Some Advice on our foreclosure after Chap.7

[sshopkins]

We were just discharged from a 7 about 3 weeks ago. We live in Albuquerque, NM. Our 1st and 2nd was not affirmed by the bank (citimortgage) even though we wanted them reaffirmed. Citi was in the process of foreclosing on us before we filed and had placed it with an attorney. We owe 166 on the 1st and 22 on the 2nd. Our house is worth 235 (about 50k on the upside). Now they started the process again on both loans with two diffirent attorneys wanting about 6k in fees per our reinstatement letter. I don't know if our BK attorney is leading down the right road. We filled out the HAMP paperwork for our attorney and he ask for a 60 day extension from Citi's attorney. We are prepared to pull money from our 401k to save the house. What else should we do or watch out for at this point?

[Pandora]

why reaffirm? Why not just pay and stay?

[tobee43]

i would take pandora's advise and ask your atty why not pay and stay?

reasoning being, that one never knows what life brings, as i'm certain you more aware of today then 5 years ago, by not reaffirming it puts you in a better position, PROVIDED the bank will agree and stop the process.

Minnesota is Both a Judicial vs. non-Judicial with a 2/3 Not Practical for 6 Months .

i would ask you atty is the bank is going the Judicial route and if they are, you may be able to get into court and see if maybe the bank could work to lower you payments or something else to assure you future is a bit eased with perhaps a lower payment or change in interest rate...or something to help you???

[sshopkins]

Yes to the pay and stay. We are not going to walk away from the 50k but don't want to have to pay all those attorney fees (Both sides) should I negoiate with Citi on my own for now for a loan modification or something else. Our reinstatement letter on our 1st mortgage states that we owe them 19k (Missed payments, late fees and 4900.00 in Citi attorneys fees and misc fees. Our 2nd mortgage has been turned over to another Citi attorney which just filed a lawsuit against us last week for 26k, we owed about 22k before our down spiral of job loss and credit card debt. So to make a long story short how do I get out of paying nearly 9k in Citi lawyer fees plus now our lawyer wants us to sign another engagement letter with 1500 min. I need some outside advice besides my lawyers!

[sshopkins]

Also before all the foreclosures and BK Rup process started, Citi loss group offered a settlement on the 2nd mort. for about 10k taht was a 13k reduction. Can that help us now?

[tobee43]

Also before all the foreclosures and BK Rup process started, Citi loss group offered a settlement on the 2nd mort. for about 10k taht was a 13k reduction. Can that help us now?

no harm to see if they will see work with you on that!

[debee]

How do you know that you have 50K in equity? Did you have the property appraised as part of your chapter 7 filing? Are you going by zillow or some other online valuation method?

Because if you're wrong about the equity amount, it changes the game.

[sshopkins]

BR lawyer did a local recent sells in the area but didn't do a comp. So lets say worse case its worth 215 or so. I'm still not going to walk away from 30K

[debee]

Why presume the worse case is 30K in equity though?

Maybe the worse case is that you're underwater. And maybe that's not the worse case. Maybe that's the best case, because maybe then you have some negotiating power with the holder of the second mortgage and can stop paying altogether for some months and then settle it at 5-10%.

I would recommend that you eliminate the word "maybe" altogether and find out what your property is really worth from someone who is actually capable of determining that.

Your lawyer was concerned with determining what your equity range was only insofar as it would impact your bankruptcy case and exemptions. The attorney just needed to know what the trustee would come up with for value on a quick look and whether it would be less than the 120K exemption allowed for debtors filing joint, or the 60K for a debtor filing alone.

However, you need different information. You need to know what the quick sale market value of your home is were the lender to foreclose. That's your bargaining chip. In my opinion, you should know that first.

If you think about it, why would Citi offer you a 13K reduction settlement when they could foreclose, pay off the first altogether, pay off their whole second mortgage and then gobble up your 30-50K equity in order to pay the lawyer's fees, the interest, the other fees they would inevitably tack on?

If all that money is there, they don't need to make you a settlement offer. There'd be enough there to make it worth their while to come and get it.

[Sweetpea3829]

And something else to consider...

A year ago, our house was valued at about 50k underwater. In the span of two months last summer, our house value dropped another 75k from 225 to 150. That quickly. Mostly because of other short sales and foreclosures in the area. I mean, these are rough estimate numbers...but still. Don't depend on that equity sticking around. Many still believe there's a second dip coming...and personally, I believe it too. There's been a lot of modifications, HAMP and in house...and the HAMP modifications generally only adjust the interest rate for about five years (at least, that's what the terms where when we explored it last year) and then the rate goes back up again. So we may very well see another dip when those mods expire and modified rates reset again.

[sshopkins]

Thanks for all the info but if last senerio is correct that is kind of depressing. So go have a independent appraisal done for a quick sell in my area for some negotiating . How about elimnating the lawyers fees?

[debee]

Don't despair. First you need to find out what your house is worth. If you know anyone in the real estate business, ask them to tell you what you could realistically get for your house today. If you don't know anyone in the real estate business, you could call an experienced agent and ask them do check the comps and get you a list price. You can either offer them a small fee, or tell them your situation and see if they'll do it pro bono. You don't need to hire an appraiser.

If it turns out you are underwater, you have more options. That is a positive. You can walk and leave the headache behind or you can gamble: stop paying the second and wait a few months. Save some money and then offer them $1500 to release the lien. Don't get depressed until you find out how the story of your house ends. There's still time for it to be a good thing.