Middle of modification but just filed. What happens w/mod

[btbeme]

@btbeme - You're absolutely right...no, we really don't want to keep a home that's way upside down. The only reason we're even thinking of this because the lender said this new prog is lowering principal balances. That would be the ONLY way we could try to stay. Otherwise, we will go through the struggles of trying to rent after bk/foreclosure, which we know will be difficult but not impossible. Now, are you saying we can potentially buy again in 2-3 years after a 7 and foreclosure? We thought it was at least 7 years. Please clarify if you can. Thank you!)

Can you still pursue a modification after discharge to keep the house? Yes. With a second, it is a bit more complicated. The second would have to agree to be "bought out", either by you or by the bank that holds the first mortgage (assuming the 1st and 2nd are different banks). How much they want to be bought out is not an exact science, but 10% of the amount owed is a pretty good target (and less is better). But make no mistake - the second has to be gone for the 1st to move forward. Ask your bank how they would handle the second - many times, a modification fails at the last minute because the second balks or the first did not know about the second.

My personal opinion is that unless the bank whacks the principle, it makes no sense to stay. I have seen the announcement of the new federal guidelines for principle reduction but still know of only a small handful of results. I can show you the math as to why banks would almost always like to get a foreclosure instead of reducing principle, but you can find that all over the internet. I know, I know...seems stupid. But it is true.

Renting isn't as hard as it sounds. Lots of available homes, for less than a mortgage payment. It is easy to search public records for the house you intend to rent and look at the deed to see who bought it when and for how much - that can give you an indication of whether they are about to get foreclosed, or whether your rental payment would cover their mortgage costs, etc. And if you save your mortgage payments, you can present a two or three month deposit rather than the traditional one month deposit. Cash talks loudly to landlords.

Buying again afterwards is difficult but not impossible. Expect to wait 3 years after the last "big event" - a foreclosure, deed in lieu, or BK discharge. Two years after BK discharge you technically become eligible for federally sponsored programs like FHA, but the clock is three years minimum after a foreclosure (or short sale, or deed in lieu). The important word is "eligible" - that is not a guarantee that you would get a loan. Having a sizeable down payment as well as rebuilding your credit after BK means a lot. Some banks are looking at people after 3 years; others will be stubborn and force someone to wait linger. It all depends, but figure 3 years as your initial goal. There are alternatives to a traditional purchase, such as owner-will-carry or investment-type loans (a company will buy the house and then lease it to you under a purchase agreement, giving you x number of years to get your own loan).

Last thing - get it ALL in writing before you sign any offer. And, yes, homes went down that much. We walked away being almost $250k upside down, even though we could afford the payment. It just didn't make sense to pay into a hole when we could save and invest that instead (which we are doing). We had a $570k first and a $80k second on a house worth $400k. We offered the bank $425k to stay. They refused; then we did a short sale for $365k that the bank accepted - and paid us almost $15k to leave intact. Its a crazy world...(someone ought to sell tickets).

[NewStart2012]

Thanks again btbeme!

Okay, I think I understand - so, with a 7 discharge, the 1st & 2nd no longer is our liability; however, if we want to avoid foreclosure (and don't want to short sale), we can try to modify. But, the 2nd is still involved since it's a different bank and the lien still exists. Thus, the 2nd would need to agree to something in order for us to modify and keep the home. Otherwise, we just walk away and start over. And if we do that, we are clear of the debt since it was include in the discharge and we did not reaffirm. Right?

Is there a "public records" link to look up the properties (when we're ready to rent)? Is it something easy to google?

That's good to know about buying as we thought it would be 7 years minimum. Hopefully the housing market in CA won't skyrocket in 3-4 years and we can start looking again. We plan to save as much as we can and start over. No more debts and no more buying an expensive home. It has been too tough to work just to pay for our house. We love our house; but love our kids more We realized after getting into financial trouble that we've been working too much and did not have a lot of family time.

Sounds like you did the right thing I'm not exactly sure why; but we were advised by our atty to do the bk and foreclose as oppose to short selling. I think she said something about it being better for us either re: taxes or liability or something like that. You have any idea about this?

Glad things worked out well for you! Hope we get the same.

Btw...we asked our atty but she hasn't responded (she's been very busy). Now that we filed, what should we expect? I know we have a 341 meeting in about a month; but, is there anything we'll need to do before then? Or is I just a waiting game now? If creditors call us, will they be violating any bk laws?

Thanks again!

[NewStart2012]

Hi! Thanks again for the detailed reply. I replied to you but realized I types in the box and didn't hit "reply" under your msg; so trying now

[tobee43]

NewStart2012: @tobee43 - yes, we planned to just let the house go into foreclosure and file our 7 to start over. But then the mod option just came up so it got us questioning whether we could keep the home and have a 7. What do you mean you've been waiting 4 years for your close and discharge? Would you mind explaining please?

the bank hasn't started any foreclosure procedures as yet and it's well over 4 years. i'm not waiting for my close or discharge, that happened over 4 years ago with respect to my bk.

NewStart2012: @tobee43 - really? Houses went down that much? I'm sure your daughter will buy again one day soon

yes, in the area in florida we are in the houses really went down big time. although our old house in nj ( and i checked zillow last week) is underwater now to the tune of 250k!

[NewStart2012]

Thanks Tobee43! So, you haven't had to pay and are waiting foreclosure for 4 years now? That's crazy! Didn't think it would take that long. We need to save and buy in Florida at those prices ;)

I read that it takes a while sometimes for a BK case to close. Why would that be?

[btbeme]

Thanks again btbeme!

Okay, I think I understand - so, with a 7 discharge, the 1st & 2nd no longer is our liability; however, if we want to avoid foreclosure (and don't want to short sale), we can try to modify. But, the 2nd is still involved since it's a different bank and the lien still exists. Thus, the 2nd would need to agree to something in order for us to modify and keep the home. Otherwise, we just walk away and start over. And if we do that, we are clear of the debt since it was include in the discharge and we did not reaffirm. Right?

Correct.

Is there a "public records" link to look up the properties (when we're ready to rent)? Is it something easy to google?

Look for your county recorder's office online. Somewhere in there will be a title search.

I'm not exactly sure why; but we were advised by our atty to do the bk and foreclose as oppose to short selling. I think she said something about it being better for us either re: taxes or liability or something like that. You have any idea about this?

The foreclosure would likely happen faster than a short sale. A short sale has to be bank approved, takes a mound of paperwork, and can collapse at any time. A foreclosure is quick and relatively simple for the homeowner, and it starts the clock sooner.

Now that we filed, what should we expect? I know we have a 341 meeting in about a month; but, is there anything we'll need to do before then? Or is I just a waiting game now? If creditors call us, will they be violating any bk laws?

A long time ago I posted a collection of "best practices" that I followed after reading hundreds of threads on this forum: http://www.bkforum.com/showthread.ph...ng-and-the-341

There are a lot of great threads that talk about what to do before, during, and after filing.

[NewStart2012]

Thank you so so much btbeme. I've been reading as many threads as I can in the ch 7 group. Will read your thread/link soon too. I'm so glad I found this forum, and need it more than ever now that we just filed

Btw...We will be going down the bk/foreclosure route. If the bank gets the stay lifted, does that mean we need to be ready to move out in 90 days from file date or will we get at least another month after the 90 days?

[tobee43]

Thanks Tobee43! So, you haven't had to pay and are waiting foreclosure for 4 years now? That's crazy! Didn't think it would take that long. We need to save and buy in Florida at those prices ;)

I read that it takes a while sometimes for a BK case to close. Why would that be?

oh! no! we left and never paid and stayed we came to florida, rented for 2 years and then filed here for the wild card exemption. then we a year ago this past feb purchased a house here in florida with a large downpayment and 100% owner fianacing.

the reason a case usually doesn't get their "close" order is it may be an asset case. usually the order of discharge comes first and then the order closing one's case. our BK has been discharged and closed just over 4 years and also the house that we left in nj when we moved actually wasn't paid for for almost 5 years but we haven't lived it in over 4. wow!! confusing. anyway, from what i understand the bank may never foreclose on it for a few reasons. first we think the mortgage isn't clean since we refin'ed right in middle of the robo signing mess and chase picked up our mortgage from some fly by night company and they are stuck with it. secondly, the house kept getting flooded, and after 4 years of being empty and not cared for we know someone that drove by and another person a friend who said she went there (she's been in real estate of 30 years) and said the house is literally underwater! LOL!! she said no one can ever live there again. so the bank let it go we guess.

we were in the house over 30 years, so it was a hard decision to made, but looking back leaving that house with all the flooding, black mold, septic and leech field problems, it was a blessing!

[NewStart2012]

Tobee, spuds like you made the right choice Thanks for the info!

Would you (or anyone else on here) know how fast they would move to do a foreclosure if there was already a sale date before filing for bk? What if they postponed the sale date to work out a mod? Could they possibly. Hange their mind on a mod and move forward with a sale? Would they bother to request a lift of the stay? If they do request a lift of the stay, how long do we have until we have to move out then? Thanks...just thought Of these questions as I was perusing the board.

[tobee43]

Would you (or anyone else on here) know how fast they would move to do a foreclosure if there was already a sale date before filing for bk? What if they postponed the sale date to work out a mod? Could they possibly. Hange their mind on a mod and move forward with a sale? Would they bother to request a lift of the stay? If they do request a lift of the stay, how long do we have until we have to move out then? Thanks...just thought Of these questions as I was perusing the board.

it's going to depend on your state whether it's a judicial or a non-judicial state. california primarily is a non-judicial state, which means it doesn't have to go through the court system. although, i would check you're county's site to see how fast they are moving. many times when you hear about those that have stayed in their homes for years, most likely you are dealing with judicial states which must go through the court systems to foreclose making the process take much longer than those states that do not have to go through the courts.

so it's hard to tell you how fast they are moving in the area you are in. most likely if there is a date set, it's set. unfortunately. ladyinthered, if/when she comes on later may know more about the calif.process and how quickly it works.

[NewStart2012]

Thanks Tobee. Hopefully LIR will come and chime in We just want to get an idea of how long we have. What if they petition for a relief of the stay? Can they then move forward with the sale before we get discharged? Would they want to? I know you can't answer for them? Just thinking out loud ;)

[LadyInTheRed]

Thanks Tobee. Hopefully LIR will come and chime in We just want to get an idea of how long we have. What if they petition for a relief of the stay? Can they then move forward with the sale before we get discharged? Would they want to? I know you can't answer for them? Just thinking out loud ;)

If they petition for relief from stay, they do not have to wait until discharge to move forward with the sale. They probably won't bother petitioning for relief from stay unless your discharge is delayed. It isn't worth the cost. But an aggressive creditor might file a petition. Because the sale was already scheduled when you filed BK, I am pretty sure they can proceed with the sale after the stay is lifted without having to start the process again. But, I'm not certain so check with your attorney.

[NewStart2012]

Thank you for the reply LIR! We will check with our atty. Hopefully, as you said, they won't request the relief of stay. We're also crossing our finger that they continue with the modification we were in the middle of before we filed.

Do you know an approximate time frame if they don't request a relief but they proceed with the sale after the discharge? Is it at least one month after discharge; thus, approx 4 months from when we filed in August (1 mo before 341 + 60 day waiting period + one month for sale)? Do we get one month eviction notice after sale too?

[LadyInTheRed]

I can't say how long it will take the lender to go forward with the sale. After the sale, the owner can serve a 3 day notice to quit (if you had a tenant, the tenant would get a 30 day notice). If you don't leave after 3 days, the new owner can file an unlawful detainer action. How long it takes to for you to be ordered out of the house by the court depends on whether you file an answer. Here's a summary of the process in California: http://www.bestalliance.com/eviction.htm

It is up to the new owner whether to work with you or move quickly to force you out. The new owner might offer you cash for keys or an opportunity to sign a lease and stay. I suggest you plan to be ready to leave 30 days after your discharge. You may have longer than that, but you need to prepare for the worst so you don't end up on the street.

[NewStart2012]

Thank you so much LITR! That's exactly what we wanted to know - time frame for worse case scenario. Thank you also for the link. It's helpful to know the process.

So blessed to have found this board! Thank you for taking the time to moderate and reply. It's much appreciated!