Can we still walk away from home after loan mod trial payments?

[kcfaninin]

Hi,
We were discharged Jan 5 2010. Our mortgage is through Chase and we DID NOT reaffirm. We are about $60,000 under water and haven't made a payment for 10 months. We were approved for a trial modification with payments starting August 1.

The trial payments are $2345 and our original loan payment was $2325. I was hoping for a lower payment, but that is the best Chase could offer "according to the guidlines". If we agree to these trial payments and contine the payments after the 3 months, are we still able to walk away at anytime if we find ourselves struggling?

I thought I read somewhere that if the home was discharged in BK, even if you did a loan mod, you can still walk away. If you did a refi, that's a dfferent story. Is this correct?

We would like to stay in the home as there is very little rental property in our area. Meaning 2 bedroom apts for a family of 5 won't cut it.

I could accept the payment more freely if the house was worth the $305,000 that we now owe, but I am having issues paying $2345 for a home that is only worth 240,000.

We can't apply for another mortgage until at least January 2012 and we really don't have anywhere to go right now. We can struggle for the next 1 1/2 years as long as we know we can walk away at that point. Please tell me that is an option!!

[yomann]

You are free to walk away at any time.
A loan mod is not a new loan, just adjustment of terms of a loan that has been discharged.
I would suggest staying put as long as possible - foreclosure could take anywhere between 6 - 12 months, and you can live "rent free".

[kcfaninin]

You are free to walk away at any time.
A loan mod is not a new loan, just adjustment of terms of a loan that has been discharged.
I would suggest staying put as long as possible - foreclosure could take anywhere between 6 - 12 months, and you can live "rent free".

After our 3 trial payments, Chase said they would send us a new packet with our new payment and the terms, interest, etc. Will we have to sign new papers stating we agree with the new permanent terms? We don't want to be held liable incase we can't keep up with the payments.

If we don't make the trial payments as agreed, they will start foreclosue proceedings. We want to avoid that, but also want the option to walk away without any legal obligation if we find ourselves struggling to pay.

[AngelinaCatHub]

After our 3 trial payments, Chase said they would send us a new packet with our new payment and the terms, interest, etc. Will we have to sign new papers stating we agree with the new permanent terms? We don't want to be held liable incase we can't keep up with the payments.

If we don't make the trial payments as agreed, they will start foreclosue proceedings. We want to avoid that, but also want the option to walk away without any legal obligation if we find ourselves struggling to pay.

Once you sign an agreement, you restart or renew the mortgage. You then will be liable for that debt.

It is a good time to negotiate with them that you would pay half the amount, lower the equity value, and then you would sign as a new buyer or they can sell it to someone else (LOL).

Also, those who have already walked in your area, you could possibly purchase for contract for Deed. (like rent to own). People are desperate not only to get out from under, but the banks don't want this property, and the Cities want the tax revenue. It is time to shop, like NOW. 'Hub

[kcfaninin]

Once you sign an agreement, you restart or renew the mortgage. You then will be liable for that debt.

It is a good time to negotiate with them that you would pay half the amount, lower the equity value, and then you would sign as a new buyer or they can sell it to someone else (LOL).

Also, those who have already walked in your area, you could possibly purchase for contract for Deed. (like rent to own). People are desperate not only to get out from under, but the banks don't want this property, and the Cities want the tax revenue. It is time to shop, like NOW. 'Hub

So, the poster above you was wrong in stating we can walk away at anytime? I spoke with Chase at length today and they held firm with what they are offering us. The longer we talked, the more rude she became. She said the payment is at 31% of our income and there is "nothing more to discuss".

We have been dealing with this loan mod since January, even quit my part-time job in hopes of getting a better payment. Chase also stated if we can't afford the payment, we might want to consider a short sale. I think they forgot the mortgage was included in BK.

Where can we find homes on contract? I've googled for our area and can't find anything. Also, what are our chances of buying a home on contract with our recent BK?

[yomann]

So, the poster above you was wrong in stating we can walk away at anytime? ...............

Obviously; you should seek legal advice from your BK attorney.
My understanding is a modification to an existing loan, does not create a new loan.
Did the loan number remain the same ?
WFB does not reaffirm mortgages, so we intend to ride thru (pay & stay).
But, I have not crossed that bridge, as we are still waiting on an acceptabe permanent mod.
Let us know how your attorney views it.

[kcfaninin]

Obviously; you should seek legal advice from your BK attorney.
My understanding is a modification to an existing loan, does not create a new loan.
Did the loan number remain the same ?
WFB does not reaffirm mortgages, so we intend to ride thru (pay & stay).
But, I have not crossed that bridge, as we are still waiting on an acceptabe permanent mod.
Let us know how your attorney views it.

Yes, the loan number stayed the same, but I don't know what will happen after the trial payments are up. I'm thinking along the same lines as you, that we would be modifying the existing loan and would still be free to walk away. I'm hoping thats the case.

I'll continue to pay until we can walk away and qualify for another mortgage on a home that we can comfortably afford. My husband won't sign papers at the end of the trial if it means we will be stuck with an underwater home.

[Pandora]

my understanding of how the mod works AFTER you've been discharged is that once you sign - trial or no - you're on the hook for the mortgage again - its a reaffirmation of the debt in a way - however given it was discharged, it MAY be booked as a new loan. It all depends on how Chase wants to play and they usually do not play nice. We were approved for HAMP through our lender earlier this year, so...just know that its not going to be an easy task or a short one.

So your org. payments were 2325 and the trials are 2345 - lets think about this for a moment. You gave the house back and didnt reaffirm because you couldnt afford your org. payments but are going to accept trial payments that are $20 MORE than the original? Not to mention that the entire loan books for what you org. owed, so to get those payments down, all of your months you didnt pay are going to be tacked onto the back end, and you'll have a balloon payment at the end. Then you need to consider that these are trial payments only - if you get approved for a perm. payment - it can (and usually does) go up. Did your loan include everything (PITI) to begin with or was it interest only? If 2345 is 31% of your income then it had to be an I/O loan or you paid your escrow items separately... - you would have to have a minimum gross take home pay of 7500 for your org. loan payment to be at 31% (the 2325), ironically it comes out to EXACTLY 31% of your income. So... you have to be making just a smidge more than 7500 a month gross according to Chase if your trial payments are at 31% of your income. You're right at that line if this be the case.

Why dont you just pay and stay - although at this point in time I doubt you can if as you say, you were discharged in Januray and havent paid your mortgage as a ride through. They'll probably tell you the only way for you to stay is to reaffirm / trial payments with the mod - which will reaffirm the loan because you have to sign documents and get them notarized, even the trial docs (at least ours had to be).

I'd consult with your attorney as well - dont put yourself in a situation where you'll end up on the hook and not be able to walk.

[kcfaninin]

my understanding of how the mod works AFTER you've been discharged is that once you sign - trial or no - you're on the hook for the mortgage again - its a reaffirmation of the debt in a way - however given it was discharged, it MAY be booked as a new loan. It all depends on how Chase wants to play and they usually do not play nice. We were approved for HAMP through our lender earlier this year, so...just know that its not going to be an easy task or a short one.

So your org. payments were 2325 and the trials are 2345 - lets think about this for a moment. You gave the house back and didnt reaffirm because you couldnt afford your org. payments but are going to accept trial payments that are $20 MORE than the original? Not to mention that the entire loan books for what you org. owed, so to get those payments down, all of your months you didnt pay are going to be tacked onto the back end, and you'll have a balloon payment at the end. Then you need to consider that these are trial payments only - if you get approved for a perm. payment - it can (and usually does) go up. Did your loan include everything (PITI) to begin with or was it interest only? If 2345 is 31% of your income then it had to be an I/O loan or you paid your escrow items separately... - you would have to have a minimum gross take home pay of 7500 for your org. loan payment to be at 31% (the 2325), ironically it comes out to EXACTLY 31% of your income. So... you have to be making just a smidge more than 7500 a month gross according to Chase if your trial payments are at 31% of your income. You're right at that line if this be the case.

Why dont you just pay and stay - although at this point in time I doubt you can if as you say, you were discharged in Januray and havent paid your mortgage as a ride through. They'll probably tell you the only way for you to stay is to reaffirm / trial payments with the mod - which will reaffirm the loan because you have to sign documents and get them notarized, even the trial docs (at least ours had to be).

I'd consult with your attorney as well - dont put yourself in a situation where you'll end up on the hook and not be able to walk.

Chase states that based on our gross income ($6200) the 31% payment is right around $2000, then they tack on PMI, taxes and insurance. That is what is bringing it up to $2345. Our original loan payment also include PMI, taxes and insurance.

If Obama's brilliant plan states that your mortgage should be no more than 31% of your gross income, then that should include taxes and insurance, because that IS part of your mortgage!!

Back in the winter we were approved for trial payments of $1680 (PMI, taxes and insurance included) We made 2 payments and then started the BK process. Our loan mod was then null and void and Chase said we had to reapply after we were discharged. That is why we chose not to reaffirm our mortgage. We planned to reapply for the loan mod in hopes of getting another good payment. The second time around our payment is higher and we make $32,000 less a year then the first time we applied. I don't get it?!?!

We did not have to sign any type of paper work for our trial payments. My husband won't if we are going to be in any way liable to where we can't walk away.

We are just hesitant to send our trial payments if we can't walk away at any point. That will be $8000 wasted. We really don't have anywhere else to go until we can qualify for another mortgage in 1 1/2years. We just want to be sure we can walk away free and clear at any point. I really don't think our attorney would know the answer to that question. That's why I was hoping the good people on this board could help.

[daytona]

31% is supposed to INCLUDE the taxes and insurance....They are adding onto the 31% in your case which is WRONG under HAMP. My bank tried to do the same thing, and I had to let the supposed "supervisor" know that he was wrong....the guy was still convinced he was right even after I read him the requirements directly from Hamp.

This "supervisor" was so flustered and convinced that he knew the program better than some low life customer (I'm sure he was thinking this from his tone) that he finally agreed to conference in with the "underwriter" who he thought would set me straight and back him up...The underwirter told the supervisor he was wrong within about 20 seconds on conference call...I thought it was hilarious....what is scary is this "supervisor" was in charge of the entire department, so if he was wrong then all his employees were telling people wrong as well....The supervisor dropped off and I spoke with the underwriter for about 5min to clear up some complex income issues and had my trail mod sent within a couple of days...I had been dealing with various incopetent idiots in the supervisors department for ~5mo and they could not get their arms around the issue...but refused to let me speak with the underwriter up until the referenced call...Point is the department couldn't admit they didn't understand something and drug out things for 5mo that took 5min to clear up.

[kcfaninin]

31% is supposed to INCLUDE the taxes and insurance....They are adding onto the 31% in your case which is WRONG under HAMP. My bank tried to do the same thing, and I had to let the supposed "supervisor" know that he was wrong....the guy was still convinced he was right even after I read him the requirements directly from Hamp.

This "supervisor" was so flustered and convinced that he knew the program better than some low life customer (I'm sure he was thinking this from his tone) that he finally agreed to conference in with the "underwriter" who he thought would set me straight and back him up...The underwirter told the supervisor he was wrong within about 20 seconds on conference call...I thought it was hilarious....what is scary is this "supervisor" was in charge of the entire department, so if he was wrong then all his employees were telling people wrong as well....The supervisor dropped off and I spoke with the underwriter for about 5min to clear up some complex income issues and had my trail mod sent within a couple of days...I had been dealing with various incopetent idiots in the supervisors department for ~5mo and they could not get their arms around the issue...but refused to let me speak with the underwriter up until the referenced call...Point is the department couldn't admit they didn't understand something and drug out things for 5mo that took 5min to clear up.

Ok, so this opens a whole new can of worms!! You mean the 31% should INCLUDE taxes, insurance and PMI?? Every representative I spoke with at Chase and the counselor at consumer credit, told us differently.

They said our mortgage payment should be no higher then 31% of our gross income, EXCLUDING taxes, insurance and PMI. Where do I go from here? I am getting nowhere with Chase!! When I tell them we cannot afford this payment, they tell me that's all they can do. I am OK with the $2000 payment if it includes the taxes and insurance.

If this is the case, who do I address this discrepency with? Nobody at Chase seems to know the guidelines as I have asked this question in the past. I just assumed they knew what they were taking about.

[daytona]

Ok, so this opens a whole new can of worms!! You mean the 31% should INCLUDE taxes, insurance and PMI?? Every representative I spoke with at Chase and the counselor at consumer credit, told us differently.

They said our mortgage payment should be no higher then 31% of our gross income, EXCLUDING taxes, insurance and PMI. Where do I go from here? I am getting nowhere with Chase!! When I tell them we cannot afford this payment, they tell me that's all they can do. I am OK with the $2000 payment if it includes the taxes and insurance.

If this is the case, who do I address this discrepency with? Nobody at Chase seems to know the guidelines as I have asked this question in the past. I just assumed they knew what they were taking about.

Here you go, this is one of the supplimental directives from HAMP; https://www.hmpadmin.com/portal/docs...cer/sd0901.pdf
Read page 6 in particular, it clearly states that the 31% mortgage payment must be adjusted to INCLUDE; property taxes, hazard insurance, flood insurance association dues, etc.... Only PMI and 2nd loans (sub loans) are EXCLUDED from the 31%.. "servicers MUST adjust..." is the key word. If they refuse to they can be thrown out of HAMP... and none of them want that. Trust me on this, I had this exact arguement with my lender and it is correct.

[Pandora]

Ok, so this opens a whole new can of worms!! You mean the 31% should INCLUDE taxes, insurance and PMI?? Every representative I spoke with at Chase and the counselor at consumer credit, told us differently.

They said our mortgage payment should be no higher then 31% of our gross income, EXCLUDING taxes, insurance and PMI. Where do I go from here? I am getting nowhere with Chase!! When I tell them we cannot afford this payment, they tell me that's all they can do. I am OK with the $2000 payment if it includes the taxes and insurance.

If this is the case, who do I address this discrepency with? Nobody at Chase seems to know the guidelines as I have asked this question in the past. I just assumed they knew what they were taking about.

HAMP is supposed to be at 31% and include everything - PITI. The way it works is they first waterfall the rate (2%, 3% 4% and then it locks at whatever the current interest rate is...which is somewhere around 5% for the life of the loan). If dropping your payment to 31% and waterfalling the rate still doesnt benefit, then they extend the terms out to a maximum of 40 years. If that still doesnt work, then they can forbear part of your loan and tack it on the end, so you have a balloon payment. HOWEVER - all of this is null and void if the bank thinks its more profitable for them to foreclose on your home than it is for them to lower the payment - even if its something you can afford with a modified mortgage. Makes no sense, but its how it works.

Chase is notorious for lying to their customers - all of the banks are actually. As far as you not receiving a package for trial payments - you HAVE to receive a package or its not HAMP. So many people get pulled into the "just make the trial payments and the package will follow" and it never does - and they never were entered into any trial program - just suckered into paying partial payments. Bottom line is if you dont receive the trial package paperwork - do not pay - you're just wasting your money.

Sounds to me like Chase tried to pull one over on you if they are trying to get you into HAMP; ask specifically if you qualify for HAMP or if they're trying to get you into an in-house modification. If 6200K is your gross income, then 31% of that is 1922 all in (PITI) and that also should include any shortage in escrow you will have over the first 5 years - so your trial payments should be less than the 1922.

Also remember - if you cannot afford the house now - you wont be able to afford it after the rate re-adjusts at year 6, 7 or 8. Something to keep in mind. The trial payments always go up - for example our trial payments were around 580 and went up to 653 when we were finally approved for HAMP, and thats with all the bells and whistles pulled out of the program (waterfall rate, extend the terms and a small balloon at the end of the note term). Our mortgage will always be less than what the 1st was - even at year 40 including everything (PITI) so for us, it was worth signing because we can afford the house for the life of the note.

[Pandora]

also wanted to add - that if you are now 32K less than what you were when you first applied for a loan mod, and your org. mortgage was at $2325, if approved for HAMP (which takes a very long time, up to a year or better in some cases) - your payments are going to be right back up there at some point in time if you end up having a balloon payment. Can you afford it comfortably without having to struggle I guess is what it comes down to? Is it worth signing documents and becoming on the hook again for this house that you already got discharged for what could be no savings at all when they tack on arrears? IMO - it wouldnt be, you really wont be saving any money at all in the long run. Something to keep in mind when laying it all out on the table.

Sometimes they will extend the balloon payment until the end of the note, yet other times they will make it payable before the note is due; so say they extend out to 40 years - and the balloon is interest free until year 27 - come that year, you will have to refinance your home (which means a 2nd) or will have to pay in full somehow the balloon. It cannot be rolled into the 1st as its already a "silent 2nd" under HAMP. In-house mods can be worked the same way but sometimes they put not only a balloon but they also forbear part of the principal, so you end up having 3 parts to your mortgage.

You need to go to an amoritization calculator for mortgages and work out the details to see what it all comes down to if waterfalled, with no balloon payment or forbearance just to give you an idea.