Advice needed re: stay and pay vs foreclosure

[dustijane]

California

We owe $150k and our house is worth approx 110k. However, we are in an ARM with Wells Fargo and our current payment is only $930...that is including escrow/ins. When we filed Ch7, we decided to let the house go and are currently behind $500 (5 months) in mortgage payments. We just received our notice of default. Last week, we decided that we would rather keep the house. We would have to pay $1400 at the minimum for a house the same size/decent neighborhood. We would rather not strap ourselves like that and would rather put any extra money into fixing up our house.

My question is, the letter says we can pay the $5,000 (which we do have saved) and stay in the house. My concern is...because we have defaulted, can they kick us out later, especially if the housing market improved? We would HATE to use up our savings to have to move later. If we pay, are we reaffirming our mortgage? or is that like refinancing? We don't really want to do that at this time...just hate to be responsible for an upside down mortgage right after discharge. Eventually though we would like to modify into a fixed loan. Ideally, we would like to pay the amount, fix up the house, and if we decide to move we would like to rent it out...eventually owning the property. Do I have anything to be worried about?

Thanks

[screentest]

Dustijane,

Your not responsible for the mortgage anymore even if it is modified. In a modification all you are doing is renegotiating the terms on your existing discharged debt. The debt is still discharged and can not be reaffirmed without opening your BK case again and getting BK court approval. No lender can reaffirm a mortgage in a modification.

If they were to write you a completely new mortgage at the current market value then that would be a new loan and new debt. (Not going to happen)

If rent is more expensive than staying and paying then I would consider just staying put. I would; however, negotiate away the late charges and fees etc to get you started again. Just offer to begin making payments again if they waive the fees due.

Keep the offer on the table until they agree to deal with you or just tell them to foreclose. Try to keep the emotion out of it and the money in your savings account.

Good luck!

ST

[helpme2010]

I would also hire a real estate attorney and have the person include in the contract if you pay the fees they are asking, you are protected and can continue in the house for as long as you keep making your payments. You don't owe a lot of money and you will likely pay that or more renting anyways, so if you like the place, try to work something out, but get it in writing.

[AngelinaCatHub]

Dustijane, have you been discharged yet? If not I don't know California exemptions but that 5K you have saved could be called an asset. Make your decision soon and put that money into a safe place soon. At this point it represent rent due in the event your Trustee questions this. 'Hub

[rustymich]

good advice

Dustijane,

Keep the offer on the table until they agree to deal with you or just tell them to foreclose. Try to keep the emotion out of it and the money in your savings account.

Good luck!

ST

[Miknan]

If you are staying and paying, are you just renting if the mortgage was included in BK? What if there was a second mortgage? Thanks.