Question about 2nd mortgage reaffirmation

[sp114]

I just called and left a message for my attorney, but knowing him I won't hear back until sometime in the middle of next week. While I'm waiting I just wanted to see if anyone here knew the answer to my question. After my case was discharged my attorney told me that the reaffirmation paperwork was never filed on my automobile or my 2nd mortgage. I'm pretty sure it was filed on my 1st mortgage, I won't know for sure until he calls me back. Here is my situation, my fiance and I have split up and she was a big reason that I was able to afford my house. With out her there it will be a real stretch to make the payments. It's not impossible, but it will require a lot of rebudgeting. If the reaffirmation was never filed on the 2nd mortgage and I sell the house but don't get enough to cover both mortgages am I still liable for paying off the 2nd mortgage? I wasn't sure what happens if only the first mortgage was reaffirmed. I would like to keep the house, but it makes better financial sense to sell it and move into an apartment for awhile. The real estate market isn't too good here right now, so I don't know if I could get enough to cover both mortgages, especially if I go through a realator. Just wanted to know what you all thought. Thanks in advance..............

[keepmine]

If you didn't sign a reaffirmation agreement, you have no liability for any deficiency balance.

[SinkingFast]

If you didn't sign a reaffirmation agreement, you have no liability for any deficiency balance.

That would be my best guess.

When you sell the house, you wanna be sure to clear the First. Pay it off. The 2nd would get whatever they get and that's it. If you didn't reaffirm, you are not responsible for any deficiency balance that remains.

[sp114]

Thanks for the responses. I was thinking that was the case, just need to double check with the attorney to see what did and what didn't get reaffirmed.

[HHM]

Let's clarify this a little...

If you did NOT sign a reaffirmation agreement, and If the house is "FORECLOSED", you are not liable for a deficiency balance if the second mortgage finance company does not receive full compensation. However, if you "sell" the house, absent an agreement with the 2nd mortgage finance company to accept less than what they are owed, they are probably not under any obligation to sign off their mortgage, and hence, you would not be able to transfer deed to the buyer.

[SinkingFast]

Even tho SP114 did not sign a reaffirmation agreement on the 2nd, HHM??

[HHM]

Even tho SP114 did not sign a reaffirmation agreement on the 2nd, HHM??

Correct. The reaffirmation agreement, or lack thereof, only applies, in a real estate setting, to the default event, i.e. the foreclosure. If this person sells their house in the normal course, the 2nd mortgage is still entitled to full compensation. Remember, when it come to secured debt, a BK ONLY discharges "personal" liability for the debt (in the absense of a reaffirmation agreement), but the lien holder still maintains FULL rights to enforce their claim against the secured property. Hence, if this person sells thier house...the sale price must fully compensate the second mortgage holder. When it comes to secured debt, BK does not allow you to have your cake, and eat it too.

Think of it this way, it is no different with a car, if you don't sign a reaffirmation agreement and go to trade in your car, the finance company still gets paid "in full" to release title.

[sp114]

Thanks for the clarification HHM. It's not what I wanted to hear, but it makes sense.