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cindybeck67 · Joined: 13 Mar 2010 Posts: 5 2.35 Dollars($)

I live in CA and have a house with a first mortgage of $500K and a second at $175K. I had some financial hardships (divorce, paid ridiculous amounts of alimony, behind on mortgage payments) and so my 1st mortgage modified my loan for me. I was not able to find out much about what they were going to do (really difficult to get any info from the mortgage company through this entire process) and just received the loan modification papers yesterday. They are giving me a 25 year, interest only, ARM. I am so upset. I really thought the loan modification was going to help me. I want to stay in my home but even if I get the second lien stripped via a Ch. 13 BK, I still wouldn't be able to refinance the first because the house is only worth (in the current market) about $380K. I also have no extra money to put towards paying off the principal.

A friend of mine told me I should just let it go and try a short sale. I am so disappointed.

Would you recommend a short sale now and letting it go or staying in the house paying interest only payments for a few years until I can refinance?

Niicss · Posted: Mon Mar 15, 2010 3:30 am Post subject:

If you go for a short sale, you would be liable for the deficient amount resulting from the first mortgage after sale of the property and also the second mortgage. If you can afford to pay it off, then you can go for a short sale. Chapter 13 can be a good option for you as it will help you in stripping off your second loan and first lender will give you a payment plan depending upon your financial situation which will help you in paying off your dues in 3-5 years.

cindybeck67 · Joined: 13 Mar 2010 Posts: 5 2.35 Dollars($)

Thanks for your reply! I cannot pay off the the amount that would be remaining in a short sale. I can afford the loan modification payment but am bothered by the fact that it's interest only and nothing goes to principal. I wanted to stay in the house long term so I am not sure what to do. To do a Ch. 13 I would have to stay in the house for the 3-5 years it takes to go through the program so that if I do sell it I won't be responsible for the second. I am hoping I could refinance by that point. Does anyone know if I would be able to refinance right away or if I would have to wait a few years after the Ch. 13 was completed to do so? So, would people recommend I stay in the home until the market changes and I can refi?

smithsussane · Posted: Tue Mar 16, 2010 12:42 am Post subject:

Hi cindybeck!

Welcome to forums!

If you can afford to pay the loan modification payment, then it's better for you to go for it. Though the payments would go towards the interest, it will help you in saving the property for time being. Once you have a better financial situation, you can apply for a refinance and check out if you can qualify for it.

Feel free to ask if you've further queries.

Sussane

Posted: Thu Mar 18, 2010 8:17 pm Post subject:

Well, I met with the bankruptcy atty who did my Ch. 7 two years ago and she said there will be a problem with trying to get the lien stripped after a Ch. 13. This is because a couple of mos ago a local judge ruled that if a person already had a discharge, they can't get a second discharge on the same item. You have to get this discharge again in order to get the lien stripped. She said I would be going in front of a different judge but would be taking a gamble b/c that judge might also rule the same being as it's all within the same county. She said I could try but might spend a lot of money to take the risk. She also said that it's not a good financial decision to keep the first mortgage either because of the interest only factor and even with the second gone it would take at least 10 years for the market to recover enough for me to be able to refinance.

The only good news she had was that because of the Ch. 7 I am no longer responsible for the debt on the second mortgage in a foreclosure or short sale.

So, if I can't get rid of the second there's no reason for me to stay here because I can't afford both mortgages and will never be able to refinance. I am sad. Sad

Needless to say I am very sad.

smithsussane · Posted: Thu Mar 18, 2010 11:44 pm Post subject:

Hi Guest!

Welcome to forums!

If you do not reaffirm your debts and if the lender forecloses the property to sell it off and recover the dues, you won't be liable for the deficient amount resulting from the sale. The balance amount will be forgiven by the lenders. However, you may have to pay taxes on the forgiven amount.

Sussane

Posted: Fri Mar 19, 2010 6:52 am Post subject:

Hi. I am not sure why it says I am a guest but the post above about my meeting with the attorney was from me (cindybeck67), the original poster.

Yeah, my real estate attorney said that they shouldn't but they may send me a 1099 (I think that's what she said) but that I won't be liable for it anyway b/c of the bankruptcy.

Anyone have any other thoughts? This is the best way to go?

cindybeck67 · Joined: 13 Mar 2010 Posts: 5 2.35 Dollars($)

Oh, and if I am headed towards foreclosure, do I still need to pay the HOA while I am waiting for the eviction order?

Posted: Sun Mar 21, 2010 10:49 am Post subject:

Anyone have any thoughts or ideas that might help me save my house?

cindybeck67 · Joined: 13 Mar 2010 Posts: 5 2.35 Dollars($)

(ok, it said I was guest again so I logged in and am posting again..)
Anyone have any thoughts or ideas about how I might be able to save my house?

adonis · Posted: Sun Mar 21, 2010 11:44 pm Post subject:

Hi cindybeck,

As the debt has been included in bankruptcy, you won't be liable for the deficient amount resulting from the sale of the property. Unless the property is sold off at a foreclosure auction, the lender may ask you to pay off the HOA fees. As you have filed Chapter 13, you might be receiving a payment plan from your lender. You can pay off the dues as per that plan and save your property.

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Loan modification ended being an interest only ARM.