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Will this be a problem? (detailed)

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CT_debtor

Junior Member
What is the name of your state? CT

Detailed history of my problem:

We were rolling 60 on our mortgage for about 9 months. Just couldn't seem to catch up...in late October, I sent 2 payments to try to catch up...unfortuantely, it got there after we became 90+, payment sent back and foreclosure started.

Before we were served, I called a mortgage broker who had been calling a couple times a month for a few months. I gave her our information, including the fact that the lender was refusing payments, and that we hadn't been served, but might be soon. She said she would call back in a day or two.

Next day, we got served. I callled a lawyer, and the mortgage company to find out what our options were (pay to get up to date, arrange forbearance to sell, or arrange forbearance to refi. The latter plans involved a down payment with either a listing or a lender commitment to pause foreclosure proceedings).

Things looked dire. We talked to our lawyer who was working on the foreclosure, and he recommended another attorney who was good at Chapter 13s. Went for that initial consultation, and the second attorney felt that based on info we had, we would probably be a candidate for a chapter 13.

The day I met with the 2nd lawyer, the mortgage broker (who I had about given up on, it had been a couple weeks), said that she found a program for us, and wanted to get the ball rolling to close within a couple of weeks. We got all proper documentation to her, and the appraisal was scheduled.

Here's where things get interesting. The value I guessed when I gave to her was about 250. Outstanding debts (2 mortgages, back taxes) come to about 190-200, depending on what the inital lender comes back with for a payoff. When the appraiser finished, as he was filling out my reciept, he asks "Who gave the mortgage company this 250 number?". I reply that I did...I was guessing the value went up since we bought in 98 @ 170. He comes back with "Well, I can't legally give actual dollar figures, but you are looking at between 350 and 400 here."

Well, hooray for us, right? Now it looks like we can consolidate every single piece of debt we have, AND take a nice chunk of change out for some remodeling, AND still have 20% equity in the home, AND have a total debt to income ratio of about 27%. Which should be great to get us back on the road to rebuilding our credit. Additional docs were sent to mortgage broker, and title was ordered yesterday...they expect it back tomorrow.

Here is the problem I just realized...and of course, I realize it NOW when I can't talk to anyone until morning. While I told the broker 3 weeks ago that I EXPECTED to be served, I never actually told her that I was. She does know about the returned payment, so I would assume she would think that ball would be in motion.

How is this going to affect our prospects? Will the lis pendens totally hose the loan, or will it be cleared up BY the refi because the party taking action is the first mortgage holder whose debt is being satisfied? Or will I have to work with the mortgage company to somehow remove the lis pendens?

Sorry to be so long winded, but I wanted to get all the details I could in here...and it is kind of thereputic to type this all out since if I don't get a response here, I will have to be on pins and needles for a day or two.
 


HUD-1

Member
Work fast. Not exactly sure where you are in the foreclosure process...First try to get the date upon which a foreclosure judgment will be effective extended. In any event, if you can pay it all off (redeem) before your Law Day, you will still own it. You will receive and need to record a Certificate of Satisfaction and file it with the court

Now, is your lender aware of the situation? Have they pulled a credit report and underwritten the loan? They may want a higher interest rate than is generally available.
 

CT_debtor

Junior Member
HUD-1 said:
Work fast. Not exactly sure where you are in the foreclosure process...First try to get the date upon which a foreclosure judgment will be effective extended. In any event, if you can pay it all off (redeem) before your Law Day, you will still own it. You will receive and need to record a Certificate of Satisfaction and file it with the court

Now, is your lender aware of the situation? Have they pulled a credit report and underwritten the loan? They may want a higher interest rate than is generally available.

Regarding the foreclosure process..we were served on 11/9, and filed our appearance on 11/26. There has been no judgement or hearing yet, just a lis pendens. No law date. My attorney is requesting an itemized list of fees that the servicer (the nightmare Select Portfolio, FKA Fairbainks). My mortgage broker requested a payoff from them last week, I would assume they would have it soon (has to be within 5 days, right?).

Mortgage broker pulled credit the first day I called; so I would imagine if it is run again, it would look worse. However, original loan has just my wife on it, new loan will have both of us...and I believe I'm the primary on the new loan (not sure if that makes a difference).

I'm definitely getting a higher rate than what is generally available, and I understand that. Thing is, it is still much lower than the terrible rate we have now that we got in 98.

I know that I'm ending up with a subprime lender/servicer (broker gave me the name; Accredited Home Lenders), but I'm confident that the potential new payment and the new total debt to income ratio will allow us to stay right on top of this and rebuild our credit without having to have a BK. I guess the worst case scenario is that the current loan falls through, and they shop to a different lender. We should have plenty of equity and income to prevent the foreclosure, we just don't have the cash they want right now to reinstate (4 payments, fees, escrow advance, etc...it's quite a number).
 

CT_debtor

Junior Member
Fears realized...original offer/idea now gone, she is looking for bailout loans now.

Here's another question, though....with the amount of equity I have now, am I better off filing 13 and refinancing in a year or two to satisfy the debts, or am I better off refinancing now, then refinancing in a year or so if we can keep on track?
 
Just because it is 90 days late doesn't mean that the foreclosure has already occurred. If the lender she found is having an issue with it then tell her to look for another lender. It is pretty easy to get your loan done. Just get it closed and funded before it goes 120 days late.
 

CT_debtor

Junior Member
That's the problem...it went 120 on 11/19. the 2 payments that would have put me back to 30 got there just after the 90 day mark.

If I'm not mistaken, the foreclosure has NOT occured...but the wheels have been put in motion....hence the papers we were served.
 
Since it is 120 days then just do a rate and term refi or up to no more than 65% - 70% LTV. Keep your rate as low as possible. Look at a 2/28 (2 year fixed rate) and no pre-payment penalty. Don't consider anything with more than 2 points in fees. Get it closed and funded soon.
 

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