Will filing a BK interfere with my home loan modification?

[luvtocrop]

I've already modified my 1st. Would like to modify my 2nd.
Planning to file for a Chapter 7 soon. Meeting with a 2nd attorney this Friday and hope to retain him.

Will filing BK interfere with my chances of getting a loan modification from my lender? Is this something i should do BEFORE I file for BK? Can I still retain a lawyer and begin working towards the BK, but just do the loan modification first? Or does it matter?

Also, there are so many new home owner programs coming down the pipe. Will a BK lessen my chances of being able to participate in those programs? The best offer for me would be a principal reduction, and I don't know if that is something we will see or not (widespread anyway). And if we do, will having a BK interfere with my chances at qualifying for a reduction?

Any advise?

[HHM]

Yes, if you are going for a loan mod, it is better to get it in place before you file. Doing so after BK can create some odd legal complications dealing with the discharge of your personal liability on the 2nd mortgage but survival of the lien, etc.

As for when to retain an attorney, that does not matter, you can retain them as soon as you want, (and probably should do so sooner so he can help plan around your situation...assuming its a full service attorney and not some cookie-cutter BK attorney).

Right now, nothing has been proposed for principal reduction (at least nothing meaningful) so I wouldn't hold out for that.

[Flowers]

who is your mortgage lender? I had Chase and it took them a good 6 weeks to get back to me (with a very fair) loan modification.

I agree with the previous poster - best to have your deal in place with the bank because it could change everything once you file for ch7.

[luvtocrop]

Saxon holds both my first and second.

[jacksmomma]

Saxon = bad news

Dear luvtocrop:

I disagree with the previous post, at least as to HAMP modifications. Here's why. First, a supplemental directive issued in March requires banks to offer modifications to borrowers in active ch 7 & 13. Previously, mods for borrowers in bankruptcy were "optional" which meant "forget it" in bank speak. Now, that has changed.

Second, your loan is serviced by Saxon.

Saxon Mortgage Services is a wholly owned subsidiary of Morgan Stanley. Saxon exists to buy tranches of bad loans, usually 5000-7500 at a time and foreclose on them. (Saxon is the 16th largest holder of bad adjustable rate mortgages.) The only departments Saxon has are collections, HAMP and bankruptcy. Apparently, the only department at Saxon that actually does permanent modifications is bankruptcy. The woman who runs the bankruptcy call center is named Donna.

Saxon is as sleazy as they come. Do not believe anything they tell you on the phone. Don't bother faxing documents, they go straight into the trash. Send everything via overnight mail, signature required. We've sent them three modification applications and they claim never to have received them, despite the fact that they signed for them. I finally sent them a RESPA letter, which is the only thing they have ever acknowledged receiving from us (and only because federal law requires them to do so). They still haven't formally responded with answers to any of our questions.

If you hire a bankruptcy attorney, make sure he/she is up to date on loan modification issues. Many bkrptcy attorneys are so busy due to the recession that they haven't been keeping up with loan modification case law or HAMP guideline changes, etc. And some attorneys will just tell you that "nobody" gets their loan modified and to either be prepared to pay the mortgage or face losing the house. This is not true! Bankruptcy does add a layer of complexity to modification, mostly because of the federal laws the bank is required to follow once you file. But filing may in fact HELP you to get a modification. My understanding is that Ch 13 is better than 7 in the bank's eyes, but I have only Donna's word on the phone to support that view.

If you really want to stay in your home, you need to make it VERY clear to the attorney, Saxon, everyone that you will go to the mat to save it. Be prepared for a fight.

Hope this helps.

[HHM]

Jacksmomma

Please realize that this is an OUTDATED thread you posted in, the thread was started in Nov, 2008.