Citi Home Loan Modification Question

[GWBcasualty]

pd1373,

Before accepting any type of modification, be sure to see if you might qualify under the new Home Affordable Modification Program. Your interest rate could be as low as 2% over 40 years plus principle forbearance at zero interest plus a potential $1000 per year bonus. AlmostFree

Just finished reading... it goes as far as to mention that junior or second mortgages can be included in the modification + principal forgiveness + the payment cannot be more than 38% of your income.

Certainly something to look into, now... as we are current on our mortgages and we are considering Ch 7 but we want to keep the home, what would you do?
BK first and loan mod later? (That what I would think as the credit report, even with a BK there would have no other debts.)
Or
Complete a loan mod and than file Ch 7??

[laurannm]

If you do a loan mod before filing, it may impact your means test, particularly if you are above-median

[GWBcasualty]

If you do a loan mod before filing, it may impact your means test, particularly if you are above-median

Right. Plus I would think that there is added incentive on part of the lender in doing a loan mod AFTER BK... especially if you didn't reaffirm and are current, but offer to reaffirm the new loan if the terms are attractive enough.
Fanny Mae specifically states that the borrower has no obligation to reaffirm the modified loan, even if the old loan was discharged in Ch 7 (page 2-3)

https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0905.pdf

We will be under median. I am self employed and can control my income if there is an issue, plus my wife gets paid little in July+August... we are looking to file August/September. No equity in home, CA System 2 exempts everything we need to exempt.

I guess if everything goes smooth we can do the loan mod in 10-12 months... makes me wonder if the program will still be in place?

[laurannm]

I think I read somewhere that the Home Affordability Act will be accepting applications through Dec of 2012.

[AlmostFree]

GWB,

Definitely wait for 7 discharge before HMP. You won't get a better deal under HMP if you reafirm -- so don't give away something for free that could be extremely valuable in the future. Almost Free