Question 2nd Home and Chapter 13 - Modify my Loan

[simon2020]

I have a second home and I heard if you go through a Chapter 13, the judge can force the mortgage loan company to change the terms of the loan. (Modify from ARM to fixed rate)

I head though you cannot change the terms for your primary residence.

Is this true? (By the way, I am in California.)

Thanks.

[justbroke]

Till decision would have (it's about percentages).

Best of luck.

[simon2020]

justbroke, thank you for your response. Q: When I file for Ch 13, will my attorney have to ask the trustee or judge to modify my 2nd home mortgage or will the judge make a decision and force the mortgage company to modify my loan?

Could it be that if the judge says well - if the debtor's mortgage company lowers the interest rate and monthly payment, that could free up more cash for the unsecured creditors?

Any comments/opinions would be most appreciated.

Thanks.

[justbroke]

Judges will generally only do things on request (also known as Motions). Otherwise, they are really just a referee over the proceedings. If no one files a motion to value or to strip your lien, the judge isn't going to sua sponte (out of the blue) decide to do this.

[simon2020]

justbroke, you basically you're saying, I have to ask my attorney to file a motion with the bk court to ask my mortgage company to modify the terms of my 2nd home mortgage? Do you know if this is as easy as it sounds? Would it not be in the the mortgage company's best interest to modify my loan when I file chapter 13?

You know while I am at it? My FICO is already shot (credit cards all late) but the mortgage is current. Can a mortgage company modify the loan pre-bk or should
I just file and let my attorney file the motion and see what happens? Thanks.

[justbroke]

justbroke, you basically you're saying, I have to ask my attorney to file a motion with the bk court to ask my mortgage company to modify the terms of my 2nd home mortgage?

Yep!

Do you know if this is as easy as it sounds?

Yes, it can be real easy. I just did one (filed a Motion to Strip Lien) and it went totally unopposed by the Bank!!! I just wrote and submitted my Proposed Order to the Judge for her signature.

Would it not be in the the mortgage company's best interest to modify my loan when I file chapter 13?

It depends. Most of these loans have been sold so many times, and the "investors" were banking on the Interest. In the end, it is best that they modify the loan, rather than be subject to foreclosure and lose everything.

You know while I am at it? My FICO is already shot (credit cards all late) but the mortgage is current. Can a mortgage company modify the loan pre-bk or should

I can answer this!!! It's best to get it done before and out of the way. I attempted a modification to stave off foreclosure, only the sale date came too quickly and the Bank dragged their feet. So, in a panic, I filed. Sure enough, the next day after filing, the Bank approved the modification (but hadn't executed it). When they discovered my BK, they had to withdraw the offer. Now I have to deal with their attorney, which is WORSE!

[simon2020]

I started the loan modification process with CW

My attorney told me to start the process of getting a loan modification for my mortgage on the "second home" but that he will also put in the petition a different interest rate than what I am paying. He will also propose a different monthly payment as well.

Knowing Countrywide may move slowly with my loan mod. paperwork (I started process - like sending them my income tax returns, pay stubs, hardship letter) -- and I am filing in about 2-3 weeks, I am going to bet the bankruptcy court will make a decision way before I hear from Countrywide. That's my attorney's thoughts but who knows -- all I care about is lowering the payments even if it is temporary during the life of my 60 month plan.

[HHM]

Regarding 2nd homes and chapter 13 modification, what you need to realize is that anything you do to modify anything in BK cannot go beyond the BK itself.

For example, you CAN cram down a second home, BUT, you must PAYOFF the cram down within the chapter 13. You CAN modify the terms of the loan, but it could only be to a 5 year term at whatever market rate there is for a 5 year loan. Hence, it is paid off within the chapter 13.

So, the answer is yes, you can modify 2nd homes, but it is impractical to do so for 99% of debtors.

Presently, the only way to do a long term modification, i.e. one that extends beyond the term of the BK itself, is through a reaffirmation negotiation.

[simon2020]

Thanks HHM -- What do you mean by "extend beyond the term of the BK itself, is through a reaffirmation negotiation?"

Can you please give me an example? I understand I can reaffirm my car loan during a BK 7 or 13 -- is that the same for a mortgage?

Also, I think I mentioned it before but my loan is NOT upside down, rather I am just asking for a lower interest rate/payment during the life of the loan and if I have to back to the old rate on month #61 so be it. Hopefully at that time I would be able to refi at a better rate in 2014 and push the rate down on my own (of course knock on wood fixed rates are not at the double digit levels in the future.)

Also -- how do I proceed with a "reaffirmation negotiation?"

Thanks.