Refinancing in 13

[chakra7]

Anyone successfully do this? If so, what were your circumstances in regards to if there were arrearage payments, you make little money past the payment every month, etc.?

Once refinanced, does the new loan come out of the plan?

Thanks for your input.

[Minnymouth]

Chances of your doing a refinance during a Chapter 13 are just about ZERO.......

First you have to have permission from the Trustee, and then 2nd most mortgage companies won't touch you during a Chapter 13 and IF THEY DID the interest rate would be outrageous.... up to 11-18%..... (choke you to death)....

If during your Chapter 13 it gets too rough, call your attorney and see if you can amend your payment plan. But you have to have good reason to do this... not just because your tired of having no money....

Keep us posted.

[chakra7]

Well, actually what happened was my attorney originally forwarded me to a mortgage broker that works with him on refinancing those in 13s. However, the mortgage broker couldn't make it happen. So, I was considering whether I should try another one, but my circumstances have not changed since then so not sure it would make a difference. I did originally run it by my attorney, and had to take the required financial class (forget what it is called) but the one that's required before discharge because he said I had to do that before trying to refinance. I'm in the red after the bk payment each month so that to me and apparently him (attorney) was good enough reason to try refinancing. I had just been getting by on help from family and child support (when it was coming) at the time.

[Minnymouth]

Sounds like your attorney needs to submit a "change in payment" to the Trustee to get your Chapter 13 payment in line so you can afford to live.

If child support payments is part of your income, then you need to call the state regulators and enforce your rights and have your spouse picked up for non-support payments.

Don't let yourself get behind on Chapter 13 payments and cause your case to be dismissed when you can make arrangements to change the amount of the payment to the Trustee......

Your attorney needs to be handling this for you...... put him to work....

[MOMof3]

We are doing it RIGHT NOW! And we are getting a low fixed rate (5.75-6%) through FHA. FHA requires that you have one-year on time payments to trustee, no new debt or collections & decent credit scores. We also got our mortgage broker through our attorney & they will work together on the ins & outs of court approval. I have not been able to get the question answered as to whether or not when we close we will be able to pay outside the plan, but I do know that my lawyer will have to file and amended plan to REDUCE it by the interest portion of our payment that increased & now will decrease--she will amend it back to what was originally confirmed (or maybe lower now that we will have some room)! We also have arrears that will be paid off in the re-fi as well as our back taxes to IRS being paid off as well (apparently this is a trustee requirement?). We are still in the early stages. We did all of our paperwork signing & gathering of stuff from the dreaded checklist and sent it in. We'll see!?!?! It really hasn't been painful so far!

[TiredandWeary]

We are doing it RIGHT NOW! And we are getting a low fixed rate (5.75-6%) through FHA. FHA requires that you have one-year on time payments to trustee, no new debt or collections & decent credit scores. We also got our mortgage broker through our attorney & they will work together on the ins & outs of court approval. I have not been able to get the question answered as to whether or not when we close we will be able to pay outside the plan, but I do know that my lawyer will have to file and amended plan to REDUCE it by the interest portion of our payment that increased & now will decrease--she will amend it back to what was originally confirmed (or maybe lower now that we will have some room)! We also have arrears that will be paid off in the re-fi as well as our back taxes to IRS being paid off as well (apparently this is a trustee requirement?). We are still in the early stages. We did all of our paperwork signing & gathering of stuff from the dreaded checklist and sent it in. We'll see!?!?! It really hasn't been painful so far!

I envy you, MOMof3!!! My husband and I attempted to start the refi process through FHA as well back in December. The potential lender said we met all FHA requirements for the Chap. 13 refinance, except for the fact that our mortgage company had been (and still is) reporting us as having late mortgage payments since May 2007! We were astonished (more like furious), as we have made all payments to the trustee on time! We had our attorney look into this because on 13datacenter website, our account has been showing a positive balance of over $20,000 to date. In other words, the trustee has not been disbursing any payments at all since last May. Our atty was able to find out from the trustee that apparently, the last attempt the trustee had made to send payment to our mortgage lender, the payment was sent back in the mail to the trustee. Apparently, the mortgage company's address had changed and since the lender has not notified the trustee of any updated address info since that time, the trustee is not sending out any disbursements. So, basically, we are being penalized by our mortgage lender for something that is THEIR FAULT! They have been marking us as having late payments since May 2007. We have never been late and if we had, our case would have been dismissed by now anyway! Our atty is preparing to file sanctions against the mortage company now, since his attempts to request their atty correct this situation have not been responded to in any way. When in a Chap. 13 BK, it is illegal to mark your credit report as having late payments since you are making payments to a trustee in the first place...that's the whole point of a Chap. 13 (to attempt to reestablish your credit by making timely payments in the plan to the trustee).

We have no idea when and if this will get resolved, but in the mean time, we are being screwed by having to make an add'l $620 a month in mortgage payments due to the ridiculous ARM increase we are in. It unnerves me to think we could have been in a 30-year fixed rate FHA loan under 7% by now if it weren't for the mortgage lender dropping the ball!

[car67]

Tired Hang in there and keep us posted I am very interested in the story and procedures as I will be going through the same cycle myself in am as we are signing the papers to file in the am!!!!! I am prepared for the worse got me a huge ass bottle of crown for xmas few years back still sitting on my mantle ahhhah If need be that is

[TiredandWeary]

Haha, car67!!! Have a drink for me, too!!! I'll keep ya' posted. It's just been one complication after another and I can't believe the Chap. 13 has been this diffiult so far all the way around!

[car67]

Awesome please do I look forward to it.

[Flamingo]

We refinanced 4 years into our 5 year plan. Our reason for doing so was due to an increase in our state exemptions as to property value and our attorney contacted us to see if we wanted to modify our Plan and pay less. We just could not see redoing our plan after being in it, at that time, 3 1/2 years. We asked if we could refinance and buy out inasmuch as we had a lot of equity in our house. We were at 54% payback. The attorney gave us permission to investigate refinancing. We obtained informatoin from a broker we contacted on our own and a broker reference provided by our attorney. The one we contacted wanted to offer us an ARM at 7.5% and the reference got us at the end 6.5% fixed 30 year (April 2006). Goes to show you how you can get ripped off and to shop around. We had to get an appraisal done and provide all that information to the attorney who then passed it on to the Trustee to see if we could refinance (this had to include the Truth in Lending form). After the Trustee reviewed, the attorney and the Trustee together file a Motion requesting the Court to give us permission to buy out. There was an attorney fee of $400 for the Motion which we paid at settlement. From the point of initial contact with the attorney requesting to buy out it took at least six month from that point to day of settlement. A LOT of paperwork and information exchanged hands at that time. It is not an overnight occurance and takes time and you need to have sufficient equity in your house to cover the Plan balance and to cover all closing costs. Best of luck to you. It is possible if you meet the requirements and was a blessing to us as we needed major house repairs done and got the money at settlement to do that on top of paying off our plan (i.e., new roof to replace leaking roof).

[Flamingo]

When in a Chap. 13 BK, it is illegal to mark your credit report as having late payments since you are making payments to a trustee in the first place...that's the whole point of a Chap. 13 (to attempt to reestablish your credit by making timely payments in the plan to the trustee).

To this Poster and anyone else in Chapter 13; watch after your discharge - you may have creditors all of a sudden start listing in your "included in bankruptcy" comments with that account a "Date of First Major Deliquency" or "Date when First Deliquency Occurred." We filed in 4/02; some of the dates they started putting in were in 2007. When disputed, the CRAs advised us that the information was correct as reported that the account was being reported as being involved in bankruptcy. We have redisputed asking to have those dates removed. This occurred to accounts that did not have this information listed previously over the past 3 years. This is recent and we were discharged 1 1/2 years ago and the information should start coming off next spring (7 years). The change of dates, I was told, would allow the information to stay on 7 years from the date they listed as the Date First Major Deliquency Was Reported.

Be careful and observant...

[car67]

I asked our attorney about the one year FHA approach to refi..... I told him I am reading cases where people have mortgages not being payed by the trustee and they are showing late at the bureau cause the trustee had no dispersed payments. He said its alot smarter to keep your mortgage or car payment out of the plan so you can maintain the postive payment flow. People who have mortgage or car note in the plan most likely had arrears to make up or didnt have the income to support the mortgage outside the plan? So I kept my mortgage outside the plan and my two cars outside the plan. We are now filed as of today WHIPPPEE

[TiredandWeary]

I asked our attorney about the one year FHA approach to refi..... I told him I am reading where people have mortages not being payed by the trustee and they are showing late at the bureau cause the trustee had no dispersed payments. He said its alot smarter to keep your mortgage or car payment out of th eplan so you can maintain the postive payment flow. People who have mortage in th eplan most likely had arrears to make up or didnt have the income to support the mortgage outside the plan? So I kept my mortgage outside the plan and my two cars outside the plan. We are now filed as of today WHIPPPEE

I agree...it would be most beneficial to not have to include your mortgage or car payments in a Chap. 13 BK. But, in our case, we actually were not including our mortgage into the original plan when we officially filed. After a couple of months (this was all prior to the confirmation hearing) though, we were about 2 weeks late on our mortgage payment and the mortgage company immediately went into attack mode by motioning for a lift of stay. It was their way of getting us to end up including the mortgage in the BK plan before the confirmation hearing. I guess I can understand from their perspective why they felt it necessary to protect themselves by doing that. But, when we tried to send them the remainder of the payment, which was well before we would have even been 30 past due anyway, they refused the payment. We also mailed the next month's payment shortly thereafter via certified mail and using a cashier's check. We sent it directly to the mortgage company's attorney. They attorney sent it right back to us again! So, basically, our attempts at keeping everything current and caught up as far as the mortgage was concerned was being denied directly by the mortgage lender. I was actually surprised they would actually not accept any certified funds whatsoever...you'd think they'd want whatever money they could get their hands on. Anyway, I guess this was all due to the fact that they were in the process of getting our bankruptcy plan modified prior to confirmation in order to include the mortgage payment in the plan. So, by the time the issue was settled, we had not made any payments to them for the months of September, October, & November of 2006. We were told to start our new payments to the trustee beginning with the December payment. Therefore, we are in arrears now for those three months. To show you how dumb the mortgage company is, they actually had filed that we were only in arrears for two months (September & October). Again, this was all because they were refusing our payments. But, with the amount of time it took for all the trustee paperwork to go into effect, we were told not to start sending money for the mortgage payments until December. This means that in essence, the November mortgage payment was also not made. So, the final confirmed plan shows us with only two months of arrears (Sept. & Oct.), but technically, it should have been three months. The mortgage company did not discover their error in this until well after the plan was confirmed, so there was really not much they could do about it.

Anyway, as far as we are concerned, either way, once the money is out of our hands and sent off to the trustee, it is not our responsibility to ensure that it gets paid to the mortgage lender or unsecured creditors. We have already done our part by making timely payments to the trustee, as we are required to do. After all, that's why we are paying $180 now in trustee fees EVERY MONTH...just for them to do their own job!!! I will gladly state my case in front of a judge any day on that one. I am not responsible for making sure the trustee is disbursing payments to all creditors. That's not our job. If we are abiding by our end of the bargain, then anyone else who is dropping the ball will have to own their own mistakes and oversights. And in the process, we will NOT be further penalized by such unreasonable nonsense by having them mark us with late payments on our credit reports! It is absolute false information and I will not let them get away with that! That is the whole reason we are in a Chap. 13 bankruptcy!! In our current situation, the reason we are marked as having late payments within the past 12 months is simply due to the mortgage co. not providing a current or new address for payments to be mailed to. That's why we are showing late payments since May 2007. How stupid!! The issue should be worked out between the trustee & mortgage company...not us! So, like I said before, we don't know how things will work out in the end, but we will go down fighting tooth and nail over it. Even if it requires involving a civil suit at some point. It's absolutely wrong!!!

[car67]

I understand your position and agree 100% who is to say my mortgage firm doesnt do the same thing once they get served with filing of Chap 13.......... I hope not. Have you tried to ask to see if the underwriters of the finance firm your working with to refi can take a special look into your claim with all facts as you presented? Give em hell and I will be watching for my mortgage company to try this attack........ Keep us posted on any news? Also can I ask who the lender is that your currently with and who are you trying to use to refi with? I think alot of people are in the same boat as us.. There is no clear path to fight these adjustables emerging yet... Just alot of headlines thanks

[TiredandWeary]

I understand your position and agree 100% who is to say my mortgage firm doesnt do the same thing once they get served with filing of Chap 13.......... I hope not. Have you tried to ask to see if the underwriters of the finance firm your working with to refi can take a special look into your claim with all facts as you presented? Give em hell and I will be watching for my mortgage company to try this attack........ Keep us posted on any news? Also can I ask who the lender is that your currently with and who are you trying to use to refi with? I think alot of people are in the same boat as us.. There is no clear path to fight these adjustables emerging yet... Just alot of headlines thanks

When my husband first inquired about refinancing, he went to something called, "The Mortgage Store" because they have one in our city and had advertised on the radio specifically for people in our situation with Ch. 13 BK and needing to refi. They also apparently underwrite their own loans and the financing is all done in-house, so I guess they may have a little more flexibility with certain lending programs if need be. The firm representative stated that since its guaranteed through FHA (thanks to the recent federal ARM-mortgage bailout program which went into effect in 2007 & enacted by George W. Bush), you have to meet certain criteria. One is that you have to have the last 12 months of mortgage payments on-time, of course. You only need 3% equity in your home (97% LTV ratio). According to the representative, they enter your criteria in this system and FHA automatically rejects it if it doesn't meet the basic requirements...it sounded like it's all done electronically and not necessarily evaluated directly by a person. That's why we would have difficulty meeting the criteria until the credit reports remove the past due flags from the past 12 months. The rep. sounded very concerned for our sake when my husband explained the entire situation to him and since it was the first we had been notified of any false info in our credit reports, it came as a shock to us, too. We just weren't expecting that there would be any credit check problems like that (other than the obvious bankruptcy). The rep. told my husband to definitely check into the situation with our mortgage lender to see why they would be reporting falsely about late payments if we have been in a Ch. 13 BK plan for the past 18 months? As of today, that is the only lender we have attempted to go through for the refi. I suppose it may be possible elsewhere to have better luck. But, then again, since we have seen our credit reports since then and know exactly what is being reported falsely, it seems to me that it will be a roadblock to us no matter where we try to refi through, until it gets resolved.

FYI, our mortgage company is Homecomings Financial LLC. I have no qualms about providing this info to anyone who may happen to read this forum post, either! It's their own unfair and lousy business practices that are going to bite them in the rear until they get their act together on this one!!