When to stop paying on mortgage?

[copaaz2005]

Hello,
We filed CH7 and had our 341 meeting last friday. We got the "report of no distribution" on Monday. In our petition, we did not select surrender or reaffirm our current house. We checked other and commented retain and pay. Question is when could we stop paying on the mortage if we wanted to walk from the house? It's underwater by alot and the amount is being discharged anyways in the ch7. I know we'll have no financial liability on the house, just our names on the Deed which the mortgage bank would have to foreclose on to recovery their property.

[screentest]

Copaaz,

You can stop whenever you feel you are ready to start the process of surrender and move on. Some people continue to pay if they can afford it and just plan to stay in that arrangement for a while. Others stop paying long before beginning the bankruptcy process and use the bankruptcy process as a way to dealy the forclosure.

It really depends on your own goals. I would research the foreclosure process and timeline for your lender in AZ and determine how long you may have in the house until the process is finished and enjoy your rent free living.

I just skipped my first payment in September and will probabaly be here until at least next summer or later if I employ some delaying tactics or make a random payment here or there.

Good Luck
ST

[copaaz2005]

So I don't need to wait for a discharge? No chance of a re-open if i miss mortgage payments? Called the mortgage company today and they won't be sending me any monthly informational statements or anything. I asked about escrow refund notification and said i would have to call in or I could write a written request to start up informational billing/payments online if I wanted to. I know that won't work right now becasue the automatic stay is still in effect. I'm thinking of waiting untill the 60 days for creditor objections to pass and then stop paying.

[screentest]

No, you don't need to wait for discharge. The mortgage company is not going to contest your chapter 7. They don't care anyway and will only exercise their rights against the property when the stay expires. (After discharge)

It's up to you to decide when your ready to move on. Your mortgage will no longer report to any credit bureau good or bad. If you continue to pay then you retain the home and the tax advantages etc; however it will not report to the credit bureaus.

If your upside down on the mortgage as I am, I would not recommend staying for too long if you plan on buying another home someday. Eventually you will want to move on and start the clock ticking until you can get a new mortgage. This is 36 months after you transfer title back to your lender during a legal process(foreclosure, short sale, DIL etc) Bankruptcy does not transfer title back to the lender, only absolves you of any financial responsibility for it.

After title is transferred you must be seasoned for at least 36 months according to FHA lending guidelines before you can be considered for a new mortgage.

This has been my dilemma as well. I had planned to stay and pay for at least 3 more years and then walk away when I was ready to rent for a while at that time. Now, I don't know. I skipped September, don't plan on paying October and will probably make the November payment and start the dialogue with the mortgage company on how to dispose of my property then. Either way after you are discharged in a chapter 7 you are in the drivers seat.

ST

[copaaz2005]

Screentest, thanks for the reply's. That's right on with what Ive read. Im just curious what peoples timelines have been with indymac/CH7 and a forclosure. I'm tryin to time it so next summer I move out and start kids in new school where we will be living. trying to squeeze out as much rent free living as possible till then.

Any timelines out their? is 3-6 months a fair estimate?

[screentest]

I am doing the exact same thing you are. I have an 8th grader that wants to have a pool party for her graduation in June at our current house. (We have the pool) I am also with Indymac/OWB and hope to play games and delay the foreclosure until at least next summer sometime. I plan to play the modification/short sale listing game etc and even send in a random payment to buy us some time if needed. Finding average foreclosure time lines in California with Indymac has been difficult. Try looking at loansafe.org and search Indymac.

[tobee43]

Hello,
We filed CH7 and had our 341 meeting last friday. We got the "report of no distribution" on Monday. In our petition, we did not select surrender or reaffirm our current house. We checked other and commented retain and pay. Question is when could we stop paying on the mortage if we wanted to walk from the house? It's underwater by alot and the amount is being discharged anyways in the ch7. I know we'll have no financial liability on the house, just our names on the Deed which the mortgage bank would have to foreclose on to recovery their property.

today...stop paying now and sock it away....for when you HAVE to move...best of luck!

[ladycee]

@screentest,

It's up to you to decide when your ready to move on. Your mortgage will no longer report to any credit bureau good or bad. If you continue to pay then you retain the home and the tax advantages etc; however it will not report to the credit bureaus.

Good post ST thanks. Question for you...what if your taxes and insurance are included in your mtg payment, you are Discharged from Chap 7, and you decide to just stop paing and eventually walk away. You are still liable for the taxes and insurance until the lender actually takes possession correct? Can you stop including the tax and insurance thru the lender prior to walking away?

What I mean is: You are no longer liable for the mtg itself as it is discharged by Chapt 7, but you are still liable for tax and insurance ....correct?

thanks

Chris

[hedgecat]

I stopped paying on my BOFA held home 12 months ago. You can see my BK status below. I'm not living in the house - it's just sitting there - so it's a little different situation - but as everyone says, if you don't intend on keeping the house, stop paying, pocket the money for your future (in my case, I was unemployed so there was no money to pocket) and walk away when it's right or when you have to. It's going to be virtually impossible for you to refi or workout the loan after a lot of time of non-payment but maybe you won't want to. I actually regret paying those last couple of months when I scraped and borrowed from friends/family to make those payments before I came to my senses. Oh, and if you want to work something out with the bank anyway, you're going to have to be behind - with BOFA it was at least 3 months before they'd talk to me about anything.

[hedgecat]

@screentest,



Good post ST thanks. Question for you...what if your taxes and insurance are included in your mtg payment, you are Discharged from Chap 7, and you decide to just stop paing and eventually walk away. You are still liable for the taxes and insurance until the lender actually takes possession correct? Can you stop including the tax and insurance thru the lender prior to walking away?

What I mean is: You are no longer liable for the mtg itself as it is discharged by Chapt 7, but you are still liable for tax and insurance ....correct?

thanks

Chris

Mine keep appearing on my statement (the escrow is in a negative status) but I don't believe I'm liable for those. I've never heard of anyone being back-billed for them after foreclosure. If your mortgagor pays those for you and send in money earmarked for taxes and insurance, I'm pretty sure they're not going to correctly apply that money.

[ladycee]

ok thanks hedgecat,

Am I correct that until a foreclosure actually gets processed, we are still liable for the tax + insurance?

I am in the 60day club now, currently up to date on mtg which includes tax + insurance. Have decided not to Reaffirm the mtg. I am pretty sure that they don't have a clue as to the particulars of the original loan (has changed hands not sure how many times and I only contact with the mtg Servicer)....Already the Reaff document they sent has a $343 fee tagged on ....why and for what? AND that could change with 3 additional payments already sent in since document was drawn up.

Here in PA the Trustees have a rule that they will not approve a Reaffirmation for mtg unless it is advantageous to the debtor...eg, reduction in principal or interest. and they have not offered such.

Am beginning to consider that it may be a good idea to "walk away" from the home after all. Probably not for a year or so, maybe longer.....need to get all my ducks in a row first. Not getting any younger and just mowing huge lawn is becoming harder and harder. Winters are "harsh".

Just wondering......if I can instruct the mtg Servicer to stop paying tax + insurance (there is no PMI) beforehand and handle that on my own until I am ready?

If I have not reaffirmed, can the Servicer refuse a request to stop escrow service?

thanks a bunch,

Chris

[tobee43]

Mine keep appearing on my statement (the escrow is in a negative status) but I don't believe I'm liable for those. I've never heard of anyone being back-billed for them after foreclosure. If your mortgagor pays those for you and send in money earmarked for taxes and insurance, I'm pretty sure they're not going to correctly apply that money.

hedge...after the discharge provided you listed the mortgage and surrendered the property on the petition you are no longer financially responsible for anything OTHER than HOA fees, if applicable.

the taxes and insurance are rolled over into the foreclosure fees and get past on. once you have surrendered the house the house is the collateral, so that is it...until they foreclosure and or give you a warranty deed and general release removing your name from the deed.

the bank may opt to give your nothing...no warranty deed, etc., however after the house is sold at sheriffs sale it goes into the new owners name and then they will clear the title at that point.

[screentest]

Ladycee,

Good advice from all. If your mortgage payment is impounded and you stop making the payment their is no collection activity against the impounds. You are not responsible for the property taxes; however one must consider the homeowners insurance as long as you live there and/or before title is tranferred back to the bank.

Remember, homeowner insurance is in place to protect YOU. Protects you from lose due to fire, theft etc while you are in control of the home and your posessions are in place.

In my case I do not have imponds so I can seperate tax payments from insurance payments. I have not paid the proprty taxes in over a year; however kept my insurance current because I still live there.
It takes 5 years of unpaid property taxes before the county can move to foreclose so paying those on a house we are eventually going to walk away from is a moot point.

My Lender is attempting to force me into an impond account right now as I have not paid the taxes. I laugh at them....

ST



taxes

[tobee43]

hedge...after the discharge provided you listed the mortgage and surrendered the property on the petition you are no longer financially responsible for anything OTHER than HOA fees, if applicable.

the taxes and insurance are rolled over into the foreclosure fees and get past on. once you have surrendered the house the house is the collateral, so that is it...until they foreclosure and or give you a warranty deed and general release removing your name from the deed.

the bank may opt to give your nothing...no warranty deed, etc., however after the house is sold at sheriffs sale it goes into the new owners name and then they will clear the title at that point.

yes screen....you are correct...my post is dealing with IF you surrendered the house. however, if you are living there, i would also keep up th insurance for liability reasons. (although i know many that have not). but i certainly would if i were still on the premises.

[ladycee]

thanks ST,

So then, I gather that your mtg and insurance payments, have NOT been included in the mtg paments. That is: their has been NO escrow to service. So that you could continue to pay your taxes or insurance IF you wished on your own.....WITHOUT having to depend on the mtg Servicer. Is this correct?

This is the way I would like to set up my mtg payments (without Reaffirmation) until and if I decide that it is a good idea to stop paying the mtg. I think this way I will only have to worry about the mtg payment itself, and can then deal with the taxes and insurance on my own.

Just not sure how to set it up that way, and not sure if the mtg servicer will "allow" me to discontinue the escrow service?

Thanks hedge and ST

Chris