Loan Modification approved- will it affect my chpt. 7 filing?

[luvtocrop]

My parents are newly retired and have always counted on their home as their retirement fund. They are looking to get about 1.5 million if they can sell. House is on the market, has been since July, and no offers yet. Problem is, now that they are on a retirement income, they don't make enough money to continue making their mortgage payments. What to do, any advise? Obviously giving up their house is not an option.

[luvtocrop]

I modified the first on my home effective November 1st. All fees were removed, late payments were tacked onto the end of my loan, and our interest rate of 6.5 percent was sustained for another 5 years.

Since the modification, we have added a student loan payment of $371/month that came out of deferment. This adjusts our financials and makes it more difficult to pay for our second, which is currently at 11.5% - ouch.

I'd like to modify this loan as well. I keep calling our rep that has worked with us on the 1st modification, and leaving him message, but he isn't calling me back. Should I submit a new package for the 2nd?

Any advise?

[Moe Bedard]

Is your second serviced by Saxon as well? If so you would need to call the main loss mit number and begin the process with the second.........you will most likely be assigned someone new for that one.......

[Ambling]

Maybe a reverse mortgage would suit them?

[Moe Bedard]

I agree. If they need cash and its tied up in the walls, reverse mortgage is definitely a viable option.

Check this out. Reverse Mortgages - Top Ten Things to Know - HUD

and HUD Home Page: How HUD's Reverse Mortgage Program Works, HUD Reverse Mortgage for Seniors (HECM).

[luvtocrop]

I'm not sure they can. My dad has already looked into it. His current lender will not let him take any more out on the home, as his income does not support the loan payment.

[Moe Bedard]

I think your dads lender may not be too informed on reverse mortgages.

5. What's the difference between a reverse mortgage and a bank home equity loan?

With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments.



The reverse mortgage is different in that it pays you, and is available regardless of your current income.



The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow. You don't make payments, because the loan is not due as long as the house is your principal residence. Like all homeowners, you still are required to pay your real estate taxes and other conventional payments like utilities, but with an FHA-insured HUD Reverse Mortgage, you cannot be foreclosed or forced to vacate your house because you "missed your mortgage payment."


Reverse Mortgages - Top Ten Things to Know - HUD

[HopingtoFind]

Just curious, how much equity do they have? If they have enough equity they can always lower the asking price.

[luvtocrop]

Yes, both my 1st and 2nd are held my Saxon. I would like to modify my 2nd to adjust my interest rate and lower my payment. Should I submit another loan modification packet in reference to the 2nd loan?

[Moe Bedard]

Call in and ask them what they require for you to submit for a modification with the second.......they might have most of what they need except for updated financials from your first modification.

[luvtocrop]

When submitting them to a loan mod, should they be positive, negative? If positive, how much positive? Should you show an excess of $100/month? $500/month? more?

If you show negative, will the lender be hesitant to modify your loan, or will that encourage them to do so?

Will you get a better rate if your financials are negative?

I recently modified my 1st mortgage and was told that all I could get was a 5-year extension on my current rate and they brought my past due payments current - big deal. They said my financials showed that I could make my payment. If I would have been able to prove otherwise, then they might have been able to lower my rate too.

We have since incurred additional debt and I'd like to modify my 2nd. If I show that we are negative, will they deny the modification? If I show positive, will they only bring my loan current?

[elpjohnson]

luvtocrop....

From what I understand, you must be in positive territory in order to obtain a loan modification. I know with AHMSI, they like to see a positive of $100 - $250 (no more than $300) per month. The lender needs to know that you can afford your payment....if you are running at a deficit, it will look like you cannot afford your monthly payment.

Hope this helps....

[Safford]

If you show a positive "before" the mod, why would they give you a mod, clearly you have positive cash flow and can afford it.

I showed a negative cash flow before the mod and calculated and showed a positive cash flow after the mod.

Another way of saying it, I can't afford to keep the house now, but can afford to keep the house if they modify it.

[ArmyOfMe]

Hi Everyone,

I am about to send financials for a mod as well.

I agree with your point Safford....why would they mod your loan if you are positive?

I am going to start a thread asking those who have successfully modified their loans to post their excess or deficient cash flow before mod and what the results were.

Also....I spoke to a credit councilor who said some lenders don't consider your minimum credit card payments as 'essential' bills when considering the mortgage payment you can afford. Anyone have any feedback on that?

[Moe Bedard]

The financials are going to have a different criteria with each and every investor........some go off of gross income.......some go off of net income........some use only up to $500 credit card debt......some do not use credit card debt at all.............this is an impossible question as we would have no way of knowing what each investor requires.........and other members who have had successful outcomes wouldn't necessarily have the same investor as you. For instance.............I modified with Chase which is my servicer not my investor, and I did have to show a surplus on my rate at the time which was 11.50% interest only, and my surplus was $264 and they required a surplus. Erika modified with AHMSI.........again her servicer, not her investor.......and she showed a surplus as well.

The investors want to make sure that you can afford the house and expenses..........not just the mortgage alone this is the reason why the want you to show a small surplus of disposable income at the end of the month using your current mortgage payment......... with most investors.



The best thing that you can do is to go over your financials and ask the above questions with the servicer on your loan...............or put together your financials, if you are unsure, with a non profit such as HOPE
1-888-995-HOPE or CCCS (Consumer Credit Counseling Services) who are familiar with the criteria for the lenders.................also keep in mind that some investors require credit to be pulled along with the bank statements so that they can verify the information that you are giving.


Because of the difference in the investors for these loans and the different criteria for each one.........members that have had success are not going to be able to assist with this matter.

[luvtocrop]

I have also been told that you should show a small surplus. Under $300 is my guess... so that's what I'll do!

[ArmyOfMe]

Thank you very much *** for your response... I understand that it is impossible to know what each different investor is looking for. From your response and the posted experience of others, I now have a better understanding of what the investors may be looking for. I will run my financials by my credit councilor before submitting...

Again, thank you so much for your time.

[elpjohnson]

In my case, I had a small surplus of $158 or so per month....and they did pull credit to verify expenses....the three-in-one real estate credit report from Landsafe....

[ummuth]

in my case, i had a deficet of $150 however i was not behind I showed that i could barely make the mortgage before it rest from 8.5 to 9.1. every case is different if you are not behind than you have nothing to loose as for finicails they did not care about credit cards they looked at utilities and monthly living expenses my invester Wells Fargo is the administrator of the security trust.

[luvtocrop]

Have been in the process of modifying my first. Was going to secure my current rate of 6.8% interest only for another 5 years and bring my loan current. Well, they sent loan mod docs that adjusted my rate to 6.0% interest only for another 5 years, dropping my payment by $288. Over 5 years, this is a savings of over $17,000.

Saxon also holds my 2nd mortgage, which I have not submitted a packet to modify. I recently went behind on my payments, as I would LIKE to modify. It is a principal/interest 15-year fixed loan at 11.99%- ouch. I would like to try and drop my rate to about 6%. Anyway, my loan mod docs included paperwork to also "modify" my 2nd. The rate would be the same, but the late payments would be added to the end of the loan, and thus the loan would be brought current. I'm not happy with this modification, but excited that they did/offered it on their own. It is a step in the right direction!

Tomorrow I am going to submit another loan mod package (by e-mail, as that is how I submitted the last one and FINALLY got someone to help me). Hopefully we can start the process on modifying the 2nd.

[elpjohnson]

I'd say that's a step in the right direction! Great news!

[luvtocrop]

My mortgage has been drastically reduced, effective for the next 5 years, due to a mortgage loan modification. This will change our debt/income ratio dramatically.

We retained a lawyer in November. Stopped paying bills, and told all creditors we were filing BK.

What do we do now?

Can we still file chapter 7? Even though the numbers have changed drastically?

If not, what do we do? Should we not file? What can we do about all those creditors who have closed our accounts, added late fees, turned us over to collection agencies???

Help!

[Dan Bailey]

luvtocrop,
If you have a retained attorney, you would need to seek his council concerning your other creditors.

[luvtocrop]

I have- all week, and no one is getting back to me with any kind of answer. I've been in contact with one of his legal assistants and she told me yesterday that others were waiting for "answers" to and she would try her best to get back to me ASAP.

I understand they're busy, but am looking for answers.

[Dan Bailey]

luvtocrop,
Noone here is an attorney, and we cannot offer legal adivice. That would be a huge liability.