interest stops. But, to cure a default and avoid foreclosure, all accrued interest must be paid. I am pretty sure the same would e true of late charges. All amounts due under the promissory note are a lien against the property, even if you are discharged from personal liability.

[catleg]

Wells Fargo used to charge late fees on my mortgage early in chapter 13. But at one point where I got 2 payments late, they filed a motion for relief of stay and in fighting that off, WFC no longer charged any late fees on my mortgage. Now whether they will magically reappear out of hiding when they prepare the final judgment costs for my foreclosure I can't say yet. It's really a moot point if you let the house go and it doesn't go for a high enough price to generate surplus funds at the sheriff's auction. (but if I attempted to redeem the house they would be rolled into costs).

[Pizza]

A friend of mine did the same thing but she hasn't made a mortgage payment in months. She said that WF told her they will not even start foreclosure until she has missed FOUR payments in a row (120+ days in arrears). So essentially, she said, the bank will do NOTHING if she just sends them a mortgage payment once every three months to keep it < 120 days past due.

I suspect that if she paid the ENTIRE past due amount, including the late fees, that WF would do nothing. Making one month's payment four times a year is not going to keep a mortgage company happy. That would be the same as 8 months late

During the first 20 years or so, the interest payment makes up the bulk of your monthly payment to the mortgage company, which means that your tax bill would go much higher for a younger mortgage than an older one.

[stevie2012]

Thanks for all the replies. I have just decided to pay every month rather than try and game the system. I'm behind January right now but I'm paying that this Friday.