Sign in to follow this  
doc20002001

wells fargo home loan mod & Chp 13 switching to chp7

Recommended Posts

Ive got a question, When People go into foreclosure and walk away from their home does that mean they owe whatever the note is for the loan and then down the road the mortgage company can sue you and garnish your wages?

Reason I ask is say worst case scenario wells backed out of the deal and I already had my chp7 bk court date can they come after me and get us for the loan value and garnish or get judgements-liens against us?

Can people put a home mortgage into a chp 7.

Also does it make a difference if we put the house into the foreclosure or I went into foreclosure after the BK.

Last question – say 10 years from now I wanted to try to get a mortgage and I had a foreclosure, would it be better to have the foreclosure in the bk or say I did it after the BK.

Sorry for all the questions, im just a little rattled after reading a lot of loan mod horror stories online.  

 

II have a question i am currently working with a attorney doing a home loan mod with wells fargo, the trial payments that were reduced almost $300 have been paid since may of 2014. I was told that i would have to pay these for 3 months and then we would get the paperwork. So in the beginning of sept2014 we finally received the new mortgage paperwork it was sent to my lawyer so we went in and signed the paperwork and the mortage was for $175,000 at a 4.2% interest rate and a Hud prommisary note for $20,000 and zero interest and due at the end of 30 yrs or we can pay whenever during the loan term time period. The original loan is at 5.5% and we still owe about $181,000. So we fed ex the new loan paperwork back to wells and the did confirm they received it and that we should get the new loan statement within a few weeks. the new loan terms start NOV 1st 2014. We have been in a chp13 since june of 2013 and changed it to a chapter 7 and we have our final court date next week oct 16th 2014. The previous wells home preservationist specialist linda was awesome to work with, she would answer the phone, any questions i had and really helped out my lawyer. my lawyer said she was the best shes ever dealt with. well a few weeks ago i get a letter from wells saying we have a new specialist his name is jeremey so i called jeremy 5 days in a row, left messages and he never would return my calls, i finally called regular customer svc and they found him so i asked if he knew when my new statement was coming as the 1st payment is due in a few weeks and he says wells is waiting on a judge to approve the home loan mod and my bk lawyer when working with Linda said that the judge in illinois doesnt make decisions on home loan mods and this was explained to the linda lady at wells and her and my BK lawyer had dealt with this and it was just up to the underwriters or wells legal dept to finalize the signed new mortgage. well this jeremy guy keeps saying we have to have a judge approve it and that is all they are waiting for to process this. My Home loan mod lawyer just had her assistant call today and jeremy told her the same thing. My question is if my new mortgage is supposed to start in nov and i dont receive the new statement isnt that new mortgage void? also wells keeps telling me to keep paying the trial mod payment which is about $10 more then the new modified mortgage. I feel like im going to get screwed. the other thing im thinking about is if i knew they were going to screw me couldnt i put the house into the chapter 7? id hate to do this chp 7 and then down the road wells screws me. What is your thoughts.

Share this post


Link to post
Share on other sites

Yes, you can include a mortgage in a BK 7...and no, they can't come after you for the balance.

 

If you do BK 7, WF might reconsider a loan modification.  If you're not interested, you can stay in the house without making payments until they foreclose.  It might take anywhere from 6 - 24 months.  They will probably offer you an incentive to move and just turn over the deed.

 

If, after the BK, you get back on your feet financially, you can probably get another mortgage after 2 years.  You might need some money down, and you'll get a higher interest rate along with PMI.

  • Like 1

Share this post


Link to post
Share on other sites

Yes, you can include a mortgage in a BK 7...and no, they can't come after you for the balance.

 

If you do BK 7, WF might reconsider a loan modification.  If you're not interested, you can stay in the house without making payments until they foreclose.  It might take anywhere from 6 - 24 months.  They will probably offer you an incentive to move and just turn over the deed.

 

If, after the BK, you get back on your feet financially, you can probably get another mortgage after 2 years.  You might need some money down, and you'll get a higher interest rate along with PMI.

ok, i understand that but next week oct 16th i go into court for our chp 7 and im afraid that wells fargo is stalling us on the loan mod, we already signed the loan mod paperwork, had it notarized at out loan mod attorneys office and it was fed exed on sept 12th they received it. we still havent received our new statement which reflects the new mortgage payment. Im worried they will back out of the deal and are waiting for me to get the chp7 done reaffirm the note and then they will foreclose. so lets say that happens and ive already done with the chp7 im assuming im on the hook for the mortgage and will owe that money till the day i die. Is that true? and will i have to pay all of that back if say 8 yrs down the rd i want to get another mortgage i wont ba able to. also if they foreclosed and i owed them the money can they garnish my wages until the debt is paid off? do they do that for mortgages?

Share this post


Link to post
Share on other sites

OK, at this point, you have to reaffirm the mortgage which is what the mod is about. If you do not reaffirm the mortgage and it is included in the Chapter 7, then the Chapter 7 will wipe out any remaining balance after the house is sold. If you are using an attorney to do the bankruptcy, you need to ask that attorney if there was already a reaffirmation. If not, then do not reaffirm the mortgage unless you get the modification.

Share this post


Link to post
Share on other sites

You need to talk this over with either your BK  lawyer or your loan mod lawyer.  The timing is confusing.  In theory, ALL your debts are extinguished by the BK 7 and the bk trustee would need to approve the loan mod.

Share this post


Link to post
Share on other sites

OK, at this point, you have to reaffirm the mortgage which is what the mod is about. If you do not reaffirm the mortgage and it is included in the Chapter 7, then the Chapter 7 will wipe out any remaining balance after the house is sold. If you are using an attorney to do the bankruptcy, you need to ask that attorney if there was already a reaffirmation. If not, then do not reaffirm the mortgage unless you get the modification.

ok thanks for the help! 

Share this post


Link to post
Share on other sites

You need to talk this over with either your BK  lawyer or your loan mod lawyer.  The timing is confusing.  In theory, ALL your debts are extinguished by the BK 7 and the bk trustee would need to approve the loan mod.

ok thanks!

Share this post


Link to post
Share on other sites

I need to chime in here. 

 

1. A loan modification IS NOT a reaffirmation agreement.  If you are doing a HAMP mod you will even find boilerplate language alluding to this.  If you are doing an in-house modification you need to make sure this is understood - get it in writing. 

 

2. Lenders sometimes want a bk court to "approve" the loan modification but such is not really required.  It is not a big deal to file a Motion to Approve if such is necessary and your attny can do this very easily.

 

3. In one of your comments you mention that the lender wants you to sign a "HUD promissory note for $20,000.00".  If this is the case you NEED to discuss this with your bk attny.  Modifying an ALREADY existing loan that is subject to a discharge in bk is one thing.  Entering into a NEW promissory note after you filed the bk is quite another. 

 

Des.

Share this post


Link to post
Share on other sites

I need to chime in here. 

 

1. A loan modification IS NOT a reaffirmation agreement.  If you are doing a HAMP mod you will even find boilerplate language alluding to this.  If you are doing an in-house modification you need to make sure this is understood - get it in writing. 

 

2. Lenders sometimes want a bk court to "approve" the loan modification but such is not really required.  It is not a big deal to file a Motion to Approve if such is necessary and your attny can do this very easily.

 

3. In one of your comments you mention that the lender wants you to sign a "HUD promissory note for $20,000.00".  If this is the case you NEED to discuss this with your bk attny.  Modifying an ALREADY existing loan that is subject to a discharge in bk is one thing.  Entering into a NEW promissory note after you filed the bk is quite another. 

 

Des.

3. In one of your comments you mention that the lender wants you to sign a "HUD promissory note for $20,000.00".  If this is the case you NEED to discuss this with your bk attny.  Modifying an ALREADY existing loan that is subject to a discharge in bk is one thing.  Entering into a NEW promissory note after you filed the bk is quite another. 

 

what do you mean by this, is this something i should worry about, I talked to wells again and my home Preservationist specialist told me that they have my signed new mortgage and all they are waiting for is for their lawyers to mail it to my attorney so my attorney can get it approved by the courts, i explained to him that my bk lawyer already tried to file a motion and the judge was pissed off as he doesnt make decisions on loan mods. My bk lawyer really doesnt want to deal with it as it seems like my loan mod lawyer keeps deferring it back to my bk lawyer and my bk lawyer hasnt even responded to emails from last week. One part of me wants to just say the hell with it and tell wells to pound sand and add it to my bk but ive got court in 2 days and i need to talk to my bk lawyer as im assuming ill go into court on thursday and reaffirm the mortgage and then maybe when i send the paperwork to wells they will finalzie the loan mod, do you think they might back out and screw me? Im really frustrated. 

Share this post


Link to post
Share on other sites

I talked to wells again and my home Preservationist specialist told me that they have my signed new mortgage and all they are waiting for is for their lawyers to mail it to my attorney

 

Are you modifying the home under the federal program, "HAMP" OR are you refinancing the home under  the federal program, "HARP". . . OR are you doing something else like an "in-house" modification?  Do you even have the documents the lender wants "approved"?  If you do have those documents, what do they say? . . . Read them carefully.

 

You need to be discussing the ramifications of what you are doing with your attny and bring the documents with you so that he/she can read them.  Since we do not have the documents any assistance offered to you is purely speculative.

 

I suspect you are doing a modification (but I cannot tell if it is under HAMP or some other program) since you state that your bk judge is not interested in dealing with such issues. . . And he/she would be correct.  There actually is some case law telling lenders not to waste the court's time and just do it.

 

Edt to add. .  It also sounds like you signed a reaffirmation agreement on the mortgage and your Judge is going to decide if it should be approved.  I am going to post a link dealing with reaffirming mortgages. If the link works spend time reading through it.   Remember, the thread starts with my belief that reaffirming a mortgage is never a good thing but there are many opinions on this topic so just read the thread to get a feel for the issues and then discuss them with your attorney - who is familiar with your case.

 

http://www.bkforum.com/showthread.php?62833-Why-reaffirming-a-mortgage-is-a-very-very-bad-idea

 

Des.

Share this post


Link to post
Share on other sites

Until the reaffirmation agreement is approved, if you feel like you are getting a raw deal on the modification, you can say forget it and simply abandon the reaffirmation process and wait out the bank to foreclose. It sounds like the debt is already included in the BK 7 so they if you follow that path and give up the house, Wells Fargo cannot go after you for the difference.

Share this post


Link to post
Share on other sites

well i went to chp 7 bk court today and everything went smoth, we didnt reaffirm the mortgage so i guess the ball is in wells fargo court, they shoulda gotten back to me and not given me the run around on the signed new loan mod mortgage. we are kinda glad as when you look at the deal its pretty crummy. current loan is 180K at 5,5% interest we owe and we owed 22k in past mortgage payments. new loan mod was 175k at 4.2% and on top of that a 20k HUD PROMISARRY NOTE 0% and not due till 30 yrs so im paying 195k for a house worth maybe 100-120K max. + i guess when we filed the chp 13 back in april of 2013 is when the clock started on our BK since we switched to a chp 7 so we are in about 18months already. my question is since wells is sitting on the loan mod paperwork we signed back in sept what if they said hey we wanna use this loan? am i on the hook? or would i have to reaffirm the mortgage? also im not planning on paying from now on and if i talk to wells i would tell them drop the principle down to current value or forget it, what do you think? Do you think the loan mod was a rip off deal?

 

Also I talked to my lawyer the bk one and he said that i have to have my loan mod lawyer  cancel the loan mod, is that true or cani do it. 

Share this post


Link to post
Share on other sites

If you decide to do nothing, they have to wait until the case is closed before starting action. I do not know how long that will take but you are correct assuming no adverse action is files (if one is filed, then who knows at that point). Once that is done, they have to complete the foreclosure process which is Judicial Only in Illinois and will take another year to do. Then there is the eviction which if you do not contest will take another couple of months to complete.

If you were to make any deal with Wells to leave early now, the trustee would get that money to pay your creditor so I would not bother unless your attorney can get the trustee to abandon those funds. If they can, then make a deal with Wells to give them the keys to a clean house. Otherwise, live there rent free (just make sure to pay the utility bills and taxes) for the year and stockpile cash for when you have to move.

Share this post


Link to post
Share on other sites

If you decide to do nothing, they have to wait until the case is closed before starting action. I do not know how long that will take but you are correct assuming no adverse action is files (if one is filed, then who knows at that point). Once that is done, they have to complete the foreclosure process which is Judicial Only in Illinois and will take another year to do. Then there is the eviction which if you do not contest will take another couple of months to complete.

If you were to make any deal with Wells to leave early now, the trustee would get that money to pay your creditor so I would not bother unless your attorney can get the trustee to abandon those funds. If they can, then make a deal with Wells to give them the keys to a clean house. Otherwise, live there rent free (just make sure to pay the utility bills and taxes) for the year and stockpile cash for when you have to move.

Otherwise, live there rent free (just make sure to pay the utility bills and taxes) for the year and stockpile cash for when you have to move.

 

Ok, so say in 90 days the automatic stay is lifted and they send me paperwork they want to foreclose, say i get a foreclosure lawyer are you saying i am responsible for the real estate taxes as in my mortgage the taxes were paid by wells fargo and not me. am i responsible for the taxes? also i will try to see if wells wants to work out a better loan mod, i would stay here if they dropped the principal to say 125K as the house was comped out at 90-100K but say i fight the foreclosure i have friends that after 2 years still havent had to move out yet or have heard from the bank as to the final date to get out. I guess inn illinois the avg foreclosure time is 695 days, do you think that is the amount of time from the 1st notice of decision to foreclose? i emailed my bk lawyer and they wont even respond as we are done. We have foreclosure houses on my street that 5 yrs ago went for 190k and some sold for anywhere from 40k-80k so i wonder if wells if knowing they will eat the house would maybe sit down and bargain. 

Share this post


Link to post
Share on other sites

I would pay the taxes just to make sure the bank was the only one in line. Tax foreclosures might go faster than mortgage foreclosures. Also, by paying the taxes, you are proving that you have not abandoned the process and hence, the bank cannot state the home is abandoned and try to go faster. Finally, what happens if the foreclosure process finds that there were errors in the mortgage and hence, you keep the place and lose the note (it has happened)? If you do not pay the taxes, you still lose the home. If you keep the taxes up, then at least you are in a better position.

Is the BK attorney willing to represent you in the coming foreclosure? If not, it might behoove you to find a decent foreclosure attorney. That might be enough to bring Wells Fargo to the table. If not, then simply pay the utilities and taxes until the process ends out. At almost to years of living rent free, you should be able to save up enough money to rent a place with a hefty security deposit.

The issue you are running into is that the people at Wells Fargo really do not know what is going on. Most of the competent people have left that organization years ago. Anyone still there that has 2 firing brain cells is so overworked that they are just overwhelmed. The rest really do not care. Besides, it is not Wells Fargo taking the loss, it is the investor of the CDO. Wells really does not care what happens because they take their fees off the top and get paid more when a mortgage is distressed than when it is paid.

Share this post


Link to post
Share on other sites

Well I finally got my Chp 7 discharge paperwork, it was done middle of dec 2014, its bice to see on my credit report 0 everywhere, the wells fargo Mortgage is also listed as zero. I finally got a letter from wells 2 weeks ago stating they revoked the paper that states they could only speak to my lawyer and then saturday i got the paper stating that i have until March 6th to come up with the past due mortgage payments and then they could start the forclosure proces. I was wondering if i tried to do another home loan od and told the lawyer to tell them we would do it for say $125000 instead of the 181000$ i owed them, i think that reasonable and they dont have to fight a foreclosure meanwhile im living for free and they have to pay the tazes and insurance. Have you ever seen anyone play hardball with them and get them to do something like this? Also again my question is since i filed BK and its discharged i dont own the debt do i have to pay taxes.  The othet thought i had was to file the loan mod through the attorney its $1500 and it bought me about 9 months time so say i did that and wells said no and then they have a few months before they file foreclosure im thinking it could stall them as then i would pay the $1500 for the foreclosure defense and then the lawyer wants $300 per month after that for court fees and appearences. Im trying to buy as much time as i can living in the house so i can save for a new one if possible. 

Share this post


Link to post
Share on other sites

First off, you do have to pay the property taxes, including the back taxes, or the taxing agency (or I think IL does tax certificates so who ever buys the certificate) will foreclose and you will not be able to fight that. Just make sure the home is assessed properly.

 

As for Wells, I would have your attorney offer another modification deal and the attorney can let them know that they are in for a huge fight without any modification in regards to the foreclosure. At this point, you have nothing to lose so you can use all sorts of defenses such as they do not have the note, MERS messed things up, etc. if the attorney is willing to go for it (and it sounds like they are). It would be funny if in the end, your attorney filed for and won a quiet title proceeding which would be the ultimate FU to Wells Fargo because they are out the debt and then, cannot take the house. I am doubting that will happen but you never know and at this point, you have nothing to lose going for broke.

So just keep up the taxes and insurance, live in the home, and save up money if you can at this point. Just make sure you are ready to move when the sale happens. Wells will bid the full amount owed to take the home however. You can wait for the eviction proceeding but I would have the next place set up by then as if it gets that far, you will have to move out quickly.

Share this post


Link to post
Share on other sites

First off, you do have to pay the property taxes, including the back taxes, or the taxing agency (or I think IL does tax certificates so who ever buys the certificate) will foreclose and you will not be able to fight that. Just make sure the home is assessed properly.

 

As for Wells, I would have your attorney offer another modification deal and the attorney can let them know that they are in for a huge fight without any modification in regards to the foreclosure. At this point, you have nothing to lose so you can use all sorts of defenses such as they do not have the note, MERS messed things up, etc. if the attorney is willing to go for it (and it sounds like they are). It would be funny if in the end, your attorney filed for and won a quiet title proceeding which would be the ultimate FU to Wells Fargo because they are out the debt and then, cannot take the house. I am doubting that will happen but you never know and at this point, you have nothing to lose going for broke.

So just keep up the taxes and insurance, live in the home, and save up money if you can at this point. Just make sure you are ready to move when the sale happens. Wells will bid the full amount owed to take the home however. You can wait for the eviction proceeding but I would have the next place set up by then as if it gets that far, you will have to move out quickly.

I dont understand how am i responsible for the taxes when the loan was put in my bankruptcy and discharged, i never reaffirmed the mortage, the bank always payed the taxes as it came out of my mortgage payment  and they also pay the insurance out of my mortgage payment and have paid both the mortage and mortgage insurance. So how can i be responsible for all of that when it was wiped out in the Chapter 7? 

Share this post


Link to post
Share on other sites

I dont understand how am i responsible for the taxes when the loan was put in my bankruptcy and discharged, i never reaffirmed the mortage, the bank always payed the taxes as it came out of my mortgage payment  and they also pay the insurance out of my mortgage payment and have paid both the mortage and mortgage insurance. So how can i be responsible for all of that when it was wiped out in the Chapter 7? 

 

Because taxes are one debt that cannot automatically be wiped out in BK.  When you stopped making payments the taxes did not get paid either.  The bank does not continue making them simply because they are supposed to.  They have to actually collect the money first.  

 

Typically the bank escrows your portion towards taxes and makes the payment annually to the state or local government for the property taxes.  If you are in arrears on your mortgage then so is your escrow account on the taxes.  

Share this post


Link to post
Share on other sites

I honestly don't know about the property tax issue.  In my experience, I had a foreclosure back in 2004 where we lived in the house until 2005...the bank paid the taxes.  I also stopped paying on another house last year to entice the bank to do a short sale...once again, the bank paid the taxes.

 

In both cases, the original mortgage contract with the banks included an escrow account out of which they would pay taxes and insurance.  I'm not sure if that obligated them to continue doing so, or if they chose to pay the taxes so they wouldn't lose their investment.

  • Like 2

Share this post


Link to post
Share on other sites

I honestly don't know about the property tax issue.  In my experience, I had a foreclosure back in 2004 where we lived in the house until 2005...the bank paid the taxes.  I also stopped paying on another house last year to entice the bank to do a short sale...once again, the bank paid the taxes.

 

In both cases, the original mortgage contract with the banks included an escrow account out of which they would pay taxes and insurance.  I'm not sure if that obligated them to continue doing so, or if they chose to pay the taxes so they wouldn't lose their investment.

thats what i thought as they ahve been paying the taxes. so well see what happenes. 

Share this post


Link to post
Share on other sites

I think I know what is happening. Wells Fargo, in hopes of keeping themselves in first place in the lien list, is paying the property taxes whether there is an escrow or not to protect their position. Most mortgage contracts allow them to do this in hopes that they can get the funds back later.

The first issue with this is that some of those taxes probably accrued after the BK filing date. If so, then Wells might have a claim for those taxes because they were a debt that you were suppose to pay but did not. The fact that they paid it does not relieve you of that responsibility.

There is also the issue that what Wells Fargo really did was purchase the tax lien certificate rather than pay the taxes outright since Illinois does those. If so, then Wells Fargo might not need the mortgage to foreclose, they can use the lien certificate instead. I would check with the property tax authority in your county to find out if the taxes have really been paid and this can throw a wrench in your plans.

Finally, there is a moral question to this. Normally I do not deal with morals on this board because I believe everyone has the right to follow their own path but in this case, I want to put it out there. Since you plan to fight the foreclosure tooth and nail, it seems in bad taste that you want Wells Fargo to also pay the property taxes. I am all for sticking to the big banks but to me, that seems to go too far. If you cannot afford the property taxes then you really cannot afford the property, even if you were to get a quiet title.

So hence, even if Wells Fargo has paid the property taxes up to this point, I would pay them going forward. You might need to let the property taxing authority in your county know to send the bills to you and not to Wells Fargo.

Share this post


Link to post
Share on other sites

I need to chime in here. . .

Real estate property taxes in the vast majority of states, “run with the land” and never become a personal obligation of the homeowner. You are in Illinois, check with an Illinois attny to see of there is personal exposure - but, I doubt it. The lender will advance the payment of taxes as a tax foreclosure in the vast majority of states will wipe out any other lien. The post petition advance made by a lender NEVER becomes the responsibility of the debtor since the underlying contract that allows the lender to “charge-back” such advances is subject to the bk discharge.

As to the “show me the note” defense you better be careful. It is a bogus argument and, since it has been litigated to death, it appears that some courts are finally cracking down by dismissing these types of bogus suits and assessing sanctions against attorneys and “homeowners” for litigating matters that have no merit. If you hire that attny for such litigation you better get in writing that the attny will indemnify you for any court sanction against you, including an order to pay the other side’s legal fees. Just my opinion.

Des.

Share this post


Link to post
Share on other sites

With Wells Fargo, once the final mod is completed, it is transferred to a new specialist. I did this on my own, it took 3 years, but I kept the pressure on WFM to keep coming up with documents that they did not have. I tried suing them, but that case was dismissed. Then I hit them with a series of TILA letters until I finally wore them down. I sent an email to all of the WF executives stating that I will continue to shed light on their tactics until they start acting in a ethical manner.

 

Did I get the best deal? I do not think I did, but I did not get the worst deal. My interest rate was 6.5%, now I am paying 2.25%, which will rachet up over the next 6-7 years to 4%. They tact the past due amount to the amount owed and shortened the loan from 25 years to 20 years. I am almost back to positive equity and if I could get what is left on the mortgage, I would dump that house today, if I could.

 

Yes...it can be done, but do not let your attorneys make it more complicated than it has to be.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this