Way underwater

[lizjimbo]

Our Chapter 7 was discharged about 3 months ago. Our mortgage with Wells Fargo was included and we did not reaffirm the debt. We are obviously still paying the mortgage but the question is...our house is valued at close to only two thirds of what is owed on it. Does anyone have any experience with WF or others as to whether they would be willing to renegotiate the loan to a much lower interest rate in order to save the principal. Thanks.

[jtm1848]

Wells Fargo is generally open to modifying interest rates, provided that your numbers qualify and you're ready to jump through the procedural hoops. What rate are you currently paying?

[Klesko]

Keep this in mind. Right now you are not legally responsible for the debt on your home. You can walk away right now and not owe anything. Yes you will have a foreclosure on your record which will keep you from buying for a few years but you will be able to rent. When you say its 2/3 the value of what you owe look at the numbers closely.

 

If you do a loan mod you will be signing new paperwork which will make you legally responsible for the house debt. Meaning you cannot walk away without owing the debt.

 

Alot depends on how much you make, how much the house is under water etc.

[tiggerlgh]

Keep this in mind. Right now you are not legally responsible for the debt on your home. You can walk away right now and not owe anything. Yes you will have a foreclosure on your record which will keep you from buying for a few years but you will be able to rent. When you say its 2/3 the value of what you owe look at the numbers closely.

 

If you do a loan mod you will be signing new paperwork which will make you legally responsible for the house debt. Meaning you cannot walk away without owing the debt. Alot depends on how much you make, how much the house is under water etc.

 

That is not true. There should be languge in the Modificaiton documents that state you are not liable for the debt and some other legalise. You can do a Loan Mod post BK and not be responsible for the debt.

[texastyke]

Agree with tiggerlgh that you do not have to reaffirm the debt by signing a loan modification post-discharge. My attorney had the following language added to my loan modification to ensure that I still remained not responsible for the debt obligation:

 

“I was discharged in a Chapter 7 bankruptcy proceeding subsequent to the execution of the Loan Documents. Based on this representation, Lender agrees that I am not reaffirming the debt and I will not have personal liability on the debt pursuant to this Agreement.”

 

If I remember correctly, this is the standard term included in HAMP loan modifications for borrowers who have received their discharge in a Chapter 7.