Expert: Terry Leeders - 8/21/2008

Question
Due to severe illness, I filed Chapter 13 in Oct 2006.  I included my home, 80/20 mortgages, Chase and ASC.  Both loans were ARMs, the payment plan increased within a years time from $2400/mo to $4700/mo - there was no way for me to meet the payments, so I converted to Chapter 7 in Sept 2007.  I received my discharge April 2008; home was included.  Foreclosure was filed, sale date scheduled for July 15, 2008.  Sale didn't happen; county clerk said there was an error in filing.  No other paperwork was initiated by Chase; ASC was discharged under the Chapter 7.  On July 31, I receive a voice mail from Chase to call them ASAP.  I call, am connected to Loss Mitigation, and now they're offering to consider me for a mortgage modification??!!!  Yes, I'd far prefer keeping my home, but I have loads of questions!  CAN Chase offer a modification of the mortgage since they were included in the Chapter 7??  The balance noted on the foreclosure paperwork was 218k; presently, home value is 190k.  Will they likely appraise, readjusting the value??  If I accept the modification, what fee's am I actually libel for - they say I show 20 payments in "arrears" - how can I be in arrears, if they were included in the Chapter 7????  HOA fees and homeowners insurance are due - who pays????  I moved out of the home after being served on March 11, someone changed locks two weeks later.  No department at Chase, Property Management, or attorneys office has record of who changed the locks.  Chase, their attorney, the property management, and the property management company all say I'm still the owner, and need to move back in.  Chase also said they cannot do a mortgage modification on a vacant home.  I've turned the electricity and water back on, had to spend almost $1000 to correct violations from HOA (weeds, clean driveway, remove cement curbing) issued AFTER the bankruptcy was filed.  HOA and their attorney were included in the Chapter 7.

I've sent in the requested hardship letter and financial documents.  Monday they said everything was received as of Aug 9, is under review, then will move to an underwriter.  Chase said all sale dates are cancelled, the foreclosure is on hold pending the mortgage modification.

Do I move back in???  CAN Chase actually do this legally???  If they were included in the Chapter 7, how do I still have a mortgage with them they can modify - wouldn't that have been negated with the Chapter 7????

Answer
yes, because they still have a lien on the home, they can offer you options.  The bankruptcy only discharges the debt, it doesn't transfer title, that is what the foreclosure is for.  As to what the lender wil require for a loan modification?  That is up to the lender, you are basically signing a new loan with them, and any terms can be negotiated.  You can walk away too without owing anything as well if you chose.