freaking out!

[badkarma]

Hi all it's been awhile since we posted
Filed Chapter 7 in Dec 2009 have 341 meeting set for Feb 2, 2010
Our goal was to keep our primary home, been laid off since Sept getting unemployment, job out- look bad.....
anyways been trying to do a loan mod with Huntington (Freddie Mac owned)since Sept 2009 Been on forebearance plan while waiting our payment was cut in half... finally got word the other day new payment is still $221 too much a month with our other bills ( car payment, 2nd mortgage, utilities , etc..)if we don't accept this what happens at 341 meeting since now we'll have to surrand our home
1. do you still pay property taxes and home owners ins while living there rent free til they forclose on us how long can we stay we live in NE ohio
2. accept new loan mod on 1st and not pay on 2nd mortagage cause then we could afford new payment but not both
3. how bad will this mess up out 341 petition?

So scared in losing our home since we have 4 kids and pets as rent around here is about the same as owning a home....
what can be done? Anything?
thanks for any advice

[jlmaca]

Hi all it's been awhile since we posted
Filed Chapter 7 in Dec 2009 have 341 meeting set for Feb 2, 2010
Our goal was to keep our primary home, been laid off since Sept getting unemployment, job out- look bad.....
anyways been trying to do a loan mod with Huntington (Freddie Mac owned)since Sept 2009 Been on forebearance plan while waiting our payment was cut in half... finally got word the other day new payment is still $221 too much a month with our other bills ( car payment, 2nd mortgage, utilities , etc..)if we don't accept this what happens at 341 meeting since now we'll have to surrand our home
1. do you still pay property taxes and home owners ins while living there rent free til they forclose on us how long can we stay we live in NE ohio
2. accept new loan mod on 1st and not pay on 2nd mortagage cause then we could afford new payment but not both
3. how bad will this mess up out 341 petition?

So scared in losing our home since we have 4 kids and pets as rent around here is about the same as owning a home....
what can be done? Anything?
thanks for any advice

This is extremely tuff position to be in. My family is in the same situation, with a home we wanted to keep, pets, and a construction business on the property. We kept looking at our income/outgo, the condition of the home and sadly decided to let it go, relocate the business and rent. It was a very hard decision as it affects everyone in the family. Our 341 was in Oct 09 and we were discharged 12/21/09. We decided not to reafirm the mortgage and have not as of yet even received a notice of acceration. By the time they get around to sending a NOD we could stay here for another 6 months or longer but we've decided April is the time to move on. Our decision was based on the fact that even if we got a MOD we'd be living in a home that we're upside down over 100K!. And we'd have to invest 25K just to upgrade all the problems the place has. So we're done with it. I've lived here for 25 years and if I stuck with the original mortgage I would have owned it free and clear in 5 years. But life happens, divorce, improvements, bad economy.... I'll just wave goodbye and move on. You should look very hard at the numbers. The worst thing is to come out of a chapter 7 still strapped to pay your bills. If the house is a good deal financially well hang on.

1. do you still pay property taxes and home owners ins while living there rent free til they forclose on us how long can we stay we live in NE ohio

I don't believe you have to pay property taxes on the property, they are attached to the real estate and follow it. But I could be wrong here. Yes pay your homeowners insurance!

2. accept new loan mod on 1st and not pay on 2nd mortagage cause then we could afford new payment but not both

In a chapter 7 the 2nd mortgage should have been stripped away right?


3. how bad will this mess up out 341 petition?

Your attorney should answer this one for you, you paid for his/her advise.

[jjsmith]

We can relate to your stress. We have 6 kids & support my parents that live with us. We have been afraid of the trustee taking our home. We just had our 341 yesterday and are waiting to see what the trustee comes back with.

On a previous home we had tried to do a loan mod and got no where. Finally after we gave up after 4 months and moved, then a couple of months later they offered us a 3% rate for 5 years and then 5.5% on the rest. That was a good loan, but it didn't make up for the fact we had negative equity of $150K. So, even if we hadn't moved, their offer wouldn't have been a good situation for us.

You say that your payment is $221 too much. Is it just too much while you're on unemployment?

As far as your questions-
1. Home owner's is paid once a year, so your policy is good until another payment is due. Taxes are also only paid once a year. When we stopped paying our bank ordered their only homeowner's policy once ours expired and told us we owed them $12K for it. They also paid the taxes, since I hadn't paid them. All those charges got rolled into the bankruptcy. When ever you are sure that you won't be staying in your home, I would stop paying anything immediately. How long you can stay depends entirely on how quickly your lender will foreclose and how fast the laws in your state let them foreclose once they file. We have 6 properties that we've been through with 4 different lenders, Our rentals began the foreclosure process much faster than our personal residence. Only one of the foreclosures ever completed. Once the process began, it takes about 3 months in our state. But even after they foreclose, you don't have to move yet, the lender has to go through the eviction process, which I've heard of lenders not even getting around to for another year. If you've been in default and making reduced payments, your time is already ticking. The longer you can stall them and keep them negotiating, the longer they will postpone foreclosure.
2. If your home is worth less than what you owe on the 1st mortgage, you can strip the 2nd off in a chapter 13. Have you been negotiating a modification with the 2nd? The 2nd has the most to lose hear and many people have gotten principal knocked of their 2nds and great modifications on them. In order for the 2nd to foreclose, they have to pay off the 1st mortgage. If your 1st and 2nd are with the same company, I'm not quite sure how that works, but if they are different lenders the 2nd will not foreclose on you in this declining market. You do risk at some point having equity in your home and the lender foreclosing. We had 1 property that we stopped paying the 2nd. They threatened us for 6 months and would not agree to any loan mod. Then my file got transferred for foreclosure and we heard nothing for a year. Finally, when we had a short-sale offer, we sent them an offer and found out that they had just ignored our file since they had no intention of paying off the first. Who knows how long we could have kept the property. For years I'm sure. Frankly, if your option is this or rent, you might just want to do this. If you end up losing your house in the end, it's no different than if you would have been renting the entire time anyway, but you have the added benefit of not having to uproot your family.
3. I might be wrong, but I don't think whether you surrender or don't surrender your house will have any affect on your 341. We had filed that we were keeping one of our cars that is one that is in our name, but it's for my parents and they do pay for it themselves. They decided they didn't want it anymore just days before our 341. We told our attorney that we needed to surrender it, even though we said we would be affirming it in our filing. He said, then just stop paying it and don't sign the reaffirmation agreement, and tell the trustee we're surrendering when he asks.

If rent truly is the same as owning a home, it seems worth it to do your best to keep your home. We feel your pain. I wish these banks realized they were dealing with people in tough situations. At our 341 yesterday, we felt really guilty as we were the only one out of 10 cases that had employment. We're in bad financial shape, but we are blessed to have a good job. We wish your family the best and pray you will find a good job soon!

[HakunaMatata]

You can change your intentions, if necessary, to surrender the house. The second can't be stripped in a C7 (you may be able to modify the first and settle for a lesser amount on the second). If you intend to surrender, stop paying property taxes (they attach to the property, not you); however, you want to keep your home owner's insurance current (you are liable until the deed is transferred). State foreclosure laws offer a broad timeline (various factors can affect your time in the house...ex/ your lender may or may not move through the process quickly, filing BK can delay the process, etc.).

It's important to focus on numbers (keeping emotion out of the equation). How much do you owe on both loans? What is the current market value of your house (look at recent comps instead of sites such as Zillow or your property tax bill)? Do you need or anticipate any significant repairs?

I think it's wonderful you've investigated your local rental market. This aids somewhat in determining whether or not you should reaffirm your house. Bear in mind, straight cost isn't always the best indicator (comparing your mortgage cost to rental costs). There are many factors to consider (declining house value and neighborhood, repairs, etc.).

In my situation, I decided to surrender my house; and, I recognize rent will be more expensive from a straight mortgage vs. rental perspective. However, my house needs costly repairs and its value has decreased dramatically (this will, likely, continue). I'm content in my decisions to pay a bit more in monthly rent and release my obligation to my underwater property.

[badkarma]

Thanks for the replys!
Yes this is so hard when you have kids and pets to think about
Yes it's $221 more then we can afford right now due to unemployment have so many apps out there and so far no calls for interviews( Looks like if I do get a job it'll be at a huge pay cut but I guess it's better then none)
Before 1st mortgage was $888 24 yrs left and 2nd $160/ mon New amount is 1st $695 now at 40 yrs and 2nd $160/mo They are allowing us to continue on Forebearance plan of $450 /mo for 1st mortgage till April 2010
we owe about $135,000 market around $125,000 for it
rent around here $950 to $1100
so don't know what to do ...Huntington swears they cann't do anymore for us we can't do goverment plan cause they can't count unemployment as income so we don't make enough with wife's part time income
Thanks again