Awaiting for MOD x12 months File Chapt 7?

[cp609]

Since 2008 our income has declined by $15,000 a year,experienced layoff in 09 in addition to major surgery which kept me off work for 3 months. Our home was purchased in 06 for $169,000, still owe $164,000, last appraisla a month ago $139,000. CC debt of $30,000, medical deductable bills $5,000. Tot yearly income $69,000.00.Were denied MOD by Wells Fargo, 60 days behind. Thinking of filing chapt 7 could we loose our home? Do we reaffirm,WF still looking for possible mod, but been waiting for a solution for 1 year,requested mod in August of 09,not late 'til June of 2010.Any advice?Thank you

[despritfreya]

A Chapter 7 does not help you save your home. If you do not work something out with the lender to bring the two missing payments current and/or you continue to fall further behind, eventually you will lose the home.

[tcreegan]

no mod forthcoming

Hate to tell you this, but the odds you are going to get a loan mod that will be affordable in your present financial condition is between slim and none.

You are underwater on your mortgage, and 6 months in arrears. Financially there is no reason to keep this house. A good attorney will not sign off on a reaff., and a good judge will refuse it. They can't honestly say it is in your best interest.

That said, some states have cases where the debtor checked "reaffirm" on the statement of intentions and then never signed any reaffirm papers. They stayed current (you would have to get current somehow) on their payments and could not be foreclosed on as long as they stayed current. This is called a "ride through" and it is the best possible solution. You are not legally liable for the debt, you can walk away in the future if things gets worse. Lenders vary widely in their willingness to do this.

Just checking the reaffirm box on the statement of intentions is not actually reaffirming. To actually reaffirm, you need to ink a new contract with your lender. Terms usually stay the same, but they can be renegotiated...you can try to get better terms. Again, variable by lender.

CAREFULL......if you reaffirm you are legally liable for that debt. Later, life happens and you can't make payments, they foreclose, sell the property and sue you for the difference between what the house sold for and what you owed on it. (called the deficiency) Reaffirms carry a lot of RISK, think it through.

From what you have given us, the best line of action is file CH 7 and lose the house. Might not be what you wanted to hear........sorry.....

Tom in Colo

[cp609]

Sorry, I think I mispoke, when I mentioned that we were late as of June,where I meant is:WF placed us on a 3 month trial in May of this year,we pay half ot the mortgage payment for 3 months then a ballon payment due on August 1st,obviously we don't have the balance or would have paid entire amount. So we are late because of the MOD trial and can't come up with difference. These seem to be our options:file bankruptcy on all debts and would be able to afford mortgage,( if WF agrees to reaffirm),short sale and file BKCY or let the house go into foreclosure this last is something we really rather not do, our mortgage is a VA backed loan. VA has not provided any help at all....Thank you for any advice

[tcreegan]

short sale no help

Hi cp069,

Scratch the short sale then BK option. It is not going to help you any.

Put house in BK = stop paying mortgage payment and save the $$ to rebuild your financial life. Multiply your mortgage payment by 6 (or 12) ....this will go a long way.

I have seen many posts about people trying to hold on to a house too long. They regretted it and wished they had taken forum advice to ditch the house.

I have seen many posts about people who stopped mortgage payments, saved the money to rebuild their affordable future. Nobody regretted this.

WF has already not been in the mood to negotiate. The half payment for three months then a balloon payment was a pathetic offer. A good offer would be capitalize arrears, fixed interest at 3%, or a principal reduction.

You have no equity, you owe more on the house than it is worth. I doubt the VA will help...they see a sinking ship.

You have to take a class before filing BK. Use this as an opportunity to get some impartial financial advice. Go to your BK court website to get a list of approved providers.

Hard to lose a house, we left behind dreams, buried pets, lots of sweat, it was tough. We are in an "owner carry terms" house for half of our old house.
Plus it was renovated right before we moved in. We have adjusted and now love our new place.

Best to you in all this,

Tom in Colo

[cp609]

Hello
really appreciated you advice which gave us something to think about,but here is the problem: If we file for BKCY and include the house what is going to happen when WF goes after the VA for the balance?( house will not appraise for what we owe). VA backed our mortgage 91% therefore if I'm not mistaken WF will collect any difference from them, then come after us for all foreclosure cost. We in turn will owe the VA, benefits will be locked until repaid in full. OH. is a recourse State,Foreclosure will stay on credit report for at least 10 years,we're in our mid fifties,who will want to take a chance and lease or rent to us? loosing sleep and what little health we have left. Thanks again. CP in Ohio

[bigtim6656]

I think you make some points here.
For some just walking away ant a good idea.

Either way be it a reaffirm or ride through you will need to bring your payments up to keep the house. I think if you come up to current and keep paying reaffirm or not and you should be fine.

It sounds like with the VA your paying one way or another.
BEST THIN IS TO FIND A WAY TO COME CURRENT. Or walk away and find a rental. Ofcourse losing your income due to the VA backed loan is not a good idea.
I do not think the foreclosure will stay on your record after bk.

Hello
really appreciated you advice which gave us something to think about,but here is the problem: If we file for BKCY and include the house what is going to happen when WF goes after the VA for the balance?( house will not appraise for what we owe). VA backed our mortgage 91% therefore if I'm not mistaken WF will collect any difference from them, then come after us for all foreclosure cost. We in turn will owe the VA, benefits will be locked until repaid in full. OH. is a recourse State,Foreclosure will stay on credit report for at least 10 years,we're in our mid fifties,who will want to take a chance and lease or rent to us? loosing sleep and what little health we have left. Thanks again. CP in Ohio

[tcreegan]

no foreclosure costs to you

Hello again cp609

If we file for BKCY and include the house what is going to happen when WF goes after the VA for the balance?

They figure it out between them. You are not involved.

VA backed our mortgage 91% therefore if I'm not mistaken WF will collect any difference from them, then come after us for all foreclosure cost.

Nope, they cannot come after you for the foreclosure costs or the deficiency.
Recourse state doesn't matter, federal BK trumps all.

VA benefits will be locked until repaid in full.

Nope, nothing is owed to the VA if the debt is discharged in a BK

Foreclosure will stay on credit report for at least 10 years,

So will a BK. You start rebuilding your credit as soon as your case closes. After a BK, your debt to income looks really good, so it is a lot easier to move your credit score up.

we're in our mid fifties,who will want to take a chance and lease or rent to us?

You would be surprised....you will be getting offers in the mail as soon as you file BK. FHA and VA will back you after 2 years if you have rebuilt some credit (and are not back in debt)

Take a deep breath.......remember you are not alone in this. All the folks here on the forum, millions more across the country....

...and....before you can file BK, you have to take a class. Go to your BK courts website and get a list of approved agencies and take the class. Ask lots of questions, get some impartial financial advice.

Hang in there cp609,

Tom in Colo