Question about Retain & Pay on Mortgages

[AlmostAmos]

I'm late on both my 1st/2nd mortgages. I haven't paid them since the Jan payment. I am working on a loan modification for both.

I emailed my attorney with the following in regards to our Statement of Intention:

The 1st/2nd mortgages - We have no interest in reaffirming these debts as the house is extremely upside down and too expensive (monthly). However, we do not want to select "Property will be:"/"Surrendered" on these. We would rather select "Retained:"/"Other - Retain & Pay" or similar verbage you have used historically for this. Our reason for this is we intend to stay in this house as long as possible & to work on a loan modification w/ Citi. Today, we received a modification offer from Citi offering to reduce the payment on the 1st by ~$200. We believe we will be able to accomplish something along this line w/ the 2nd as well. We're concerned that by selecting "Surrendered" on the SOI, we will essentially nuke the possibility of this.

Received this email back:

We can certainly list that your intention is to retain both mortgages. Be aware, however, that if you are not up to date on both payments (whether you pay them up or have a modification finalized so that you’re up to date “on paper”) the mortgage company is likely to object to it at the 341 hearing.

Why would they object to this? Because I am behind on my payments? My intention is to work something out with Citi & NOT to reaffirm... Will they not work with me after the discharge b/c I, most likely, will not be current going into Ch 7?

Am I being daft?

[newbie2]

I'm late on both my 1st/2nd mortgages. I haven't paid them since the Jan payment. I am working on a loan modification for both.

I emailed my attorney with the following in regards to our Statement of Intention:



Received this email back:



Why would they object to this? Because I am behind on my payments? My intention is to work something out with Citi & NOT to reaffirm... Will they not work with me after the discharge b/c I, most likely, will not be current going into Ch 7?

Am I being daft?

Yes. As been mentioned before, when you file a Chapter 7 you are supposed to be current on secured debts. The reason for this is exactly what your attorney described - they probably will file for a relief from the automatic stay. Unlike a Chapter 13 in which your arrears are accounted for in your plan, a Chapter 7 doesn't offer that assurance to the lender.

The lender may work with you, or they may not. Your attorney is doing a good job by letting you know of the risks if you file without being current. Only you can decide if it is worth the risk.

[HHM]

If you are behind on your first mortgage and file chapter 7 BK, the mortgage servicer will file a Motion for Relief from Stay, doing so is practically automatic on their end. Just because they filed the motion, doesn't automatically mean they will immediately start foreclosure, the new HAMP guidelines require banks to at least "consider" modification for those that have filed BK.

What are the underlying numbers here.
Mortgage balances, monthly payment, gross income. Maybe we can provide you some insight on whether a modification is even likely.

[AlmostAmos]

Why would they file a relief from stay? Just so they COULD start foreclosure if they wanted to? According to the mod docs, it says they will NOT foreclose providing I'm in my trial period. Since the 1st seems to be a sure thing at this point (at least paying the trial payments), I guess I would only have to worry about them foreclosing on the 2nd if I don't get trial payments on that in time...

1st Mtg - 354k, 1808/mo
2nd Mtg - 84k, 635/mo
Gross Income - 90k/yr

I just received a mod offer from Citi on the 1st. $1600/mo including taxes/insurance. I received an offer on the 2nd but had to turn it down (not pay by the due date) b/c they gave me 2 days notice. I'm working on it again. It looks like it will be 2% fixed for 27 years w/ a payment of $430/mo.

Most likely, I will not pay ANYTHING prior to the filing date but I will be paying the trial payments on both BEFORE the 341.

[SMinGA]

Speak to your mod/mortgage contact and find out if filing before the mods are complete will delay things. They may need relief from the stay just to continue working with you regarding the modifications if they are not already finalized.

[AlmostAmos]

Speak to your mod/mortgage contact and find out if filing before the mods are complete will delay things. They may need relief from the stay just to continue working with you regarding the modifications if they are not already finalized.

Good thought. Thanks!

[SMinGA]

Just pulled out my mod paperwork - inhouse mod w/ Bank of America. It does have this disclaimer:

This offer is contingent upon BAC Home Loans Servicing LP receiving relief from the Automatic Stay for any bankruptcy in which the property referred to in the Loan Modification Agreement is included at the time of Modification.

Ours was a fairly quick process as we did inhouse. Some take longer. My opinion: it may be best to postpone filing until the mod is a done deal, if at all possible. Some aspects to the modification are time sensitive - and I believe it can take a few weeks at least for a creditor to get the stay lifted.

[AlmostAmos]

I could postpone it until the trial payments are started but not any longer than that. Thoughts on that? From what I'm seeing w/ Citi - it could take 6 months of trial payments until the mod is finalized. I don't have that time as I'm battling a short window of opportunity w/ my income. Too much longer & I'll be over the median.

[SMinGA]

Being in the 'trial' phase would probably be good - as you'd be making payments & would not be in any sort of foreclosure process. And if you know there would be months of trial payments then there would also be adequate time to get relief from the stay?

I could postpone it until the trial payments are started but not any longer than that. Thoughts on that? From what I'm seeing w/ Citi - it could take 6 months of trial payments until the mod is finalized. I don't have that time as I'm battling a short window of opportunity w/ my income. Too much longer & I'll be over the median.

[yomann]

We filed BK7 at the point of making the 3rd out of 4 "special forebearance payments".
The 341 meeting went without a hitch; no one showed up.
I then actually made the 4th payment to WFB after the 341 to show good faith.
Currently in review for a permanent modification.
Our attorney suggested filing after completing a loan mod,; but added being in a trial period was good enuf.