Mortgage Confidential: Bankruptcy and note modifications

Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Q: Unfortunately, I had no choice but to file bankruptcy to save my home from foreclosure. Countrywide initially said it would modify my loan to bring it to a more reasonable rate, but then declined at the last moment. Are banks working with people like myself who have had to file bankruptcy to modify home loans?

A: Only the servicing lender can modify a note, in your instance it would be Countrywide. If another lender replaced your current note with Countrywide it would then be considered a refinance and not a note modification. Conventional loans ask that two years elapse before entertaining a refinance. I would suggest that you keep trying with Countrywide to see if they'll budge. I don't know all the specifics about your situation but you might also want to explore the FHASecure program from an FHA lender to see if you qualify for this new rescue program.- David

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.