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Can my bank charge me for back interest on a loan modification?

My bank just offered me a loan modification which basically reinstates my loan at the amount before my wife lost her job. I have received a pay increase, so the amount is $100 cheaper than when we stopped paying. (also had a ch7 discharge) My bank told me that "HUD puts like a second lien" on my home if I sell it for all the back interest, payments, and forclosure fees. Adding that to my total cost means I owe 40k more than my home has ever been worth. Is HUD really adding a lien? Can the bank charge me for back interest? I can understand the foreclosure fees....
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August 19 2013 - Carol Stream
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Answers (3)

I saw a loan modification agreement recently that had a large portion deferred and due in a balloon payment in 20 years. If the home was refinanced or sold before that point, the deferred amount plus interest would have to be paid. It sounds like this is happening in your case. 

This isn't necessarily bad--you still get to keep living in your home, get a lower payment...It may be nothing more than delaying a short sale or foreclosure (if values don't appreciate significantly) but at least it gives you the ability to live in the home now.
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August 20 2013
Profile picture for JohnWilt
Just about every lender will add those 'back fees' and back interest. Can you make payments? You don't have to pay the lien until you sell. Many times they will ask for a small monthly payment towards the lien interest free. Chap 7 and the lien will prevent you from refinancing but not from buying a car. If you need info on a short sale let me know.
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August 20 2013
I am not a lawyer nor a lender but check the fine print in any documentation they have sent you or you signed.  It's likely in there. 

That said, consider a short sale before allowing foreclosure. 
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August 19 2013
 
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