Modify mortgage in Chp 13?

[BamaDad07]

Has anyone ever modified their mortgage while in Chapter 13? Reason I asked is that my lender sent me a letter in the mail offering to roll my arrears back into the loan and give me a fixed rate also. This all depends on if the Court allows it.

[Flamingo]

Has anyone ever modified their mortgage while in Chapter 13? Reason I asked is that my lender sent me a letter in the mail offering to roll my arrears back into the loan and give me a fixed rate also. This all depends on if the Court allows it.

Since you already filed, you would need to bring this up with your attorney and see what, if anything, the trustee would allow in this situation. You would need Trustee permission as to anything concerning your mortgage (refinance, modify, etc.).

[justbroke]

Has anyone ever modified their mortgage while in Chapter 13? Reason I asked is that my lender sent me a letter in the mail offering to roll my arrears back into the loan and give me a fixed rate also. This all depends on if the Court allows it.

If you received this post-petition (and pre or post-confirmation), then you need to bring this to your lawyer.

The reason is that this modification may free up more money to be paid to your unsecured creditors (if you're not in a 100% plan).

Also, your lawyer will probably need to Motion the court to allow the modification if this is post-confirmation (since you'd need to modify your confirmed Plan).

I'm trying to modify my mortgage now, but I'm pre-confirmation.

[BamaDad07]

In my plan all I am paying back is the arrears on the mortgage and a title loan on my vehicle. All my unsecured debt is not on the plan.

[justbroke]

In my plan all I am paying back is the arrears on the mortgage and a title loan on my vehicle. All my unsecured debt is not on the plan.

So, you're paying 0% to unsecured creditors? If your arrerage is now part of your mortgage, then you'd be freeing up cash.

I just wonder (remember, beware of wonder) if the excess will be sent to the unsecured creditors now.

[HHM]

I see no reason to accept the mortgage companies plan. You are already paying back your arrears. Why tack on your arrears to the principal and pay interest on that for the next 20-30 years.

To even do it, you would have to lift the automatic stay in your BK

[BamaDad07]

I have an appointment with my lawyer, bad thing is I just went down there yesterday. Then I got home and the letter was in the mail box.

Would the court consider that a payoff? Probably not.

[justbroke]

I see no reason to accept the mortgage companies plan. You are already paying back your arrears. Why tack on your arrears to the principal and pay interest on that for the next 20-30 years.

And, there's the kicker. You could be done with the arrearage in 36-60 months. The plus is, you pay no interest on the arrearage if included in the Plan.

Otherwise, like the sage HHM has posted, you'd be paying interest on the arrearage for the next 20-30 years.

My modification is mainly to deal with my interest rate. I have an interest only rate which expires in 2 more years. On top of that, it's an ARM... so... my payments could skyrocket in 2 years (2.5 years into my Plan). That wouldn't be good.

[BamaDad07]

My loan is an ARM and it has went up twice and down once already. The offer is a fixed rate below that of which the loan originated with, almost 2 percent lower. As far as the automatic stay goes, well its gone and im in a "drop dead" agreement.

[BamaDad07]

Deleted

[HHM]

As far as the automatic stay goes, well its gone and im in a "drop dead" agreement.

Huh?

In any event, you have 2 options.

1. Enter into a stipulation to lift the automatic stay as to the lender, and do the loan mod. But otherwise keep you chapter 13 intact (probably this is the best option). Thus, some of your payment would then go to unsecureds. Why not counter offer to them and simply say, lower the rate but I will pay the arrears in my chapter 13 plan.

Clarification: are you upside down in your home. Do you owe more than it is worth.

2. Dismiss your chapter 13, do the loan mod. But then you would have to deal with the title issue and unsecured creditors outside the BK.

[BamaDad07]

Huh?

When the chp 13 plan payments were supposed to start, I sent in payments according to the plan to the lender for my monthly payment. Instead of applying them to the loan, they sent the payments back stapled to a peice of paper saying that they were not enough to cover the arrears so they couldnt accept them.

While this was being straightend out they filed a motion for Order Confirming Stay Termination. My lawyer got ahold of their lawyer and worked out a settlement,I had the money for the payments. My lawyer sent there office the money because the mortage company would not accept it. Part of the agreement was a drop dead clause. If the payment is not made within the month it is due they can start the foreclosure process again.

Here is the thread I started on the above issue back in September when it happend...
http://www.bkforum.com/showthread.php?t=28832

[justbroke]

Wow. This is one of the few reasons to pay inside the Plan. The Trustee would have ripped them a new one.

Paying outside the Plan is subject to all sorts of problems with how payments are applied! Specifically, you'll see many problems with arrearages and "post-petition" payments. This problem is so large, that many Plans have all sorts of Provisions which specify exactly how the Mortgage Servicer should apply all post-petition payments! More accurately, these Plans usually direct that Post-Petition mortgage Plan payments go to Post-petition mortgage payments and not arrearages.

Congress was so concerned about potential foreclosures at the conclusion of a successful Chapter 13, that they added things to the 2008 Foreclosure Prevention Act to require mortgage servicers to essentially be forthcoming on how they apply payments and that they just can't, at the end of a Chapter 13, declare that the debtor didn't pay some "fee" or late fee or assessment or other charge.

I don't know the whole details, and haven't read your earlier thread, but I don't know why your lawyer stipulated to the current terms. The Plan should have addressed this.

This is how my Plan addresses post-petition payments... (this will be in my pro se blog some day)...

Because the Court requires that all secured creditors receive post-petition payments through the Plan and by the Trustee, all payments made timely to the Trustee shall be deemed to be timely payment to each creditor. As such, no post-petition “late fees”, “late charges”, or assessments by secured creditors shall be allowed unless such fees or charges have been approved by the Bankruptcy Court. The Court shall retain jurisdiction to determine all post-petition costs and attorney’s fees associated with the claims filed in this case.

Confirmation of the Plan, completion of the Plan by the Debtor, and discharge shall impose a duty and legal obligation on the holders and/or the servicers of any claims secured by liens, mortgages, and debts of trust on residential real property to:
(a) Apply the payments received from the Trustee on the pre-petition arrearages, if any, and only to such arrearages; and
(b) Deem the pre-petition arrearages as contractually cured upon confirmation of the Plan and discharge of the Debtor, thereby precluding the imposition of late payment charges or other default-related fees and services during the life of the Plan based solely on the pre-petition default or defaults; and
(c) Apply the direct post-petition mortgage payments, if any, paid by the Trustee or by the Debtor, to the month in which they were designated to be made under the Plan or directly by the Debtor, whether or not such payments are immediately applied to the loan or placed into some type of suspense, forbearance or similar account; and
(d) Notify the Trustee and the Debtor in writing of any changes in the interest rate for non-fixed rate or any adjustable rate mortgages and the effective date of any such adjustment or adjustments; and
(e) Notify the Trustee and the Debtor in writing of any change in the property taxes and/or property insurance that would either increase or reduce the escrow portion, if any, or the monthly mortgage payments and the effective date of any such adjustment or adjustments; and
(f) Refrain from directly paying or attempting to pay any pre-petition tax obligation that the Debtor has included in the Plan to be paid under the Plan unless a motion is filed to modify the Plan with adequate notice and hearing to the Debtor and the Trustee; and
(g) Refrain from ever assessing, charging, imposing, advancing or billing any type of fees or charges (such as legal fees, broker price opinion fees, property inspection fees, property preservation fees, etc.) to the mortgage loan which are incurred during the life of the Plan either post-petition or pre-confirmation or post-confirmation and pre-discharge unless such fees or charges have been approved by the Bankruptcy Court upon the filing of a proper application for the approval of such fees and charges under Fed. R. Bankr. P. 2016(a) and Local Rule 2016-1.

[BamaDad07]

Thats why if i can get my house straightend out with this mod, i'll deal with the other stuff. I have three little girls and I am a single dad, it would be nearly impossible to move to another house so I would rather stay here.

[BamaDad07]

Well, almost a Month later still nothing from my lawyer on this situation. I have faxed them the information multiple times, have called and emailed them. I have until the 30th of this month to complete the offer.

Does anyone know if I can contact the court myself on this issue? I would really like to take advantage of this offer. Would the court consider it new or receiving more debt?