I need some help, or at least some honest answers.
I filed chapter 7 bankruptcy in January, 2008. My attorney led me to believe I could keep my home even though I presented him with certain issues that I was concerned about and am now finding that my worst nightmares are coming true.
I made the mistake of getting into an interest only option ARM 3 years ago. I signed the papers just prior to having heart surgery and was under alot of stress. This loan is in my name only. I also did a quit claim deed to take my husband off the deed since the loan was solely in my name. At closing I find out that there is a 3 year pre-payment penalty, but I signed since I was looking for a lower rate (had a great loan that I should have just stayed in).
After recovering from surgery I tried to see if I could do anything to get out of the loan. The mortgage company would not help me without refinancing and paying the 12k prepayment penalty on top of refi costs. The broker gave me a letter in writing stating they would refinance after 2 years and pay off the prepayment penalty if I was still wanting to do a refi at that time. When 2 years was up I found out the broker had gone bankrupt as well. So I am now at the end of my 3 years but unable to refinance since I just filed chapter 7.
I would like to put our home in my husbands name if possible, however we own our own business and I dont think his income is high enough to qualify, and his credit isnt great (715 last time I checked).
My attorney treats me like I am a nuisance and advises to just keep paying the mortgage to stay or let it foreclose and walk away from it. He said he wouldn’t re-affirm because we are upside down now due to my principal balance going up and home values going down. I am working with Adams County (Colorado) to help me with a possible loan modification but they tell me the lender so far will not deal with them either (probably because of the bk).
We like our home, we like the area, we like the school our son is in, and we want to stay in our home but I need to find a way to do that. Right now we owe 265k and the value is probably about 255k. Also the broker screwed up and now I find out that the property deed is still in both of our names. So here are the questions-
1- can I do a loan modification with a ch. 7?
2- or could I stay and pay the minimum payment (while the principal balance rises- should have another year before it resets to double the min. pymt) while I increase my husbands pay (pay him a higher income and dont pay myself this year) and keep his loan obligations current to improve his credit and then do a short sale to him in a year?
3-Also can I submit a quit claim deed now to get him off the deed?
4- Is there any benefit of my trying to sell the house (to whomever) or do a deed in lieu so that I dont have a foreclosure on my credit report too? I cant see going through the trouble since I already have the bk on my credit report, but dont know if it will affect my husband since he is still on the deed?
5- Or does it sound like there are too many obstacles and I should just quit paying, let them put it in forecloser, save the money I would noramlly use for the mortgage, and walk away now?
Sorry this is so long winded but there are alot of kinks involved. Just want to know what to do so that I can sleep again.
Rae Jean (more…)