Ch 7 Include House while waiting 4 a Mod.?

[eddiep]

I totally agree with you, you do not need to hire an attorney to get a loan modifcation. I got very few responses from moderators, maybe they could tell I was too broke to hire an attorney.

I didn't like how much they pushed NACA, and was actually shocked that people got their mods done with them. There were a few of us that started out at the same exact time, many stayed with NACA but I was skeptical and ditched NACA. I got my mod approved months before they did but they got 2% and 3% interest, I did not and most of them have finalized the mods and I still haven't gotten my final documents yet.

[chad9162]

Nice, I'm sure your experience will be well regarded on the forums

[2muchinDebt]

No one on that board steered me towards a lawyer. I already have one since we'll be filing. I have been pleaded with to not file for bk, but we have to so that's a mute point.

I think the other reasons I want to keep the house although it's under water $100k...because it would be hard to save up for a down payment while also rebuilding an emergency fund again. We'd be paying alot of taxes..well..I guess that can be changed by changing 401k distributions?

We'll wait to see what we're offered and go from there.

[CCCrazy]

True, thanks for the clarification concerning relief, chad...sheesh...so if that's the case, then the only options Wells will have with me on my 2nd once I'm discharged is to either settle with me or charge it off? and if they charge off, then I'll have a lien there accruing interest and late payments until the day I die? I find it very hard to believe that a bank can't do whatever the hell they want, why can't they extend the terms on my 2nd from 10 to 30 years or reduce the interest after my discharge if they wanted to?

[chad9162]

True, thanks for the clarification concerning relief, chad...sheesh...so if that's the case, then the only options Wells will have with me on my 2nd once I'm discharged is to either settle with me or charge it off? and if they charge off, then I'll have a lien there accruing interest and late payments until the day I die? I find it very hard to believe that a bank can't do whatever the hell they want, why can't they extend the terms on my 2nd from 10 to 30 years or reduce the interest after my discharge if they wanted to?

No one really knows...I've read that loans mods are considered new loans. If thats the case then it wouldn't violate BK laws. I'm not paying on my 2nd and might try to settle. But if not oh well, I'll find a better house at a cheaper price. I'll live here until my credit gets better and then let it foreclose. So i'll be a renter with huge tax breaks. The foreclosure won't hurt my credit since the mortgage will be included in my BK.

[Amy26]

To the OP, I too live in Virginia and wonder if you live in Northern VA? If so... getting out of your upside down house is what I would do...hell I am doing. In Northern VA alone the housing prices were already over inflated... I paid 250,000 for a condo that was 790 sq ft. They are now foreclosing and short selling for 120k...and those are the units that are bigger than mine. Do you know how long it will take a home to rise again (specially in VA) over 100-150k? If it was 20k or something then probably easily...but not a 150k.

For my own home, I'd probably have to pay it off before I would see any break even on it unless by some miracle of God the housing market just booms again in the next 5 years. But, its not somewhere I'd want to live for 30 years.

If you can see yourself living and staying in your home for 30+ years ... then sure keep it and see if they'll mod it. But if its something you will want to sell in 5-10 years... then I personally would not do that.

[chad9162]

No one really knows...I've read that loans mods are considered new loans. If thats the case then it wouldn't violate BK laws. I'm not paying on my 2nd and might try to settle. But if not oh well, I'll find a better house at a cheaper price. I'll live here until my credit gets better and then let it foreclose. So i'll be a renter with huge tax breaks. The foreclosure won't hurt my credit since the mortgage will be included in my BK.

I meant to "aren't" considered new loans....Oops

[Toby629]

We got a loan mod through our lender, good deal, interest reduced from 5.75 to 3 and payment reduced $300 per month. We are behind 5 month on our 2nd. Since we are filing a chapter 7, our attorney advised us not to worry about the 2nd right now. They will not do anything as we owe more on the 1st than what it is actually worth (thanks to the housing crash.) He said we will have to deal with it eventually. When we are ready, after the chapter 7 is discharged, we can either do a chapter 13 to lien strip it or do a settlement with the lender for 10 cents on the dollar. He said they will settle as they know they won't get anything otherwise. BTW, we just got a mod offer from the 2nd lowering the payments $200 per month. We are just going to do what our attorney has advised and deal with the 2nd later either with a 13 or settlement offer.

[2muchinDebt]

To the OP, I too live in Virginia and wonder if you live in Northern VA? If so... getting out of your upside down house is what I would do...hell I am doing. In Northern VA alone the housing prices were already over inflated... I paid 250,000 for a condo that was 790 sq ft. They are now foreclosing and short selling for 120k...and those are the units that are bigger than mine. Do you know how long it will take a home to rise again (specially in VA) over 100-150k? If it was 20k or something then probably easily...but not a 150k.

For my own home, I'd probably have to pay it off before I would see any break even on it unless by some miracle of God the housing market just booms again in the next 5 years. But, its not somewhere I'd want to live for 30 years.

If you can see yourself living and staying in your home for 30+ years ... then sure keep it and see if they'll mod it. But if its something you will want to sell in 5-10 years... then I personally would not do that.

Amy, I am in the Fredericksburg area. I could see myself here for defintely another 20 years, not 30. I am waiting to hear back from our lawyer. Doesn't filing immediately speed up the foreclosure process?

[pcn]

We got a loan mod through our lender, good deal, interest reduced from 5.75 to 3 and payment reduced $300 per month. We are behind 5 month on our 2nd. Since we are filing a chapter 7, our attorney advised us not to worry about the 2nd right now. They will not do anything as we owe more on the 1st than what it is actually worth (thanks to the housing crash.) He said we will have to deal with it eventually. When we are ready, after the chapter 7 is discharged, we can either do a chapter 13 to lien strip it or do a settlement with the lender for 10 cents on the dollar. He said they will settle as they know they won't get anything otherwise. BTW, we just got a mod offer from the 2nd lowering the payments $200 per month. We are just going to do what our attorney has advised and deal with the 2nd later either with a 13 or settlement offer.

If you modified your 1st, you are planning to stay there, correct? If so, why wouldn't the 2nd just wait things out until you want to sell? You couldn't sell without settling the 2nd, and then they would have the upper hand.

[Toby629]

That's what we will do is just deal with the 2nd later. We definately plan on being in this house for a few years at least. We're just relieved to know that we can deal with the 2nd later, we just want to be sure the 1st is able to be paid monthly right now. DH employment is not the greatest now so if we can just get through the BK and know we can keep the house, we'll be starting all over after the BK.

[chad9162]

If you modified your 1st, you are planning to stay there, correct? If so, why wouldn't the 2nd just wait things out until you want to sell? You couldn't sell without settling the 2nd, and then they would have the upper hand.

PCN, you are correct. The 2nd will always have a lien and when you go to sell you have to satisfy their lien in order to pass clear title. At that point they might take a lesser amount and just issue a 1099 (loss for tax write off). Or you might be able to settle the 2nd before hand. If you file BK you are no longer liable for the mortgage. So they either settle or get nothing, especially if you are upside down. If you walk away the 1st mortgage will foreclose getting ridding of the other liens. Since you filed BK there's no one to go after to.

Some of us are upside more than $100K and with jobs loss and pay cuts, it'll probably be at least 10 years before we break even.

I am doing the same as them. If my 2nd does not settle I'll just walk and start over. In the mean time I'll get a tax write off.

[pcn]

Chad9162, so you didn't reaffirm at the bk, correct? The more I read, the more it seems like it is a reasonable way to "lien strip the second" using a ch7. I know that HHM doesn't agree, but I'm not totally convinced that it is a bad choice either. Maybe I'm swayed by the faster resolution of the 7 compared to the uncertainty of trying the ch13 lien strip. Could you have gone the ch13 lien strip route, and if so, why didn't you?

[Toby629]

chad9162 what do you mean "in the meantime, I'll get a tax write-off?"

[chad9162]

Yes, I could have tried a chap 13 but 5 years is a LONG LONG LONG time. Here's the way I see it. HHM doesn't agree with this idea because he's old school thinking. He thinks that a house should be an "appreciating asset" and that people aren't willing to give up the house. That's why he considers it "risky." I agree with him on the last point. You have to be willing to walk away!

I'm underwater $150Kish. HHM believes I should just walk away. I'd agree with that point if my mortgage wasn't so close to rentals in my area. Since I pay about $1550 a month in mortgage interest and make $85K, my tax breaks make it even closer.

So while my credit improves I'll try to settle the 2nd. If not I'll walk away. People need to realize that its just a house and not your home. Homes cause bad business decisions. Since the foreclosure is included in the BK it won't hurt my credit.

As for reaffirming the answer is no!. In fact the BK code does not require "real" property to be reaffirmed. If you're late or miss one payment its not a big deal, they still have to foreclose. In order to foreclose you have to be in default, they can't just foreclose because they feel like.

As long as you underwater....you have time and the 2nd will not do anything. Obviously as you pay down the 1st mortgage you'll give the 2nd a better position. But IMO the economy will take at least 2 years to even stabilize. In CA, we're lay offing government workers or cutting pay. That financial impact hasn't even been factored in yet so I'm confident I have time.