Chase no help, and they just ****.

[Alice in Chains]

Long story....

We were with WAMU, bought in 04' paid too much, you all know the story.
5 year interest only. 5.5%. I started calling a year before it was going to reset, asking for help. None to give, wait till it's time, they were too busy with foreclosures, etc. Well, recession hits. We're buried in debt. Wife and I both had paycuts, all our payments to cc's skyrocketed, etc. We stopped paying most in March and turned off the phone, concentrating on the house. Hoping we get a good mod, and can file CH 13 to pay off debt and save some pride.
Chase, never can talk to ONE point of contact, and you get told different things time and time again. Basically, we were told we needed to "be in trouble" to get help. Told to even miss two payments, "not three, that's pushing it" according to one person. So, we do. We get a forebearance. (didn't kwow it was till AFTERWARDS) First were told it was a payment program to make sure we could keep up on payments, then we'd be put into a similar loan under the loan mod.
Little info.... 1st mortgage, 535k (that's with late fees now)
2nd mortgage 80k. When we bought, did a 80/10/10.
It's worth between 500k and 540k now, (maybe.)
My wife and I combined make about $120k a year. Yes, we over bought, I know. We were newly married and were stupidly caught up in the bubble. (much help from our realtor and bank too.) We live in So. Cal.
Our payment on the orignal loan, with taxes, etc, was $3400. Second $400.
After months of back and forth with Chase, from faxing over everything they want, over and over again, (including things multiple times because they couldn't find it, or didn't note it, making us go through paperwork over and over again) we get the loan mod papers FDX'd. With anticipation and excitement we open it.
Fixed at 5.75% with a balloon payment of 284k after 25 years. Our payments with taxes, are now $3600. Still have the second. My wife and I cried and I got about 3 hours of sleep last night. I get it, they got us a fixed loan, but what part of us not being able to afford even our current payment didn't they understand? WHAT A JOKE. At least our first payment isn't due till Feb 1st, that's a big help. (yawn)
OH... and we need to decide and have back to them by 11/30. Nice huh?
We're behind about 17k, (we were barely making our original payments before everything in the economy went haywire, so when they told us to miss a couple, it was helpful.....) so I'm assuming if we don't accept this, they start foreclosure process? My first thought was we sign and then see what our BK attorney says. (We're going to file BK no matter what now, but were hoping for a CH 13 and being able to keep the house) Now, I don't know.
I just don't get it. We're so stressed out and pissed off, and in utter dismay to say the least.
Anyone have any thoughts or advice? Can I take this up any ladders? We're in a spot where after putting down 80k years ago, and investing more into the house for 5 years, we don't want to lose it, but I'm not sure we have a choice. Maybe we just need to claim CH 7 and be done with it. I want so badly to keep our home, (we're not terribly upside down like a lot of people) and I thought I did everything I could to do just that. I even had people from Chase saying, "wow, you filled out everything very well, we dont' have many people this organized or calling us to follow up." I was ON THEIR BUTTS and I got a big finger for it.

[Alice in Chains]

and after doing some reading, does my info sound like a HAMP deal? Are we truly at 31% of gross income. If they take into account our full income before our paycuts, (which mine have start to come back a little, and they just asked for recent paystubs before we received the offer) with taxes, we'd be about there. With full pay, we'd make 139k a year gross. Monthly, 31% is 3590, which is about what they quoted us. Man, I type that, and it sounds great. Reality is, we have a second, tons of debt, daycare costs, etc, etc. (and we owe the IRS as well) We'd be scraping by even if we wiped out all of our CC debt. Living in SO. Cal, we make good money, but not great. It's expensive. Maybe we need to get the heck out!

I just don't know what to do.

[caldwell02]

Have you tried negotiating re: the second? I mean offering them say 5-10% to pay it off?

[wonderland]

Alice in Chains- You can go chapter 7 and still keep the house. You need to speak with a bankruptcy attorney, although to strip the 2nd you need to go chapter 13. You really need to talk with an attorney. I think you can go ch 7 to get rid of the cc debt then when that is discharged to a ch 13 to strip the 2nd. I am not positive though.

[Alice in Chains]

We have not tried to negotiate the second. We kinda figured there was nothing we could do about it? Only recently did I discover we might be able to strip it if we did a 13. We are talking to an attorney next week.
I've also heard it's possible to do a CH 7 and keep the house, but I read so many people doing Ch 7's and having no choice but to leave. I'm not sure if us only being underwater less than 100k helps us or hurts us. We do live in Orange County, CA, and although the foreclosure rates here are going up, I do believe it's still considered desirable, and I know we weren't hit as hard with price drops as other areas. Considering the 80k or so we put down, (we weren't a no down payment case we actually tried to do things right but got priced out of 5 homes in a 3 month span) I would think the bank wouldn't mind taking our house? I could be naive here though. I realize a foreclosure costs them money and they would prefer we stay.

[wonderland]

I think you need to talk to an attorney for sure. I'm in OC too values really aren't recovering yet. There are a lot of sales...but all foreclosures. I think you should fight! You can most certainly go chapter 7 and save the house. You are allowed to have 75K of equity in your house and still keep it in chapter 7 (that number may be a bit off check w/the attorney). It takes at least 3 months to foreclose in CA...and sometimes longer. I think you need to push Chase and ask for HAMP. They are definatly not sticking by the guidelines to get you to 31%. Your 2nd mortgage isn't a secured loan anymore which is why you can strip it in a Ch 13. You aren't alone...everyone in CA was overstretched. If they weren't no houses would have sold and values wouldn't have gone up. I am very worried too but we can't do anything but fight!

[davephx]

You have me confused about the ability of the CA homestead exemption to keep the house. My understanding its the exemption applies only to judicial liens i.e. those resulting from a lawsuit or judgment not a mortgage lien. It only delays foreclosure a few months maybe until the mortgage company motions to lift the stay which seems to always be granted. But I hope I am wrong!!

Obviously you should clarify with an attorney.

It seems clear in AZ there is no Chap 7 protection under AZ Homestead Exemption but CA seems a bit less clear.

Here is my research:
Before selling a home in California , a lender has to give the owner at least three months' notice. If you receive a three-month notice of default, and then file for bankruptcy after two months have passed, the three-month period would elapse after you'd been in bankruptcy for only one month. At that time the lender could file a motion to lift the stay and ask the court for permission to schedule the foreclosure sale.

Chapter 7 Cannot Cancel the Foreclosure

With all this debt being canceled, you may be wondering why the foreclosure on your home won't be canceled too. The trouble is, when you bought your home you probably signed two documents (at least)--a promissory note to repay the mortgage loan, and a security agreement that could be recorded as a lien to enforce performance on the promissory note.

Chapter 7 bankruptcy gets rid of your personal liability under the promissory note, but it doesn't remove the lien. That's the way Chapter 7 works. It gets rid of debt but not liens--you'll still probably have to give up the house under the lien since that's what provided collateral for the loan.

Source: How Bankruptcy Can Help With Foreclosure - Free Legal Information - Nolo

OR
I am going to proceed under Chapter 7-what will happen to my house?

There is a chance you may lose it. Even if you're willing to continue making the required monthly payments, you could still lose your home if you file for bankruptcy under Chapter 7.

With a Chapter 7 filing, if you have no equity in your home and you haven't made your payments, the creditor can foreclose on your home (take it from you) during or after bankruptcy, even if your unsecured debts are discharged. The Chapter 7 discharge does not release the lien. Of course, a lender can also foreclose on your home in these circumstances if you do not file for bankruptcy.

If you do have equity in your home, your unsecured creditors may also have an interest in your home, especially if it is worth more than the total of your mortgage debt and any applicable homestead exemption. In that case, the bankruptcy trustee may take possession of your home and sell it for the benefit of your unsecured creditors—in other words, it may become part of the assets collected for distribution by the trustee.

Source: American Bar Association Family Legal Guide
I am going to proceed under Chapter 7-what will happen to my house?- ABA Family Legal Guide

BUT another site says:
Homestead Exemption
Every state has its own homestead exemption, which is the law that determines whether you will be able to keep your home in a Chapter 7 bankruptcy. If the equity in your home is less than the homestead exemption, you will probably not lose your home to foreclosure. But if your equity exceeds the homestead exemption, your lender will probably be allowed to foreclose, then write you a check for the amount of your homestead exemption.

BUT the above is not State specific and it seems clear from AZ attorney sites our homestead exemption does not stop home from foreclosure sale even if no equity.

Than
CA Exemptions
May file homestead declaration to protect exemption amount from attachment of judicial liens and to protect proceeds of voluntary sale for 6 months.
Cal. Civ. Proc. Code § 704.920
Cal. Civ. Proc. Code § 704.950
Cal. Civ. Proc. Code § 704.960

Source: California Bankruptcy Exemptions - CA Homestead Exemption - California Bankruptcy Law :: Legal Consumer.com OAKLAND, California 94601

NOTE: A mortgage is NOT a "judicial lien" as far as I can tell.

[wonderland]

We have spoken to several attorneys about ch 7 & ch 13 and they all have said you can keep your house in both if making regular payments. I really think you must talk to a lawyer about your personal situation. There are certain exemptions you get in both ch 13 and ch 7. There are state and federal laws as to how much you can keep in bankruptcy. I think you choose either the state or federal.

[Hopefull2009]

With a Chapter 7 filing, if you have no equity in your home and you haven't made your payments, the creditor can foreclose on your home (take it from you) during or after bankruptcy, even if your unsecured debts are discharged. The Chapter 7 discharge does not release the lien. Of course, a lender can also foreclose on your home in these circumstances if you do not file for bankruptcy.

If you're going to file Chapt 7 and want to keep your home, your payments must be up-to-date. That's why most who are behind and want to keep their homes file Chapt 13 because the back payments can be included in the repayment plan.

[wonderland]

That is why I think it is key to get the loan modification and then file bk...whether it is ch 7 or ch 13

[davephx]

I assumed behind in payments and trying to prevent foreclosure. But yes if current just keep paying. But if you have a lot of equity, rare today, can sell give you the exemption amount and the rest to the creditors.

[Alice in Chains]

We're considering agreeing to the loan mod, even if its not what we want. That's part of the reason I posted though. Do I have any course of action left? Thy have approved our home loan mod, but it's too much money. We're behind 17k in payments, (late fees and the couple missed payments we HAD to go through to even get to this point) We didn't miss any forebearance payments, but are behind in general for sure.

They gave us an 11/30 deadline, and we just got the papers on TUESDAY!

Where can I go from here? I called to speak to the negotiator, who wasn't there, and was told they'd call back. (they have not, of course)

[davephx]

Since the modified 1st is about 31% of income don't think you can do much better.

Depends on how badly want to stay and afford payments of course. I assume they rolled up the back 17k so that is a big benefit.

If you take the mod, you can than deal with 2nd and debts in Chap 13. Assume 7 is out since income too high, probably won't make Means Test.

With 2nds a major issue there is still hope that something will be done like the 2MP program. If you stop paying 2nd it doesn't seem much risk of them foreclosing since your about even. But to foreclose they would have the resale costs etc which by the numbers wouldn't make sense unless you had much more equity vs about break-even.

[Alice in Chains]

Since the modified 1st is about 31% of income don't think you can do much better.

Depends on how badly want to stay and afford payments of course. I assume they rolled up the back 17k so that is a big benefit.

If you take the mod, you can than deal with 2nd and debts in Chap 13. Assume 7 is out since income too high, probably won't make Means Test.

With 2nds a major issue there is still hope that something will be done like the 2MP program. If you stop paying 2nd it doesn't seem much risk of them foreclosing since your about even. But to foreclose they would have the resale costs etc which by the numbers wouldn't make sense unless you had much more equity vs about break-even.

The did roll back the 17k. We want to stay, but maybe only for a couple more years. If we do stay, we'd have to do something about the 2nd and get into a Ch 13 fast.
Appreciate the feedback. I can't believe looking at the numbers that it's 31%, but it is. We were told by Chase to epxect a 2-3% starter for a few years until it got up to 5. whatever %. That's what we hoped for. I'm not sure why we didn't get it. I guess I need to insist on talking to them at length tomorrow, if they're even open.

[Hopefull2009]

Chase to epxect a 2-3% starter for a few years until it got up to 5.

There aren't many 2% out there. That would come if your income was lower and hard to get to 31%. Many of the customer service reps will shoot out those numbers just because they are part of the guideline instructions and they really don't know any better. Each case is different depending on income.

[davephx]

The servicers get no incentive payments to drop below 31% of Gross.

The 2%/40 years is simply the lowest they can go to get to 31% and get the maximum incentives. But under the "waterfall" the rate decline stops as close as possible to 31% if hit it.

[Alice in Chains]

Thanks for the input, it makes sense. For some reason we just thought if they saw the rest of our debt, they'd help even more. Thinking it through, why would they? They put us at 31% gross, so the rest is up to us. I think we'll agree to it, and file.

If we could get rid of our second, it would really help.

[davephx]

If properly implemented HAMP is suppose to be very specific easy to follow pure numbers game. 31% of gross = affordable first mortgage. Simply no concern about 2nd or other debts. NPV Test idea seems logical. Deducts huge costs to foreclose, not payments for many months while on market to resell, discount "foreclosure sale" pricing etc. Seems very logical. If underwater usually result should be better to modify since will get paid on a far higher current mortgage balance instead of all the costs of foreclosure, resell, managing, costs while for sale, etc. etc.

Even if Mortgage = FMV the logic with so many costs to foreclose it still "should" be better to modify!

But servicers make it far more complex by tossing in other requirements or excuses it seems.

[yomann]

Even if Mortgage = FMV the logic with so many costs to foreclose it still "should" be better to modify!.............

Will this still hold true if "1st + 2nd=FMV" and you have 2 seperate lenders (1st is a 60% of FMV, and 2nd at 40%)
Related question - will the NPV test be run only using the 1st, or will the 2nd be included ?

[davephx]

HAMP Only is concerned about the 1st (2MP was suppose to deal with 2nds but seems dead).

We do not know the secret to the NPV Test. It seems to include the 2nd and the other debts/budget. These if big may increase the potential redefault assumptions working against the mod.

But .. one would think... if hugely underwater that "should" be far more important logically.

Maybe higher risk of redefault ...maybe.. sometime... vs immediate huge loss if foreclosue.

[2havefaith]

The did roll back the 17k. We want to stay, but maybe only for a couple more years. If we do stay, we'd have to do something about the 2nd and get into a Ch 13 fast.
Appreciate the feedback. I can't believe looking at the numbers that it's 31%, but it is. We were told by Chase to epxect a 2-3% starter for a few years until it got up to 5. whatever %. That's what we hoped for. I'm not sure why we didn't get it. I guess I need to insist on talking to them at length tomorrow, if they're even open.

Your situation sounds alot like mine. Our mod was approved, but it was not the greatest. We accepted it. Only other option was to deny and lose house. We will stay for a few more years. Prior to mod, we had a sheriff sale date so we filed a chapter 13 to save the home(only a temporary fix) . With the new Bankruptcy laws, our income was too much for a 7. The chapter 13 trustee payment was ridicilous!!! We paid for about a year and had it dismissed. Was still in the bankruptcy when we decided to modify loan. In order for Chase to work with us, they had to be removed from the bankruptcy. To make a long story short, BR was dismissed and we worked out payment plans with some of the creditors. Payments are much less than the trustee payment. We still have alot of debt and believe me, the thought of filing again crossed my mind, but i would never do it because i feel that it was the worst thing that we could have ever done. The attorney will quote you a plan payment, but believe me, that is ONLY an estimate. It is up to the trustee and it will be MUCH more than what the attorney quotes you . Aside from the ridicilous trustee payment, they will control your live for the next five years or however long your plan is. Can't make any purchases without the trustee approval. Tried to get a used car and the sales quy said, "does the trustee know u r here" Thats when I said what have i gotten myself into.