Confused by bank wanting to modifiy after discharge

[lookinupn09]

I had my chapter 7 discharged Mar 15th of this year, and included the mortgages on the property in the Bankruptcy. That means the debt is discharged, but the 'mortgage' remains, right? So, by the bank sending me loan mod docs, certified mail last week, they must think that the mortgage can be modified. Or, is this a trick. Can anyone expand on this?
October will mark the 2 year anniversary of not paying this mortgage. The note is in my name only, but my wife's name is on the title along with mine. Anyone agree this may get interesting.

[AlmostAmos]

What bank? They MAY try to get you to mod w/ language that will lock you into it. More like a refi...

[lookinupn09]

What bank? They MAY try to get you to mod w/ language that will lock you into it. More like a refi...

Indy Mac

[SMinGA]

Read the agreement.

My understanding is that loan mods change the payment terms, amortize missed interest, etc. - but do not create a new loan agreement. Meaning the original loan is still standing, and a discharged loan will still be discharged after the mod. But something to that effect should be stated in the mod paperwork.

[lookinupn09]

Read the agreement.

My understanding is that loan mods change the payment terms, amortize missed interest, etc. - but do not create a new loan agreement. Meaning the original loan is still standing, and a discharged loan will still be discharged after the mod. But something to that effect should be stated in the mod paperwork.

Thanks for your reply. I agree with your definition of a loan mod. I am not sure why they would want to modify a discharged debt. Or, why would I. My feeling is they want to avoid the foreclosure process, as do I. Do you think there is a way to communicate with an institution like this to create a new deal? I can't be alone here, as they surely are overburdened with cases like this. Your thoughts...

[SMinGA]

My understanding of a mod: its there for those who need a little help to keep their house. Such as lowering the rate, amortizing missed interest, etc. Its not going to help everyone - but in some cases can make the difference of staying or walking away.

If a minor adjustment will do that for you, then it could be in the bank's best interest to help you so you stay and they are not stuck with a house that sells for far less than your current mortgage balance.

We have completed an inhouse mod with Bank of America. Part of the process was submitting info to them regarding our income, expenses, etc. (Fell behind when income dropped & expenses increased. Have since started bringing in more income with a 2nd job.) If our paperwork revealed we couldn't afford the mortgage no matter what, they would not have approved the mod. In your case, you no longer have unsecured debt payment - so your current financial state is better than it was previously. If that + a loan mod would allow you to stay in your home (assuming that is what you want to do) then it could be good for you & the bank.

[lookinupn09]

My understanding of a mod: its there for those who need a little help to keep their house. Such as lowering the rate, amortizing missed interest, etc. Its not going to help everyone - but in some cases can make the difference of staying or walking away.

If a minor adjustment will do that for you, then it could be in the bank's best interest to help you so you stay and they are not stuck with a house that sells for far less than your current mortgage balance.

We have completed an inhouse mod with Bank of America. Part of the process was submitting info to them regarding our income, expenses, etc. (Fell behind when income dropped & expenses increased. Have since started bringing in more income with a 2nd job.) If our paperwork revealed we couldn't afford the mortgage no matter what, they would not have approved the mod. In your case, you no longer have unsecured debt payment - so your current financial state is better than it was previously. If that + a loan mod would allow you to stay in your home (assuming that is what you want to do) then it could be good for you & the bank.

Thanks for your reply. I am 80 t0 100K under water on the note. Income to debt ratio for me is OK, except I don't make enough right now to cover the note. Even with a refi at the reduced number and lower rate, I don't think there is enough income to get it done. Not sure how it's going to work out. Good luck to you!

[brad10281]

I'm gonna try to work with my bank on a mod. I was discharged in March as well but if I can get them to do a principal reduction I may stay. I probably won't stay unless they reduce the principal. I took a 31% decrease in pay after 5 months of unemployment last year. Problem is that I have to try to get the second mortgage settled for as little as possible if the first will modify the loan.

So you're still living in your house almost 2 years after stopping payments? July 1st will mark 9 months for me. Still waiting on the foreclosure process.

[willsurvive]

Read the agreement.

My understanding is that loan mods change the payment terms, amortize missed interest, etc. - but do not create a new loan agreement. Meaning the original loan is still standing, and a discharged loan will still be discharged after the mod. But something to that effect should be stated in the mod paperwork.

Does anyone know if this means you are back on the hook for the loan amount after a bankruptcy. I guess what I'm asking if you got a discharge from bk7, did not reaffirm the home, then modified the loan, does it mean you are now liable for the balance if you can't make the payment in the future?

BofA just contacted us yesterday via FedEx for HAMP. I don't want to modify anything if it means we are now liable for the entire balance. Thanks!

[SMinGA]

Since you're modifying the terms of the original loan, not taking on responsibility for a new loan, it should not affect the discharge. Loan #, account open date, etc. will not change.

Refinancing would be different however. When you refinance you pay off the original and take out a new loan.

[BCA2009]

From everything I have read, SMinGA is right, BUT, this would would be a time when I would not skimp on having a good attorney review the documents. I would not sign anything related to a discharged home loan without being 100% sure there was no new liability. But then I'm paranoid.

[SMinGA]

Being cautious is better than being too carefree I think. A little paranoia never hurt anyone, right???

From everything I have read, SMinGA is right, BUT, this would would be a time when I would not skimp on having a good attorney review the documents. I would not sign anything related to a discharged home loan without being 100% sure there was no new liability. But then I'm paranoid.

[BCA2009]

"Just because you're paranoid, doesn't mean they aren't out to get you!" - Joesph Heller, Catch 22

my BK motto

[lookinupn09]

"Just because you're paranoid, doesn't mean they aren't out to get you!" - Joesph Heller, Catch 22

my BK motto

I will 2nd that.
With my wife and I on the title, and only my name on the note, must be some sort of trouble for them to go forward. Should know more soon, as the 90 day deadline is in August.