Navy Federal Credit Union NFCU Mortgage and Chapter 7

[Anonymous]

My husband lost his automotive engineering job due to the COVID-19 pandemic. We have retained an attorney and may be filing a chapter 7 if he cannot find another job soon. We are afraid that the bankruptcy trustee may not allow us to reaffirm our VA loan as the monthly payment is somewhat high. We do not want to risk the trustee dismissing our Chapter 7. Does anyone have experience with NOT reaffirming a mortgage at Navy Federal? We will still be able to pay the mortgage payment...will they let us stay in our home as long as we pay? Or will they automatically start foreclosure even though we have never been late and don't plan to ever be late paying the monthly payment?

[NC_Mtg_Loaner]

Sorry to hear about your husband losing his job.

Are you able to request a forbearance?

This would allow you to avoid the BK, keep the house and get caught up in a few months if you're not able to make payments using the forthcoming UI.

[Anonymous]

Thank you very much, our income is now reduced by 2/3. We called Navy Federal and asked them about a forbearance. We could have a three-month forbearance; however, the three missed mortgage payments would all be due in one lump sum after the three months along with the fourth month's payment. Unfortunately, they are not doing what some other institutions are doing, which is moving the three mortgage payments to the back end of the loan. On top of that, we do not qualify for the stimulus check.

[Revelate]

I think this is a question for your attorney.

My limited understanding is if you are current on the mortgage payments you can generally keep the house.  That said, what's your equity situation on the property now?

Check for forbearance on the rest of your debts too, there may be a way to get through this or at least push it out a little.

[Anonymous]

Hi thanks so much for your reply.

We owe $440,000 and the property is worth about $450-$480k, so not a lot of equity. We have been getting the due dates of our payments pushed out for credit cards pushed out so that is helping as well. I was just wondering if anyone has had the experience of having a mortgage discharged with Navy Federal and have been allowed to remain in the house. I've heard that most banks/credit unions will let you but some give you a problem.

[Revelate]

You probably will get more traction asking the question on the BK forum.

I'll request it be moved there actually.

[Anonymous]

thanks!

[Scupra]

Maybe @Anonymous could shed some light on this?

[Anonymous]

Sorry for the late reply on this. Although I haven't worked in mortgage servicing or collections while at Navy Federal, I found them generally to try to help when possible. If it's not too late, I would consider asking their home preservation/retention team about a modification at the end of your 3-month forebearance. What many lenders are doing is adding the missed payments to the back of the loan. This may or may not be sufficient for you. 

Regarding your original questions, I have not heard of Navy Federal forcing a forclosure after the automatic stay expires if the loan is current. I would certainly ask Navy Federal's bankruptcy department (a section within "Specialized Collections") to confirm this. Perhaps other myFICO members have experience including a NFCU mortgage in bankrtupcy?