Loan Modification after Chapter 7 Discharge

[sammyt74dp]

HAMP paper work I received yesterday doesn't mention Reaffirmation anywhere. It does show that if you have received a Chapter 7 Discharge you will not be liable for this debt. They just want to make sure they are the first lien holder in case they need to foreclose. Also sya foreclosure action will be stopped while making trial payments. Payments weren't as low as I was hoping for and I am still very sceptical of the whole approved modification process after the trial payments are made. So going back out to check a few rentals today before I commit to this. BTW if your not dealing directly with the presidential office of your mortgage co, you are wasting your time. Amazing how they are on it now that BK is discharged

[HHM]

That sounds more like a "schill" posting over at loan safe.

[liboton21]

Someone over at loansafe posted a successful modifications in Socal while in BK7, basically, the lawyer have to write BofA that they can contact them while on automatic stay so they were on negotiations with NACA. He was given 2% for the life of the loan and yes, he was far behind in his mortgage.

[justbroke]

Yes, please let us know, and congratulations.

[sammyt74dp]

I was just discharged today YEAH!! and my HAMP modification offer just showed up from Wells Fargo. I'll check my package and let you know. If there is any wording on reaffirmation or "new terms" I'm not signing it and will walk from the house.

I'll let you know

[adv1234]

Thanks for the discussion. I think it would be a no-brainer for a modification, as now the bank has no enforceable rights against me. But on the other hand, nothing that banks do surprises me. I was just wondering if the part about there being a Fannie Mae regulation forbidding the right to a modification. My personal thoughts is that it was a bunch of horse malarkey.

If anyone here can point me to the Fannie Mae Regulations/Guidelines, then I would be happy to take a meander through them, otherwise, I really can't be bothered. Part of me wants to take the opportunity to start completely fresh and take advantage of all the newly acquired financial smarts gained over the past few years. The other part of me wants to hold on to my home because it will be difficult to purchase a home with a mortgage again in the foreseeable future.

In any event, I am not stressing over the decision - just trying to weigh all options and make a good one...

Much thanks for the discussion and ideas.

[justbroke]

No lender with 1/2 a brain would consider modifying loan terms and leaving a debtor with the option to walk away. I'm sure a modification post-bk would become a new loan.

Yet, it has been done in a couple of cases. My major heartburn with it, would be if the debtor actually signed "new terms" thereby creating a "back door" reaffirmation. I think it would be defensible (from the Debtor's standpoint), but still think that's the only area that could get the lender in trouble should they seek an in personam action against the Debtor at a later time.

[OhioFiler]

I don't know what to look for, but the only thing I worry about is the back-door reaffirmation.

No lender with 1/2 a brain would consider modifying loan terms and leaving a debtor with the option to walk away. I'm sure a modification post-bk would become a new loan.

[justbroke]

Does anyone know if the bank modifies the loan after discharge will this automatically reaffirm the loan? I am waiting for approval...if I do get approved is there anything in the small print I should look out for?

I don't know what to look for, but the only thing I worry about is the back-door reaffirmation.

[mickeyme]

Does anyone know if the bank modifies the loan after discharge will this automatically reaffirm the loan? I am waiting for approval...if I do get approved is there anything in the small print I should look out for?

[justbroke]

I disagree with Just Broke, nothing in particular about a bankruptcy, or the effects of bankruptcy, would prevent the lender from modify the terms of the loan.

I should have written "why would they", and that probably would have made my position clearer.

My concern is only with the "back-door" reaffirmation. As we both posted, people do in fact get these modifications on their discharged mortgages. My statement was more "why would they"... not that the lenders can't. In this instance the lender decided that they won't modify the mortgage.

[HHM]

I disagree with Just Broke, nothing in particular about a bankruptcy, or the effects of bankruptcy, would prevent the lender from modifying the terms of the loan. I have asked around about this, there is no rule or regulation (with Fannie Mae) that says you cannot modify a non-reaffirmed mortgage. However, such a position is consistent with many lenders and Fannie Mae's attitude toward bankruptcy.

The mere fact that a debtor discharged their personal guarantee of the mortgage does not prevent the lender from modifying the repayment terms of the security interest.

However, as I have pointed out in many posts, getting a mortgage modification IS NOT A RIGHT. You could be fully eligible for a modification and the bank can still deny you.

[adv1234]

Thanks for the replies. I guess it's walk-away then. No tears here. I've gotten past all my other bad financial decisions and the house is the last one hanging out there. I'm not attached to it, and moving back to being a renter will be a big relief. I've been living on cash for over 18 months now. The change in lifestyle has been a big relief. I've purchased a brand new 2009 vehicle with cash, lived withing a budget, and have saved a lot. If I can't afford it, I don't buy it, and I don't pay any bank interest anymore. With the way things are going, if I get 6 months to a year out of living in the house for free, then work my butt off for another year or two after that, I will be able to afford a decent house outright. Feels good.

[shabam]

I agree with the comments above. You either pay it off at the original terms or you walk away, possibly losing any equity you have. It is the risk you take by not reaffirming.

[justbroke]

I smell b-s on this one. I have not read anywhere that bankruptcy eliminates consideration for a modification, or the need to reaffirm. Can anyone confirm or deny if this letter is true?

Umm... you didn't reaffirm, so the debt is discharged. You don't owe them any money. So, how can they modify it? I think the General Counsel's office is correct.

(Okay, there are several people who have, somehow, got a modification after discharging the debt. These are questionable if the lender actually had them sign papers and that the lender then recorded the modification. This is a back-door reaffirmation, and those are technically not allowed. But that's another story.)