Please some sound advice needed!And my "Loan mod" Story

[billsbroke]

First of all, I aplied for a Loan Mod under the Obama plan with my first Mort. we are with Wells Fargo, So far they have been helpfull I must admit, We have missed the last twp payments ( March and April) We did not want to miss the April Payment but they acually told us NOT to pay it because it would just be sent back while our loan was under review. We did not think we would have much luck with this as we never re-affirmed our Mort. In Bankruptcy but continued to pay it every month, surprisngly just today after only a month I recieved a small package with the "rules" We are to pay on the 1st of May, June and July our regular Mortgadge payment...It must not be a minute late for these three months or we immediatly go into default and everything is null and void, After the three payments we then wait again for our acuall loan mod to come in and we do not have to make a payment until that comes in sometime in August, we were not told what the Mod would be just that we will get it if we make these three payments as told we are to because thats what the "investor" wants to see first, whatever that means. I had to do three things to get this, A very strong letter in which we detailed in full whay we are having problems and why we want to keep the house, second we had to provide a full account of monthly expenses and lastly we had to show proof of income, That was all we had to do and that was 30 days ago, we just got this package today detailing what we need to do to get the mod.I feel good about this and cant wait to see what the new terms are going to be?

My Question is with My second that is held with HSBC, We never re-affirmed that either and just paid it every month, we did miss one month but nothing was ever said, We owe $226K On the first and $39K On the second, our value is now at $180K...After several attempts to work with HSBC on some type of "mod" they dont want to hear it and just tell us to contact something called "Acorn" It then dawned on me... we have a house that at best case senerio wouyld sell for maybe $160K Not even close to enough to satisfy the first mortgadge, never mind the measley 39K to the second , they wont work with us, they no longer report our payments to the Credit Bs...etc, I am toying with the idea now of just not paying them anymore, I have had it with them, so my Question is are they crazy enough to Foreclose?? on that small amount? would they really buy out the first to make a point? Are we in a "good" situation because we did not re-affirm? Yes, I understand most people do tell us "Just walk away" However we love our home and want to stay here , Our daughter loves it here the schools are great etc, etc, etc....You have all heard this a million times...Can anyone shed some light on different options? Scenerio's? Is a chapter 13 lein strip an option? I was told that since we are no longer liable for the money we have nothing to strip?? Anyone have any dealings with HSBC and second morts??

I also wanted to tell you about how my Firat mort mod went and is going in case anyone was interested, For us anyway I honestly cannot say anything bad about Wells Fargo, they have been courteous and really tried to help us, They even said on the phone "we do not want you to fail" So, again, our ideal situation would be to get rid of that second and only pay on this "new" first mod we are getting, do you see a chance? Does it seem from what I told you here that HSBC would foreclose? whats the worst thing they may do? what do you all think we should do, Please I really need the advice, I hate to keep sending that payment out for the second it seems like money we may as well just burn..

[hamletsdead]

It is highly unlikely that your 2nd mortgagor would be interested in foreclosing in the situation you described, since they would have to pay off your entire 1st mortgage, plus pay all the foreclosure auction fees (which average about 10% of the sale price), and they would get . . . nothing! In fact, they would have to pay out extra money over and above what you owe them in order satisfy your 1st and the auction fees. So, smart money says no way they will foreclose.

You can strip the 2nd in a follow-on Chapter 13. It's a little weird, philosophically, since you don't owe the 2nd mortgagor anything personally, and yet in your Chapter 13 plan when you strip the lien it will become unsecured debt that you propose to make payments on. Realistically, if you are still under water financially, the proposed payments on the plan can be negligible, or perhaps nothing (talk to a BK lawyer about this). I'm in the same boat right now, with my 3rd mortgage, and they're being jerks about settling the debt. I'm willing to pay them to release the lien so I don't have to file an follow-on Chapter 13, and they don't want to hear about it. I guess they'd rather just hang back for years and see if the house recovers any value. Stupid of them, but then again they are the folks who did electronic appraisals and offered to send me $230,000 via overnight mail with the loan docs.

[biotechsolution]

It is highly unlikely that your 2nd mortgagor would be interested in foreclosing in the situation you described, since they would have to pay off your entire 1st mortgage, plus pay all the foreclosure auction fees (which average about 10% of the sale price), and they would get . . . nothing! In fact, they would have to pay out extra money over and above what you owe them in order satisfy your 1st and the auction fees. So, smart money says no way they will foreclose.

You can strip the 2nd in a follow-on Chapter 13. It's a little weird, philosophically, since you don't owe the 2nd mortgagor anything personally, and yet in your Chapter 13 plan when you strip the lien it will become unsecured debt that you propose to make payments on. Realistically, if you are still under water financially, the proposed payments on the plan can be negligible, or perhaps nothing (talk to a BK lawyer about this). I'm in the same boat right now, with my 3rd mortgage, and they're being jerks about settling the debt. I'm willing to pay them to release the lien so I don't have to file an follow-on Chapter 13, and they don't want to hear about it. I guess they'd rather just hang back for years and see if the house recovers any value. Stupid of them, but then again they are the folks who did electronic appraisals and offered to send me $230,000 via overnight mail with the loan docs.

I would be very leary of an attorney who can get your 2nd mortgage lien stripped in a chapter 13 following a chapter 7 discharge. Under the new bankruptcy law changes in 2005, it is not possible to receive a discharge in a
Chapter 13 if you have received a discharge in a Chapter 7 within 4 years.
Meaning you cannot file a Chapter 13 to discharge any debt within 4 years of your Chapter 7 discharge.

If you file a Chapter 13 within 4 years of your Chapter 7 discharge any debts included in the Chapter 13 will have to paid at 100% since you aren't eligible for a discharge.

If an attorney tells you any different he's wrong.

[Overmylimit]

I would be very leary of an attorney who can get your 2nd mortgage lien stripped in a chapter 13 following a chapter 7 discharge. Under the new bankruptcy law changes in 2005, it is not possible to receive a discharge in a
Chapter 13 if you have received a discharge in a Chapter 7 within 4 years.
Meaning you cannot file a Chapter 13 to discharge any debt within 4 years of your Chapter 7 discharge.

If you file a Chapter 13 within 4 years of your Chapter 7 discharge any debts included in the Chapter 13 will have to paid at 100% since you aren't eligible for a discharge.

If an attorney tells you any different he's wrong.

This is true however my Attorney said there is a grey area to this...he explained it to me but it was a little over my head (Lawyer jargon) something like you file the 13 but it wont actually be discharged until the 4 years is up.

[billsbroke]

I would be very leary of an attorney who can get your 2nd mortgage lien stripped in a chapter 13 following a chapter 7 discharge. Under the new bankruptcy law changes in 2005, it is not possible to receive a discharge in a
Chapter 13 if you have received a discharge in a Chapter 7 within 4 years.
Meaning you cannot file a Chapter 13 to discharge any debt within 4 years of your Chapter 7 discharge.

If you file a Chapter 13 within 4 years of your Chapter 7 discharge any debts included in the Chapter 13 will have to paid at 100% since you aren't eligible for a discharge.

If an attorney tells you any different he's wrong.

you are correct the attorney I called said its not an option because under a 13 the second mort would become "unsecured" debt and in a 13 you have to pay unsecured debt over a 5 year period, therefore it would acually be worse, The heck with it I am just going to keep paying it...I dont have a choice and I like to sleep at night, I am not going to play games with my home, there is no way around not paying that second unless we walked and I dont want to walk, I have put everything I have into this home emotionally and money wise, I have never felt this vulnarable about anything, awefull feeling

[hamletsdead]

You guys need to talk to better bankruptcy lawyers. It is absolutely possible to file a Chapter 13 immediately after receiving your Chapter 7 discharge -- it's unofficially called a Chapter 20. You just can't receive your discharge in Chapter 13 for 4 years, so even if you qualified for a 3 year plan (as opposed to a 5 year plan) you have to wait at least 4 years to get your second discharge. While it is true that your second mortgage, once stripped, becomes unsecured debt, you only pay on it to the extent you pay any other unsecured debt in your Chapter 13 plan. Thus, if your plan called for (and your income supports) only paying 10% of any unsecured debt, then you would only pay 10% of whatever you owed on your 2nd, over however long your plan is for. You could still have a 3 year plan, but you won't get your discharge for another year.

If you actually have no positive cash flow under the means test and monthly expense worksheets, you can file a Chapter 13 that proposes to pay whatever you want, and still strip the lien. I'm doing it myself (assuming my 3rd won't settle) and funding the payments to them out of my 401K for 3 years -- $1000/mo for 36 months on $230,000.

[biotechsolution]

You guys need to talk to better bankruptcy lawyers. It is absolutely possible to file a Chapter 13 immediately after receiving your Chapter 7 discharge -- it's unofficially called a Chapter 20. You just can't receive your discharge in Chapter 13 for 4 years, so even if you qualified for a 3 year plan (as opposed to a 5 year plan) you have to wait at least 4 years to get your second discharge. While it is true that your second mortgage, once stripped, becomes unsecured debt, you only pay on it to the extent you pay any other unsecured debt in your Chapter 13 plan. Thus, if your plan called for (and your income supports) only paying 10% of any unsecured debt, then you would only pay 10% of whatever you owed on your 2nd, over however long your plan is for. You could still have a 3 year plan, but you won't get your discharge for another year.

If you actually have no positive cash flow under the means test and monthly expense worksheets, you can file a Chapter 13 that proposes to pay whatever you want, and still strip the lien. I'm doing it myself (assuming my 3rd won't settle) and funding the payments to them out of my 401K for 3 years -- $1000/mo for 36 months on $230,000.

and three years must pass between the filing of a Chapter 7 and a subsequent Chapter 13. The period allowed between Chapter 7s has also been extended from six to eight years.

[albacore44]

I'm in the same situation with HSBC as my second, but at $242,000. From all my studying, HSBC does not offer any help of any kind. They are based in UK and not bound by US laws to participate in any of the new modification programs. I am employed and right now able to make the payments on 1st and 2nd, interest only, but its a ticking time bomb, and soon as Mr. Bernanke decides to raise rates the 2nd won't be afffordable. I estimate house to be $200k upside down. my plan is to go through BK first, hopefully a Ch-7. after discharge, i will just stop paying them. risky.........yes, but I just don't think they will buy out my 1st with citi at $417K with a house that far upside down. They will most likely sell to a JDB, and I will figure out how to get the Lein released in time. I am like you, have way too much sweat and tears invested in this place, and at my age never be able to get another property like this

[biotechsolution]

You guys need to talk to better bankruptcy lawyers. It is absolutely possible to file a Chapter 13 immediately after receiving your Chapter 7 discharge -- it's unofficially called a Chapter 20. You just can't receive your discharge in Chapter 13 for 4 years, so even if you qualified for a 3 year plan (as opposed to a 5 year plan) you have to wait at least 4 years to get your second discharge. While it is true that your second mortgage, once stripped, becomes unsecured debt, you only pay on it to the extent you pay any other unsecured debt in your Chapter 13 plan. Thus, if your plan called for (and your income supports) only paying 10% of any unsecured debt, then you would only pay 10% of whatever you owed on your 2nd, over however long your plan is for. You could still have a 3 year plan, but you won't get your discharge for another year.

If you actually have no positive cash flow under the means test and monthly expense worksheets, you can file a Chapter 13 that proposes to pay whatever you want, and still strip the lien. I'm doing it myself (assuming my 3rd won't settle) and funding the payments to them out of my 401K for 3 years -- $1000/mo for 36 months on $230,000.

You better have your attorney read this case. This is just one. There are many more that support 1328(f). which says it's the filing date for a 13 after a 7 discharge. Not the discharge date of the 13 for the 4 years time limits.
this case deals directly with your chapter 20.

http://www.tneb.uscourts.gov/opinions/stair/10-04-2007;_David_Dyer_07-32281_Mark_and_Jenna_Weaver_07-32595.pdf

[billsbroke]

I'm in the same situation with HSBC as my second, but at $242,000. From all my studying, HSBC does not offer any help of any kind. They are based in UK and not bound by US laws to participate in any of the new modification programs. I am employed and right now able to make the payments on 1st and 2nd, interest only, but its a ticking time bomb, and soon as Mr. Bernanke decides to raise rates the 2nd won't be afffordable. I estimate house to be $200k upside down. my plan is to go through BK first, hopefully a Ch-7. after discharge, i will just stop paying them. risky.........yes, but I just don't think they will buy out my 1st with citi at $417K with a house that far upside down. They will most likely sell to a JDB, and I will figure out how to get the Lein released in time. I am like you, have way too much sweat and tears invested in this place, and at my age never be able to get another property like this

To be honest, I filed chapter 7 and never re-affirmed either mort, but I just dont have the guts to stop paying! lol...I just cant gamble with a family.Everytime I say to myself "They would never buy out the first" etc...I write them a check in the next instant, Its horrible to live like this, feels like there is a gun to my head...I know I took the money blah blah blah....But no one is perfect and we all fall on hard times, what upsets me the most is the Unwillingness of some of these companies to help? I mean if they only would meet someone halfway it would avoid all kind of trouble, I find it insane that a company such as HSBC would rather see a family foreclose because they are behind two payments rather than help them out? Its upside down, the Govenment can give BILLIONS to banks to help them and ITS MY AND YOU MONEY?? What about us?? W e cant get $1000 to help us past a bad month..Its insane!!

But in the end, I pay because I see my daughter sleep in her bed at night unaware of any problem, That type of security is what makes me feel writing the check is worth every penny, even if I dont have to anymore and even if the mort isnt worth the paper its written on, That roof over my families head is priceless....and so, I fight on to save what little bit of the americn dream I have left..

By the way, My first Mort is going to be modified but not under the Obama plan, They told me because my mort is FHA its done a bit different, thats why maybe in the end if worse comes to worse I can get a "Partial claim" anyway thats the update on that