ARM and Lein Strip Question....

[natfro]

This is a long story, and I'm here posting because I don't understand what has happened, I have to call the attorney tomorrow.

In February of 2006 we were in the process of refinancing our home out of an ARM. The payment had raised over $700 a month. The day we were supposed to close, we were notified (by the broker) there would be no closing as there was a 38k lien on our property that showed up on the title committment. (long story short, husbands mother was still on the deed of our home, and she allowed a home to be foreclosed upon and they attached my husbands property with the difference from the sheriffs sale).

Obviously we were refinancing because we could not afford the payment increase, and eventually we got behind. We contacted an attorney (very well known here in our area of Ohio), who told us that we could file a chapter 13 with a lien strip. We filed in December 2006, with a lien strip, following my MIL quit claiming our deed, an appraisal, etc. That title committment showing the lien was supplied to the attorney, that is the document they used, they never ran anything else on the title as far as we know.

Fast forward to July/August 2009, we're still in this ARM and paying our 13 payments, we received letters stating our mortgage payment was dropping...repeatedly. We gave these to the attorney. Then I was checking online and our bankruptcy history showed no activity on the lien. So I start checking, calling the attorney etc., first thing the attorney tells me is that National City that holds the lien never replied to ANY of the 13 requests. Second, I call the county recorders office, they run my property for me and tell me there is no lien on my property. Now I realize that the lien can still be on the property and maybe the recorder isn't up to date (the recorders office swears they are up to date).

Finally, today, after repeatedly calling my attorney over the last 2+ months and questioning all this we receive a letter in the mail from the attorney stating that we need to dismiss our 13 and refile, that due to the drop in property values and the lien holder not replying this will save us 20k. Here's the catch. We have 2 years left on our 13, and the attorney wants us to voluntarily dismiss and refile a new 13 for 3 years.

Am I stupid because I don't understand this? I paid a FEE for a lien strip when we filed in December of 2006, why is the lien not stripped or being stripped? Why are payments not being made? Why has my attorney not pursued this? Why have my mortgage payments, at the very least, not been altered and the excess money applied towards arrears or some other debt? For months we have been paying an additional $500 towards our mortgage, which could have been used to get ahead paying on something else.

Tomorrow I am going to call the attorney. I am interested to see how much he's going to charge me to do this. I'm also interested to find out how much the payment is going to be. I want to have confidence in my attorney, but I have such an overwhelming feeling that he's dropped the ball, and now I am going to pay for it. I also have a feeling that I am going to go from 2 years left to pay, to 3 years and have a larger or equal payment, because the lien issue wasn't pursued or stripped like it originally was supposed to be.

Yes I know the property values have dropped, and there is a possibility that this might be in our best interest. I also have another issue. Our income has changed, substantially for the better.

Right now, we're both ready to throw up to be honest. If anyone has any advice at all we'd greatly appreciate it.

[UpsideDownMI]

Sounds to me that your attorney owes you an answer! If your attorney did his/her job your lien will be stripped when you finish your plan and receive a discharge.

[natfro]

It would have been stripped by the end is what we have learned. Here's what happened.

We met with the attorney, and apparently exemption levels have changed. When we orignally filed our exemption was 5k, now our exemption is 20k. House values have dropped so dramatically in our area of Ohio that we no longer have the equity we had 3 years ago.

Our attorney drew it all up, if we voluntarily dimiss and refile we save over 20k. Of the 38k lien we had to repay most of it under the old 13, with a refile we will have to pay 1% of it, so less than 4k.

Our attorney said he has a handful of clients (4) that the bad economy benefits. We're one of them, that's why we got the letter. He said that the reason they were hedging on answers is because something that applied to us was in the works, and changing and he was waiting for email confirmation. He showed us the email, it was nothing we understood, it was a law, and very technical. But we fall under it.

Also we found out on the ARM dropping, while the statements Chase sends us do not indicate it, the overage we have been paying has all been applied to principle.

So here we go again, we are refiling. I gathered documents all day yesterday. The way we see it, we had a payment of $2700 a month, and the new payment is $1600 a month, so we should be more than capable of paying around $2000 a month and getting this whole thing over with as soon as possible.

As luck would have it, during the last 3 years I graduated college and make more money now, but my husbands work is the steel industry and his income has declined, so we balance out to almost the exact same income as we did the first time around.

I forgot how nice he was and understanding. We got scared because of the letter, the ARM, the economy, and we jumped the gun. He told us that was completely understandable, and he also understood that we don't want to go through the whole thing again, but that financially it is in our best interests and he would do whatever he needed to do to make this round much less stressful than the first time.