Want to keep our house..

[berry417]

Hello. We recently filed chapter 7 and were discharged last week. We are behind on our 1st mortgage with GMAC, and our 2nd mortgage with Greentree. GMAC has not started the foreclosure process yet, but I think it will be soon. We are not even talking to the 2nd mortgage holder until we know what the 1st is going to do. In the mean time, we sent in the loan modification packet into GMAC.
According to the making home affordable website, your mortgage payment needs to be atleast 31% of your gross monthly income. Ours is NOT, so I am afraid that we will not qualify. Is there anything else we can do to keep our house? We are willing to resume our monthly payments & possibly start a repayment plan of our delinquent payments....
Has anyone been in this situation? If so, was the bank willing to work with you even though you didn't qualify for the loan modification.
Thanks!!! Any advice is appreciated!!

[HHM]

It is not that your "current" mortgage payment needs to be 31%, it is that a modified payment must be no more than 31% and that number must be able to satisfy the loan in some way.

For example, if 31% of your gross income is $1,500, and your mortgage is $230,000 or less, you will probably get a modification since that payment can reasonably service the loan, but if the mortgage is $500,000 and your max payment is only $1,500, you won't get a modification.

There are other factors, the bank is required to do a liquidation analysis as part of the HAMP program.

[NoMoreCards]

I was also behind, also with GMAC. They started foreclosure and I didn't want to lose the house. I took a 401K hardship to catch myself up and received a call from Consumers Credit Counseling for them to work as mediators between me and GMAC to work out a modification, after catching up. Last Friday night I had my phone interview with them. They told me that my mistake was catching the house up without talking to them first.
It seems they take your information and submit it to the the lender to work out a modification (I did not qualify for the Obama plan). The lady I talked to said if you are behind they are more willing to modify and help you make arrangements to catch up by a modification by either lowering interest, or putting some payments at the end. She also said that being a modification, would not reaffirm the debt as the original loan would be modified, not a new loan issued.

In any case, I suggest you look them up and give them a call. There was no charge for me to talk to them, nor did they attempt to sell anything. Consumer Credit Counseling Services is paid for by Freddie Mac (the lady said).

I wish you the best.

[NoMoreCards]

It is not that your "current" mortgage payment needs to be 31%, it is that a modified payment must be no more than 31% and that number must be able to satisfy the loan in some way.

For example, if 31% of your gross income is $1,500, and you mortgage is $230,000 or less, you will probably get a modification since that payment can reasonably service the loan, but if the mortgage is $500,000 and your max payment is only $1,500, you won't get a modification.

There are other factors, the bank is required to do a liquidation analysis as part of the HAMP program.

When I tried to qualify for the modification with Making home affordable plan, they took 31% of my gross income, and then took the mortgage payment, insurance, and property tax numbers. Because my expenses were at 30% of my gross income, they told me I could not qualify for this plan. If this were based off Net income, I would have qualified but because they used before tax figures I did not qualify.

Example:
31% of gross income = 1600 monthly
Current mortgage = 1200 + 200 property tax + 70 insurance = 1470.00 monthly
Mortgage debt = 180K
Did not qualify because it was under the 31% gross income.

[HHM]

Correct, if your mortgage payment is already 31% or less of your Gross income, then there is nothing to modify. You can afford your home (technically) so something else is eating up your money, and that needs to be the focus.

[berry417]

Thank you all for your responses. We are definately able to make our mortgage payment now that we have been discharged, and have no credit card payments to make. The problem is not the monthly payment, it is the past due amount that we owe. On order to resume my monthly payments, they want me to send in the whole past due amount (which is about 20k)
Also in the meantime, our 2nd mortgage is calling to get us to pay them. I have tried to explain to them that until we know what the 1st mortgage is going to do...Im not going to pay any more money torwards the house. While Im waiting for GMAC to go through my modification packet (which will probably get declined anyways), is there anything else I can do? Thanks again for all the advice!

[SMinGA]

You can still contact your lender and ask about any inhouse modification options.

We are with Bank of America, sent back in documents yesterday for the following:

*Amortize (increase principal) the interest from the missed mortgage payments
*Reduce rate to 3.875% for 2 years, then it will be 4.375% for 2 years, and then it will be 4.75% permanently. Original term was 30 years fixed @ 6.95%.

Our original mortgage payment is/was less than 31% of gross, so we did not qualify for HAMP. Originally just called to find out about doing something to address the arrears and bring the loan current. Was not going to say no when they offered a rate reduction as well. (We will be filing ch. 13 either way, but this way we will have more DMI and less priority debt - so can do a 36 month plan.)

[Pandora]

Is there a reason why you did a Ch. 7 vs. a Ch. 13 that would have enabled you to keep the house and roll the back payments into it - or were you trying to get a modification after your discharge?

Just know that the mortg. mod (HAMP) if thats what you're going for is a very long process - many are already 12 months in waiting; in-house can be faster and many without trial payments (in-house) but the terms arent the same as HAMP many times, however sometimes they can mimic HAMP.

It took us 8 long months to get a modification (HAMP) and it was pure hell, but it was worth it for us in the end. We knew however that we would walk away if no mod was offered, so you need to look at it from a business decision vs. an emotional one. We were offered the waterfall rate of 2% for the first 5 years, then 3% year 6, 4% year 7 and years 8-40 are locked at 5%. Loan was extended to 40 years (we still had 28 to go) and our balloon payment will be less than $20K at the end of 40 years. Org. term was 6.25% with a payment of 1330 PITI. A very good modification - payments were cut 50% for the first 5 years from what we were paying PITI, and by year 8, it will still be less than what we were org. paying before the mod, so we got lucky.

We had to file Ch. 13 to strip the 2nd mortgage - and are in the process of doing so.

Good luck to you, I hope it all works out.

[SMinGA]

This matches what I know, from personal experience & what I've read of others at Loansafe.org. For our inhouse modification, the process took about 6 weeks.

One other alternative - if all else fails and you are certain you want the house & can afford the house now - you can file chapter 13. You would not be eligible for a discharge since you just did a 7, but could file a ch. 13 to resolve the arrears over 36-60 months. Would also incur attorney fees (but maybe your attorney would give you a reasonable rate?) and trustee fees. Also would NOT be able to strip the 2nd, no matter whether there is equity in it or not, since you're not eligible for discharge in a 13.

Just know that the mortg. mod (HAMP) if thats what you're going for is a very long process - many are already 12 months in waiting; in-house can be faster and many without trial payments (in-house) but the terms arent the same as HAMP many times, however sometimes they can mimic HAMP.

[lisamomof4]

can i ask why you can't strip a 2nd in a ch13 if you have already done a ch7? our ch7 discharged in july '09. i don't believe we have any equity in our home over what is owed to 1st so why can't a 2nd be gotten rid of? i had thought that was still an option of last resort for us. our 2nd has been 'charged off' and we didn't re-affirm on loans

[newbie2]

can i ask why you can't strip a 2nd in a ch13 if you have already done a ch7? our ch7 discharged in july '09. i don't believe we have any equity in our home over what is owed to 1st so why can't a 2nd be gotten rid of? i had thought that was still an option of last resort for us. our 2nd has been 'charged off' and we didn't re-affirm on loans

The 2nd is deemed stripped upon discharge. Since you don't qualify for a discharge, it cannot be stripped.

[Pandora]

can i ask why you can't strip a 2nd in a ch13 if you have already done a ch7? our ch7 discharged in july '09. i don't believe we have any equity in our home over what is owed to 1st so why can't a 2nd be gotten rid of? i had thought that was still an option of last resort for us. our 2nd has been 'charged off' and we didn't re-affirm on loans

Because there is a set number of years between filings. You can only strip a 2nd mortgage in a 13 and only under certain conditions. In a 7, your personal liability for the 2nd is removed, however the lien still remains against the home.