In limbo with citimortgage...please help

[jc471]

Hi I am new here, and I found this site kinda by default but I am very impressed with what I have read...therefore I am hoping for some advice...
Lost my job in 2008...husbands still works...have 2 mortgages through citi...1st and 2nd...way upside down after value check last month...was approved for mod last June with the terms of 2.25% for 1 year..down from 7.99%...offered nothing on 2nd...was doing ok we thought but with full pmt on 2nd we were still struggling.. sought out help from hud counselor per citi's website to see about obama plan..this was May of 2009...waited...waited and waited for value check to come back and on July 17 of 2009 was told we did not qualify because of husbands income...was advised by citi to resend package to regular mod dept....was done on July 20th...getting run around from citi...am being sued by two cc companies and looking to file bk chapt 13...lawyer says we should wait as to not have to put arrearage or 1st mort. in plan..and the fact that they may not do mod because of this...August 27th 2009 will start forclosure proceedings...still unemployed and actively looking..(Joys of living in Michigan) ...found this website last weekend and decided to place a call to number listed...spoke with cindy...she informed me that my loan was owned by citibank and serviced by citimortgage and as far as she knew if we did not qualify for obama plan they would not do anything else to help us..per legislation that passed 6 months ago..but was supposed to be reinstated by mid or late august..but as of yet she hadnt heard anything about it...she also told me after she grilled me about why i hadnt made my last 2 mod pmts or why i still didnt just keep sending in mod pmt even though my mod had expired...i told her I wasnt aware that i could send in mod pmt after expiration and that nothing was done on second so we were still struggling..she told me she would send my file to dept that would call me within the week to let me know if they could even review this case..but wanted me to fill out workout pkg that i could find on citi website in case the person from this undisclosed dept needed any more paperwork from me I would be able to send it over asap...Ok question 1: I am not sure what next step should be...I am ready to just file so they dont start forclosure proceedings and maybe be able to finally sleep at night..but we do not have the 3500.00 dollar arrearage to pay and that will make my bk plan alot more money....we are at the end of the wire as far as time..and I am afraid they are going to either come back and say no or per michigan law start proceedings without any notice...please..any advice will be greatly appreciated...