31 Oct Modification of a Home Loan: A Case Study.
Last February I wrote a post about a retired womanâ€™s struggle to keep her house, and how the mortgage company refused to grant a modification. Actually, they never refused, but were so darn incompetent in processing the papers and making any determination that the foreclosure marched on, and I had to file a Chapter 13 bankruptcy to stop it.
Well, I filed the bankruptcy and an adversary complaint to attack the loan. But, that didnâ€™t solve the problem. Basically, the loan on this ladyâ€™s home called for monthly payments that were more than she could possibly afford. When you are living on social security of $1200 a month and the mortgage payment is $818 a month; the budget just wonâ€™t work.
In our district (the Eastern District of California), if you are behind on your mortgage when you file a Chapter 13 bankruptcy, those payments must be made through the plan. So, in this case, she was obligated to make the monthly mortgage payments through the plan.
The plan I filed called for minimal mortgage payments, and was objected to for failing to adequately pay the on-going mortgage. The trustee gave me about six months to sort this out, but my continuing efforts to get the mortgage modified failed, and the adversary didnâ€™t help much. (It did start a dialogue, but the attorney couldnâ€™t stop the mortgage company from pushing for full payments while we negotiated or litigated the complaint.)
The judge, reluctantly, dismissed the chapter 13 case for failure to confirm a workable plan.
The foreclosure went back on calendar, and I picked up my efforts to help get a modification. Well, the loan company appeared to be working with me, and they got the foreclosure put off for a month. During that month, I submitted a new set of papers (they had lost all five of the previous sets), and called every two days to see how the process was coming along.
The foreclosure sale is set for Monday, November 3, and as of October 29th, the modification branch of the loan company has promised to have an answer in 30 to 60 days! And they told me that neither they nor their attorney can stop the foreclosure sale.
So, I can file another chapter 13 on Monday morning to stop the sale, and hope that the modification comes through before I get thrown out of court again.
In this case, however, my client has given up. Although she loves the home she has lived in for years, the stress of this process has worn her down. Since I canâ€™t promise that sheâ€™ll get the modification, or that it will be something she can afford, sheâ€™s decided to walk away.
After the foreclosure sale, Iâ€™ll be able to get her at least thirty days to move, and thatâ€™s what sheâ€™ll have to do. The mortgage company will get this ladyâ€™s home, a house they wonâ€™t be able to sell in todayâ€™s market for anything close to the amount of the mortgage or the costs of the foreclosure and sale. But they won: they will get the house back.
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