If you let your home go in your BK...

[mom2three09]

how in the world did you manage to take the emotion out of it?

We are 7 mos. post discharge (chpt 7) and are seriously considering letting B of A have our home (we did NOT reaffirm). We originally thought we would continue making our payments and then at the point in which we could buy again we would just sell our current home. But now we are realizing that may not be the best decision. Homes just like ours are selling for about what we currently owe on our home (and sometimes even $5K less) so getting payoff, plus realtor fee's, plus $ for DP on new home is looking like quite a long shot Not to mention that we need a new furnace and AC unit which will cost thousands....

So why is it that we are struggling so hard with this decision??? I guess it's the fear of the unknown -- wondering what will happen if it comes time for us to get out and we can't find a rental.... we have two dogs that we aren't willing to part with ... we have to have a 4 bedroom house because our girls are 10 yrs apart (5 yr old & 15 yr old) & affordable 4 bedroom homes are extremely hard to come by in our area. We likely won't find a place for any less than we are paying here, but yet we also won't have to replace anything when we're renting so that's something that needs to be taken into account too. The thought of being a renter again just makes me sick

If you made it this far... thank you !! I guess I just need to hear some personal experiences and maybe I'll feel better. Today is the last day to pay our mortgage before it's considered late -- so it's do or die time .....

[sofarsogood2]

Hi Mom,
We are in the same position. Couldn't pay this month. After discharge, hubby's pay cut by 40% and I have been laid off, so we really have no choice. Tried to talk to bank about a mod, but our "investor doesn't do mods" according to customer service reps . House is way underwater, expensive to maintain (taxes, lawn care, etc.) so if they want it.....

Alot of houses in foreclosure around here, several on each block- nothing is selling- they will sit on it for a long, long time.

I understand your anxiety, but I'm sure you and I will find a suitable place to live- what I dread is the packing- YUCK!

Good luck to you!

[mom2three09]

Hi Mom,
We are in the same position. Couldn't pay this month. After discharge, hubby's pay cut by 40% and I have been laid off, so we really have no choice. Tried to talk to bank about a mod, but our "investor doesn't do mods" according to customer service reps . House is way underwater, expensive to maintain (taxes, lawn care, etc.) so if they want it.....

Alot of houses in foreclosure around here, several on each block- nothing is selling- they will sit on it for a long, long time.

I understand your anxiety, but I'm sure you and I will find a suitable place to live- what I dread is the packing- YUCK!

Good luck to you!

Ugh! I feel your pain We tried for a loan mod a couple of winters ago when dh had a very long lay-off (he's construction) and were told we didn't have enough income to qualify for a mod

You're right, the packing is what is going to really stink --- and then ofcourse the moving it all

Good luck to you and your family!

[bulletproof77]

I owned my home for 26 years before losing it in a divorce, BK, then a foreclosure. Sure, I felt bad for a while, but then I started looking at it just like the banks do. And remarkably, my attitude changed. Once you take all that artificial emotion that the banks pump down the American people's throat: Such as your just a "nobody" if your a renter or that we all just HAVE to HAVE that 30 year ball and chain to prove our self worth, the decision is quite easy. I thoroughly enjoy the freedom I have now. I'm not tied to worrying about if the house next door to mine is declining in value. I can move to better neighborhoods and economic climes if need be. I drive by my old MacMansion every now and then and I laugh. Bank of America really got intelligent when they foreclosed. It sits and rots, losing value each and every day in a desert full of foreclosures. I read all these made up articles about how the "real estate market is coming back any day now"...No, no, it's not. Each day the newspapers are literally packed with new foreclosure notices. I look at my foreclosure as freedom from the slavery that the so called "American Dream" has become...And why would you hate the thought of renting ? Other than a tax loss, the freedom factor is worth it. Being a renter doesn't make you any less of a person than anyone else...

[mom2three09]

I owned my home for 26 years before losing it in a divorce, BK, then a foreclosure. Sure, I felt bad for a while, but then I started looking at it just like the banks do. And remarkably, my attitude changed. Once you take all that artificial emotion that the banks pump down the American people's throat: Such as your just a "nobody" if your a renter or that we all just HAVE to HAVE that 30 year ball and chain to prove our self worth, the decision is quite easy. I thoroughly enjoy the freedom I have now. I'm not tied to worrying about if the house next door to mine is declining in value. I can move to better neighborhoods and economic climes if need be. I drive by my old MacMansion every now and then and I laugh. Bank of America really got intelligent when they foreclosed. It sits and rots, losing value each and every day in a desert full of foreclosures. I read all these made up articles about how the "real estate market is coming back any day now"...No, no, it's not. Each day the newspapers are literally packed with new foreclosure notices. I look at my foreclosure as freedom from the slavery that the so called "American Dream" has become...And why would you hate the thought of renting ? Other than a tax loss, the freedom factor is worth it. Being a renter doesn't make you any less of a person than anyone else...

You're right, it doesn't.... for me, it's more about not being able to personalize the space I live in ... not being able to paint or change out flooring that I may not like ... it has nothing at all to do with "being less of a person because I'm now a renter" .... heck, I was a renter til I was 35 yrs old....

I know, I know... life will go on ...............

[Billssuck]

I am now two months late on my mortgages and am in a ch13. We modified our plan to surrender our home after my husband lost his job and then found another making $1K less/mo. Anyway, for me, what gets me most is getting through the embarrasment factor in the small community I live in by publicly foreclosing on the home. If I can get through that without too many puppy dog faces feeling sorry for me, then I will be fine. The house itself has been my prison for years, i.e. it took every spare penny we had to pay for it, maintain it, heat it, and it literally owned me and not the other way around. Like another poster said, I will feel such freedom from it once this process is done. I look at the memories this way: I'll make more memories with the same family at another building. It's not the building but it's the family I can not do with out.

Right now, I believe the bank (B of A) maybe starting the legal paperwork to lift my automatic stay so that they may communicate with me. After that, the foreclosure process starts. That's when the "embarrasment" factor comes into play with the notices put in the paper and/or an auction. Hopefully, the bank just tries to sell it, but we shall see. And this too shall pass....with my family by my side.

[lisamomof4]

momif you really do want to keep your home please try contacting either or both: NACA dot com and then go to 'home save' or 995hope dot org, both services are FREE. never pay for help to mod. also contact BofA and let them know you want help. the rules have changed from a few years ago and there is a different attitude towards mods now. you could try looking at loansafe dot org for advise also. we are in a very simular situation, 4 kids, 2pets, husband out of work for 1+yrs. new employment pays much less. we just got a mod from BofA with help from NACA. it just all depends on if you are willing to fight, best of luck

[SMinGA]

1 thought: if you can't rent what you need for the same amount of $ or less, then moving does not really make sense. But that does not mean you are locked in forever.

Bank of America (formerly Countrywide) mortgage here also.

We were behind by ~5-6 months and contacted BofA about an inhouse mod a couple of months ago. Had to fax mountains of paperwork, but nothing complicated. (Check stubs, itemized budget, tax forms, 'hardship' letter, bank statements.) They just modified our mortgage - adding the interest from missed payments onto our loan & lowering our rate. It reduced our payment and brought the loan current.

Asking for a mod = no harm in trying as I see it. But it seems they won't even discuss it if you're current. Perhaps they see it as 'you must be able to afford your mortgage since you're paying it so well'. In most states it takes months, even longer sometimes, to foreclose. Here is what I suggest:

Hold onto your mortgage payments. Let June, July, and August come due. Set that $ aside... Call in August and request an inhouse mod. (Much less red tape and quicker than the federal HAMP mods.) If it works out for you - you may just get a lower payment AND have that money saved from missing your mortgage payments to do the home repairs.

Our timeline:
Requested mod mid-April
Did not make May payment
May 21st mod approved
June 1st: had to return docs to BofA with certified funds = new payment amount (payment was applied as $120 fee & the rest to interest)
June 15th online account info w/ BofA updated to show mod payment amount & rate
July 1st: begin new payment amount at standard terms (due on 1st, 15 days grace)

If you did not reaffirm, a mod WILL NOT change that. It just changes the terms of your original mortgage, which has been discharged.

If you apply for a mod mid August and get it, your schedule will probably be:
Sept: don't make payment
Oct 1: must send back paperwork w/ 1 month payment
Nov 1: start making new payment

While waiting to find out what (if anything) BofA will do for your mod, you save up your mortgage payment $ for June-July-Aug-Sept. If the mod goes thru, make the 1 mo new payment with what you have saved & do what is needed to repair your home with the rest. If it does not work out, then you'll have started saving for moving & a rental.

PS-while trying for a mod, all collection activity stops.
PPS-the budget MUST show money available. If it looks like you're too cash strapped for a mod to help, they won't bother. We were almost declined because they undercounted some of my income... You don't need to go as detailed as with a ch. 7 budget (where you're showing nothing left) and don't need to include the misc. categories like entertainment, recreation, etc. Since those things, technically, come out of the money 'left over' each month.

[mom2three09]

momif you really do want to keep your home please try contacting either or both: NACA dot com and then go to 'home save' or 995hope dot org, both services are FREE. never pay for help to mod. also contact BofA and let them know you want help. the rules have changed from a few years ago and there is a different attitude towards mods now. you could try looking at loansafe dot org for advise also. we are in a very simular situation, 4 kids, 2pets, husband out of work for 1+yrs. new employment pays much less. we just got a mod from BofA with help from NACA. it just all depends on if you are willing to fight, best of luck

1 thought: if you can't rent what you need for the same amount of $ or less, then moving does not really make sense. But that does not mean you are locked in forever.

Bank of America (formerly Countrywide) mortgage here also.

We were behind by ~5-6 months and contacted BofA about an inhouse mod a couple of months ago. Had to fax mountains of paperwork, but nothing complicated. (Check stubs, itemized budget, tax forms, 'hardship' letter, bank statements.) They just modified our mortgage - adding the interest from missed payments onto our loan & lowering our rate. It reduced our payment and brought the loan current.

Asking for a mod = no harm in trying as I see it. But it seems they won't even discuss it if you're current. Perhaps they see it as 'you must be able to afford your mortgage since you're paying it so well'. In most states it takes months, even longer sometimes, to foreclose. Here is what I suggest:

Hold onto your mortgage payments. Let June, July, and August come due. Set that $ aside... Call in August and request an inhouse mod. (Much less red tape and quicker than the federal HAMP mods.) If it works out for you - you may just get a lower payment AND have that money saved from missing your mortgage payments to do the home repairs.

Our timeline:
Requested mod mid-April
Did not make May payment
May 21st mod approved
June 1st: had to return docs to BofA with certified funds = new payment amount (payment was applied as $120 fee & the rest to interest)
June 15th online account info w/ BofA updated to show mod payment amount & rate
July 1st: begin new payment amount at standard terms (due on 1st, 15 days grace)

If you did not reaffirm, a mod WILL NOT change that. It just changes the terms of your original mortgage, which has been discharged.

If you apply for a mod mid August and get it, your schedule will probably be:
Sept: don't make payment
Oct 1: must send back paperwork w/ 1 month payment
Nov 1: start making new payment

While waiting to find out what (if anything) BofA will do for your mod, you save up your mortgage payment $ for June-July-Aug-Sept. If the mod goes thru, make the 1 mo new payment with what you have saved & do what is needed to repair your home with the rest. If it does not work out, then you'll have started saving for moving & a rental.

PS-while trying for a mod, all collection activity stops.
PPS-the budget MUST show money available. If it looks like you're too cash strapped for a mod to help, they won't bother. We were almost declined because they undercounted some of my income... You don't need to go as detailed as with a ch. 7 budget (where you're showing nothing left) and don't need to include the misc. categories like entertainment, recreation, etc. Since those things, technically, come out of the money 'left over' each month.

Thank you both for some great advice! And thank you, especially, to SMinGA for such a detailed account of what we should consider doing & how your own mod with BofA went!!

At this point we have nothing to lose by asking for a mod. Our interest rate is 7.25% so even getting it lowered 1% will knock $100 off of our payment. I did pay June's payment (like an idiot ), but will not make July's payment. We will stick the payments into our savings account for 2-3 months and then ask for an in-house mod. If all else fails and we still want to keep our house we'll just use the $ to catch the payments up.

Can I ask what interest rate they gave you on your mod? It would be a dream to get a rate of around 5%... that would make our payment affordable even during my husbands winter lay off months where he's only drawing unemployment...

ETA: I'm putting a stop payment on June's payment. Then we will ask for a mod in August/Sept.

[SMinGA]

We were at a 6.95% fixed rate, 30 year loan.

Our mod is:

3.875% for 2 yrs
then it increases
4.375% for 2 yrs
then it increases
4.75% permanently

Still ends at the same time as before - end of the year 2036.

I have heard of some dropping as low as 2% for the initial rate, ours didn't go that low. But our primary concern was amortizing the missed payments & bringing the loan current. Any rate reduction was a bonus!

They only amortized the missed interest - not anything to fund our escrow account. Of course, our escrow account is looking a little lean at the moment since we have only made 3 mortgage payments since they last paid taxes & insurance. About once a year BofA assesses if they need to change the escrow payment, and I figured they would raise it at the next check (temporarily) until it was right side up. But we just got notice that our county tax assessor is lowering values, so our property tax bill will go down... That should bring it even by early 2011 I think, and so at some point our escrow payment should go down slightly.

Can I ask what interest rate they gave you on your mod? It would be a dream to get a rate of around 5%... that would make our payment affordable even during my husbands winter lay off months where he's only drawing unemployment...

[bulletproof77]

I see your point, but for myself it was a good decision. As far as "personalizing"..I redid all the paint and the flooring before moving in. I have a very understanding landlord who pretty much lets me do what I want. The good landlords are out there. As far as my costs per month, I lease for about 60% of my former payment and I'm not locked in to anything. Posters here are correct, "home" can be wherever you and your family lives, it is just some wood and shingles..Yes, I don't own where I live, until this "housing crisis" hits rock bottom (and I don't think we are even close yet) I don't want to be tied to anything. I found through my foreclosure just how much of "me" was wrapped up in my house. I let it define me and how I lived and the cost was just a bit too high. I tried the "loan mod" route also, and the constant frustration of dealing with the morons at Bank of America, the sheer underhanded dealings all turned me off. And in the end, I still would have paid way too much above market for the house. Underwater is underwater, and I'm not into gambling on the future or throwing good money after bad. Good luck.

[SMinGA]

Seems like financially, giving up your mortgaged house was the only realistic choice to make. I do believe there will be plenty of rentals out there, and that finding a rental even with a recent bankruptcy and/or foreclosure will not be a problem.

Since to mom2three09 indicated she does not expect to be able to rent for less than the current mortgage amount, her situation 'felt' similar to what I went thru. We are somewhere in a -10% to +10% equity situation. No reason to pay for an exact #. Before our mortgage was modified, our mortgage was about even with what we would have paid going to a rental for a 3 bedroom home. Maybe we could have shaved $50-75 off, but that is not a certainty. With our modified payment, even when it caps at 4.75% interest in 4 years, there is NO way we could rent for less.

One note - we specifically asked about inhouse mods. I knew we didn't qualify for HAMP as our original payment was NOT over 31% of our gross. (I'm guessing that is why we didn't get 2% to start our mod.) From all I've heard, its the HAMP and not inhouse that are so horrible and take months or even years, include trial payments that may or may not become permanent and so on.

As far as my costs per month, I lease for about 60% of my former payment and I'm not locked in to anything.

[mom2three09]

We were at a 6.95% fixed rate, 30 year loan.

Our mod is:

3.875% for 2 yrs
then it increases
4.375% for 2 yrs
then it increases
4.75% permanently

Still ends at the same time as before - end of the year 2036.

I have heard of some dropping as low as 2% for the initial rate, ours didn't go that low. But our primary concern was amortizing the missed payments & bringing the loan current. Any rate reduction was a bonus!

They only amortized the missed interest - not anything to fund our escrow account. Of course, our escrow account is looking a little lean at the moment since we have only made 3 mortgage payments since they last paid taxes & insurance. About once a year BofA assesses if they need to change the escrow payment, and I figured they would raise it at the next check (temporarily) until it was right side up. But we just got notice that our county tax assessor is lowering values, so our property tax bill will go down... That should bring it even by early 2011 I think, and so at some point our escrow payment should go down slightly.

Wow, 3.875% would be beyond wonderful

Yes, I know all about the yearly assessment of escrow accounts -- we've had our payment go up a couple of times because of it

Can I ask if your loan is FHA? Ours is. I do hope that doesn't make the bank less likely to approve a mod because they are guaranteed their $$ regardless of whether they foreclose or not

I put a stop payment on June's payment so I guess we're on our way to either a loan mod or a foreclosure (most likely) .... keeping my fingers crossed they give us a mod... Our income did decrease in 2009 by more than $10K and will probably be even more of a decrease for 2010. Is the 31% DTI that banks look at to decide whether or not you qualify for a mod based on total payment (including prop. tax & insurance) or just the base mortgage payment? Also, how many months of paystubs do they want to see?

Btw, thx SO much for the great info!

I see your point, but for myself it was a good decision. As far as "personalizing"..I redid all the paint and the flooring before moving in. I have a very understanding landlord who pretty much lets me do what I want. The good landlords are out there. As far as my costs per month, I lease for about 60% of my former payment and I'm not locked in to anything. Posters here are correct, "home" can be wherever you and your family lives, it is just some wood and shingles..Yes, I don't own where I live, until this "housing crisis" hits rock bottom (and I don't think we are even close yet) I don't want to be tied to anything. I found through my foreclosure just how much of "me" was wrapped up in my house. I let it define me and how I lived and the cost was just a bit too high. I tried the "loan mod" route also, and the constant frustration of dealing with the morons at Bank of America, the sheer underhanded dealings all turned me off. And in the end, I still would have paid way too much above market for the house. Underwater is underwater, and I'm not into gambling on the future or throwing good money after bad. Good luck.

I can totally understand not wanting to sink $$ into a home that is underwater by thousands. If our home were under water I wouldn't hesitate to walk away. As it stands right now, homes in our area are selling for about what we currently owe (or a little less) -- so we need to build up equity before we even think of selling.

And you're right, home is where you make it ... We've lived in a few rentals over the years that we truly loved .. and we made a lot of great memories there!

[SMinGA]

The 31% of gross guideline - my understanding - is the total mortgage payment including escrow. Its a requirement for the federal HAMP program that you don't qualify if your mortgage is already less than that mark. So on a gross of $5k per month, your mortgage would need to be over $1550. I think that is part of why there are so few HAMP success stories, if it were 31% of net it would make more sense I think. Many have mortgages below 31% of gross but still need help or must face letting a house go.

Our loan is not FHA - I don't know if that would have a bearing or not. If you travel over to loansafe.org, and go to the forum (look for the 'free help' link in the menu) there is tons of info. I mean literally tons, try not to be overwhelmed!!!

They did not give me a # of stubs to send - I believe I sent 2 months worth. Then had to send the most recent stubs for each job when I sent back the paperwork. (They provided an overnight envelope/label for FedEx.)

Our income started going down gradually in 2008 and some expenses increased, we used cards to make up the difference. Assumed it was temporary I suppose? Eventually ran out of room on the cards of course. Last spring I started looking for a 2nd job - found one after 6 months. That is now bringing in a decent amount of income that greatly improves our financial outlook.

Wow, 3.875% would be beyond wonderful

Yes, I know all about the yearly assessment of escrow accounts -- we've had our payment go up a couple of times because of it

Can I ask if your loan is FHA? Ours is. I do hope that doesn't make the bank less likely to approve a mod because they are guaranteed their $$ regardless of whether they foreclose or not

I put a stop payment on June's payment so I guess we're on our way to either a loan mod or a foreclosure (most likely) .... keeping my fingers crossed they give us a mod... Our income did decrease in 2009 by more than $10K and will probably be even more of a decrease for 2010. Is the 31% DTI that banks look at to decide whether or not you qualify for a mod based on total payment (including prop. tax & insurance) or just the base mortgage payment? Also, how many months of paystubs do they want to see?

[SMinGA]

I have a good one on that topic...

When we closed in 12/06 it was with a company called Fieldstone. They sold to Countrywide almost immediately. (I think we made 2 payments to F then started paying C.) With the closing and first few payments, of course, we were funding an escrow account.

When Countrywide got it, they sent us a notice that we did not need those funds in escrow and so sent us a check for what was in the account. Did not lower the monthly payment. I knew they would eventually figure out OOPs so I put the $ in savings and let it draw interest. When they paid out taxes & insurance later that year, they did a review and gave the option of paying in full to balance the account or paying extra each month. We paid extra each month, leaving the balance in savings. ING Direct was paying 3-4% at that time.

That was before things went downhill, and we were never tempted to 'borrow' from that money.

Yes, I know all about the yearly assessment of escrow accounts -- we've had our payment go up a couple of times because of it