I am 100,000 in negative equity but got a loan mod. Is it worth keeping?

[espo1357]

Good point. Which begs the question that has not been asked yet. When one says they are $100k under water that isn't very helpful unless you also know what the current value of the house is. If your house is currently worth $900k and you owe $1 million at 3% appreciation you will be even in @ 3years. If your house is currently worth $100k and you owe $200k at 3% appreciation you will be even in @ 24 years! (not counting principal payments).
good luck...

Its crazy stuff.

I figure at least 10, maybe 20 for me to get even. However, if I buy another home, its still 20% down (at least 40k), and the transaction fees, and probably a downgrade in home from the home I have now (I would have to plop down about 50k to have the same home I have now).

For me, being in the 13, I am going to keep up with the home. However, if I lose my job (a good possiblity, then I will just go with a 7 and let the home go and then start over).

I posted a week or two ago that I was going to get the 13 dismissed, and then convert to a 7 when the job ran out. However, I am just gonna stay in the 13 for court protection, and then just go with the 7 if I qualify.

If I had 50k and good credit and liked the city I lived in and had good job security, I would just plop down the 50k and start over. But, none of the above match up (mostly, my career stinks right now, and I really want to go back to school and start over).

Sorry for the rambling, but this housing crisis is far from over all across America. And middle class folks like me, who took a 30k pay cut and have no equity are pissed.

What did you do with your home?

[IBroke]

Is it too late to NOT reaffirm the home?

I am in a 13, and have decided to affirm during the 341. Probably not a good idea, but at the time, I wanted to stay in the home. I will not have equity, even in five years. But, I wiil just stick it out and rent it out if I have to. Eventually, in 30 years, I will own it, not the bank.

30 years is not that long of a time, is it? LOL.

I'm not 100% sure about the procedure in a CH13. As far as I know, a mortgage is not discharged at completion of the BK...

[Darling89]

My house is valued at around 200,000. I owe 290,000. With the loan mod. 2% FOR 5 YRS then 3% 4% and capping off for 18yrs. at 4.75%. I rent out both bedrooms, live in a small but nicest part of the house, which is very small. There is a shed I can renovate for more income which would almost pay all the expenses on the house.. I live in a destination location where people come in the winter. I would like to understand how appreciation affects me. I need to understand this concept. Can anyone help explain this to me in terms of my situation? I checked out the article from Oct. 8 2010 "The great mortgage mystery" and have been very tempted for the past 2 years to just keep the rent money and let it go.... but since I went for the modification and got it, have second thoughts about this. Any thoughts on all this?

[msm859]

My house is valued at around 200,000. I owe 290,000. With the loan mod. 2% FOR 5 YRS then 3% 4% and capping off for 18yrs. at 4.75%. I rent out both bedrooms, live in a small but nicest part of the house, which is very small. There is a shed I can renovate for more income which would almost pay all the expenses on the house.. I live in a destination location where people come in the winter. I would like to understand how appreciation affects me. I need to understand this concept. Can anyone help explain this to me in terms of my situation? I checked out the article from Oct. 8 2010 "The great mortgage mystery" and have been very tempted for the past 2 years to just keep the rent money and let it go.... but since I went for the modification and got it, have second thoughts about this. Any thoughts on all this?

At 3%/year appreciation break even is @ 12 years (not counting principle reduction) However, your question is a little more complicated. If you didn't live in your house what would rent costs? If not less then why move anyways? There are other benefits/expenses to owning that also have to be considered.

[Darling89]

So this doesn't take into consideration principal reduction? Which means? Much more $ goes to principal at a 2% rate for 5 years, that's for sure. I am pretty ignorant about this stuff, but if inflation increases, does it not make it better for me to stay in a low interest house situation like I have? Houses do need to be maintained, but if I can keep my space and do some traveling with my work have a home base that practically pays for itself, it sounds like it is worth holding onto. Especially if I do not reaffirm it when I file Chapter 7. Thanks to everyone for bearing with me here. I am trying to grasp it. This is all new to me.

[espo1357]

At 3%/year appreciation break even is @ 12 years (not counting principle reduction) However, your question is a little more complicated. If you didn't live in your house what would rent costs? If not less then why move anyways? There are other benefits/expenses to owning that also have to be considered.

msm,

can you expand on your thoughts that there are other benefits/expenses to woning that also have to be considered. I am guessing that you are referring to the tax write off (benefits), and the upgrades that need to be covered (expenses) as the home wears down. what am I missing?

Thanks

[LadyInTheRed]

I'm not 100% sure about the procedure in a CH13. As far as I know, a mortgage is not discharged at completion of the BK...

I think you are right. I found it in the bankrtupcy code at one point, but can't find it now. But, the US Bankrtuptcy Court's website says:

As a general rule, the discharge releases the debtor from all debts provided for by the plan or disallowed, with the exception of certain debts referenced in 11 U.S.C. § 1328. Debts not discharged in chapter 13 include certain long term obligations (such as a home mortgage), debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor's conviction of a crime. To the extent that they are not fully paid under the chapter 13 plan, the debtor will still be responsible for these debts after the bankruptcy case has concluded

http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter13.aspx

My understanding is that your personal liability for a mortgage is discharged in a Chap 7, but not a Chap 13 (except a stripped 2nd). So, if you are discharged from a 13 and later want to give up your home, you will still owe a deficiency if allowed in your state. It seems to make the reaffirmation of a mortgage pointless in a Chap 13.

[IBroke]

My understanding is that your personal liability for a mortgage is discharged in a Chap 7, but not a Chap 13 (except a stripped 2nd). So, if you are discharged from a 13 and later want to give up your home, you will still owe a deficiency if allowed in your state. It seems to make the reaffirmation of a mortgage pointless in a Chap 13.

That's exactly what I thought when I was reading something about a mortgage-reaffirmation in a CH13. Actually - and based on what you just posted - you shouldn't be able to reaffirm a mortgage in a CH13 because it can't be discharged in the first place.

[mrslick]

hi all, i converted my case to chapter 7 last month due to a big decrease in income. my case is like this, i'm 3 months behind on my mortgage and i just got my loan mod docs. my mod is very similar to others except on the 7th year the rate will be 4% and will remain at that for the rest of the term. the only problem is, the bank is requiring me to get court approval before the mod is clomplete. my attorney talked to the trustee today and she said that that would not be a smart move to have the court approval and my attorney agreed with her. i'm not upside down on my house, i still have about $50k in equity even in this housing crisis. my first question is, does court approval means that i have reaffirm the mortgage? second, my attorney seems to be concern about his liability if he represent me if indeed the court approval the bank wants is reaffirmation, i thought attorney suppose to do what's best for the client? my Wife and I both want to keep the house. third, did anyone of you needed court approval to get the loan modify? Please help, my 341 meeting is this monday.

[espo1357]

hi all, i converted my case to chapter 7 last month due to a big decrease in income. my case is like this, i'm 3 months behind on my mortgage and i just got my loan mod docs. my mod is very similar to others except on the 7th year the rate will be 4% and will remain at that for the rest of the term. the only problem is, the bank is requiring me to get court approval before the mod is clomplete. my attorney talked to the trustee today and she said that that would not be a smart move to have the court approval and my attorney agreed with her. i'm not upside down on my house, i still have about $50k in equity even in this housing crisis. my first question is, does court approval means that i have reaffirm the mortgage? second, my attorney seems to be concern about his liability if he represent me if indeed the court approval the bank wants is reaffirmation, i thought attorney suppose to do what's best for the client? my Wife and I both want to keep the house. third, did anyone of you needed court approval to get the loan modify? Please help, my 341 meeting is this monday.

You have to get on page with the attorney. Go there and demand that they answer your questions. Its a joke that you and your attorney are not on the same page. Sorry if that was mean, but come on man.

Also, you can delay the 341 if you have to, I think you can.

Lastly, just wait for the loan to get modified and then file the 7. Why do you need to file right away?

Good luck. You are in a great postion, with you home in good shape and all. Things will work out!

[mrslick]

espo1357, thanks for your answer. i had to file because i was in chapter 13 and my wife and i had our first child. she's only working part time after maternity leave plus baby expenses sent our DMI that we used to pay into the ch. 13 to a negative balance. so we had to convert asap before the ch.13 trustee dismiss the case for nonpayment.

[LadyInTheRed]

my attorney seems to be concern about his liability if he represent me if indeed the court approval the bank wants is reaffirmation, i thought attorney suppose to do what's best for the client?

He is supposed to do what is best for his client. But, the client doesn't always know what's best for himself from a legal perspective. That's why he hires the attorney. If the client and attorney don't agree on what's best for the client, the attorney has to decide whether to do as his client asks, or withdraw as counsel because his client won't take his advice. Yes, the attorney is worried about his liability. He should be.

You have to get on page with the attorney. Go there and demand that they answer your questions.

Yes. It is your attorney's job to explain what's going on and the reasons behind his advice until you understand. If you still disagree, then the two of you need to come to some mutual understanding and decide together how to proceed. If you can't do that, it's in both your best interests to part ways.

[mrslick]

thank you

[BrokeOR]

Some great responses to this thread-learned some things.

I would only add one thing: Have you factored in the maintenance/upkeep of the property in your decision? Might want to think about the age of the property and the things that will need to be done over the nexgt few years while you are rebuilding your credit and perhaps a bit cash poor. If you're able to sock away maintenance costs from the rent you get, sounds like a good deal. If not, you could end up with an albatross that gets you in the end.