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HARP Refi after CH7 Discharge, Mortgage NOT reaffirmed?

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  • HARP Refi after CH7 Discharge, Mortgage NOT reaffirmed?

    Does anyone have any experience or knowledge of the process with refinancing a mortgage through the HARP program for a mortgage that is current (never late), was not reaffirmed, and was included & discharged in Ch7?

    My current 30-year mortgage is 5.5%. It meets all requirements to be refinanced through the HARP program (Fannie Mae) to a 15-year 3.125% (possibly lower); however, the mortgage lenders are telling me I have to reaffirm the mortgage before they can start the process. Otherwise, it won't get approved in underwriting. I understand the concept since I didn't reaffirm & technically the mortgage doesn't "exist".

    My Ch7 was discharged/closed in February 2012, and the new HARP regulations removed the bankruptcy post-discharge waiting period for refinancing in March. Is it even possible to reaffirm a mortgage after a Ch7 case is discharged/closed? Has anyone refinanced a mortgage without reaffirming it or reaffirmed it after discharge?

    This would be an incredible step for me in achieving a solid plan for retirement, and I'm desperate to make it work if there's any way to get through or around the red-tape.

    Thank you!!
    Filed Ch7 11/2011, 341 - 12/5/11, 12/6/11 - Trustee's Report of No Distribution - No Funds
    Deadline to file Objections: 2/3/12, DISCHARGED & CLOSED 2/10/12!!!

  • #2
    No, you cannot reaffirm a debt after the case is closed. A reaffirmation agreement must be entered before discharge.

    Bankruptcy code Section 524(c) lists the requirements for reaffirmation:

    (c) An agreement between a holder of a claim and the debtor, the consideration for which, in whole or in part, is based on a debt that is dischargeable in a case under this title is enforceable only to any extent enforceable under applicable nonbankruptcy law, whether or not discharge of such debt is waived, only if—
    (1) such agreement was made before the granting of the discharge under section 727, 1141, 1228, or 1328 of this title; .....
    The entire text is at http://www.law.cornell.edu/uscode/text/11/524
    Last edited by LadyInTheRed; 06-08-2012, 01:01 PM.
    LadyInTheRed is in the black!
    Filed Chap 13 April 2010. Discharged May 2015.
    $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

    Comment


    • #3
      As for refinancing, you could certainly refinance a discharged debt. You just can't reaffirm a discharged debt. As an aside, I would make sure that you're not refinancing a home with which you are underwater! If so, I would make sure this HARP/HAMP/???? modification/refinance includes a principal reduction to bring the loan to current market value.

      I don't know the details of HARP or if it requires the debt to be reaffirmed in a bankruptcy. That would actually be counterproductive and quite... foolish to reaffirm in bankruptcy with no guarantee of a HARP/HAMP refinance afterwards!

      Your problem is specifically with the lender (or lenders) that you are working with. You will need to look at more lenders to see which has less stringent underwriting requirements. HARP, itself, doesn't care about reaffirmations. In fact, the entire HAMP program (under which HARP sits) allows modifications and refinances on debt that was not reaffirmed. The problem is that HAMP has always been a voluntary program with the banks and this is why it has failed miserably (in my opinion).
      Last edited by justbroke; 06-08-2012, 12:15 PM.
      Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
      Status: (Auto) Discharged and Closed! 5/10
      Visit My BKForum Blog: justbroke's Blog


      I am not an attorney. Any advice provided is not legal advice.

      Comment


      • #4
        Thank you for the responses!! My house is not underwater, but it is over the 80% LTV that HARP requires due to the market dropping. It's the HARP program that I'm looking to refinance under. If HARP doesn't care about reaffirmations, then, I will call around to other lenders to find out if there are any who are willing to work with my situation. I always planned to stay in the house, so if I can change my payments to include less interest & more principal to pay it off earlier, I'd like to do that. I'm actually glad reaffirming after discharge is not an option, that just seemed like it would be a logistical nightmare if that's what I had to do. Thank you so much!!!
        Filed Ch7 11/2011, 341 - 12/5/11, 12/6/11 - Trustee's Report of No Distribution - No Funds
        Deadline to file Objections: 2/3/12, DISCHARGED & CLOSED 2/10/12!!!

        Comment


        • #5
          I am very interested in your experience and anyone else doing this. I am in the same situation: Chapt 7 discharged April 2011, mortgage not re-affirmed, LTV 90%, is a freddie-mac loan made in 2002 @ 5.75%. Never been late on a payment.
          I want to refi to a 15 year note and lower the interest rate.

          I've called around a few places, starting with my current lender, BOA. BOA is where I learned I could refi under harp 2. Since then, I've called a few others - most don't want to work with me as they DON'T WANT to work through HARP. The brokers don't want to go down that path because they have to send it to a bank for underwriting - each bank determines if they will write the loan based on certain criteria and BK exeptions disqualify potential HARP recepients. For me and DH, we have credit scores in the mid-600, but the BK in less then 4 years disqualifies us for most banks qualificiations of underwriting the loan. The brokers cut me off as soon as i give them the BK dates.

          However, BOA, the owner of my mortgage seems to want to work with me. Albeit, not the 'best' rates, but 3.5% for 15 year note is better then what I have now! I really questioned the 'specialist' about our eligibility and he read through the banks qualifications statement... and it seems we are good to go futher on our quest. I'm not getting my hopes up either...


          BTW: We are 0 risk to the bank at this time. Our bk was due to business debt, our income has substantually increased since bk, we have 0 debt (now). mortgage payments on 15 yr note is 24% of our take-home income and we wouldn't be able to bk again for 10 years... so to me, this is a no brainer for the bank to give us a loan.

          Comment


          • #6
            From all of the banks & brokers I've spoken to, I've gathered that refinancing under the HARP program is not possible when you did not reaffirm your mortgage in BK. Refinancing a non-reaffirmed mortgage requires manual underwriting & the HARP program only utilizes Desktop Underwriting (automatic).

            Also, even though the HARP regulations deleted the requirement for the BK discharge waiting period, I have yet to find a bank who will work with me because it hasn't been 2 years post-discharge, regardless of the HARP regulations. ETA: Wells Fargo (my current mortager) was willing to work with me, but they required that I reaffirm the loan. Since my BK is closed, I cannot reaffirm it. Hindsight being 20/20, I would have refinanced under HARP BEFORE I filed. So, note to anyone who hasn't filed yet & wants to refinance their mortgage to a lower rate under HARP, do so before you file.

            I'm hoping the HARP regulations may change in the future as they have in recent months to accommodate people in our exact situation. If you happen to find a bank who will work with you under the HARP program sooner than 2 years post-discharge, please keep me posted!!! I'm an ideal candidate as you are, but there is quite a bit of red tape yet for those in our situation.

            Good luck!!
            Last edited by delphinus317; 07-12-2012, 12:31 PM.
            Filed Ch7 11/2011, 341 - 12/5/11, 12/6/11 - Trustee's Report of No Distribution - No Funds
            Deadline to file Objections: 2/3/12, DISCHARGED & CLOSED 2/10/12!!!

            Comment


            • #7
              While I dont want to burst anyone's bubble... have you thought of what the payment will be since you're going from 30 yr to a 15 yr? What happens IF somewhere down the road Murphy comes calling (you know that Murphy..always around when you least expect it)

              one thing to consider before you leap into a refi - do the numbers game and see if it would be better off to merely double up payments monthly vs. full refinance. That way if anything happens, you have the extra $ to fall back on. You will still pay off your note early...just w/out being locked into that fixed amount.

              Just food for thought

              Comment


              • #8
                Originally posted by Pandora View Post
                While I dont want to burst anyone's bubble... have you thought of what the payment will be since you're going from 30 yr to a 15 yr? What happens IF somewhere down the road Murphy comes calling (you know that Murphy..always around when you least expect it)

                one thing to consider before you leap into a refi - do the numbers game and see if it would be better off to merely double up payments monthly vs. full refinance. That way if anything happens, you have the extra $ to fall back on. You will still pay off your note early...just w/out being locked into that fixed amount.

                Just food for thought
                I agree. My payment would go up $140 according to the terms WF offered if I refinanced to a 15 year loan. I have plenty of cushion in my budget right now to handle that. However, being as I have no other option really, I have decided to redirect the surplus in my budget to emergency fund savings & retirement rather than paying off my mortgage early. My mortgage is currently 5.5% and my retirement funds are performing higher than that. It just makes sense for me to continue to pay the mortgage as is & beef up my retirement for the compounded interest. Should the HARP regulations change in the future to make it possible for me to refi at a lower interest rate, I will pursue that avenue again, when I expect to have a better financial buffer for those "unexpected" situations that may arise.
                Filed Ch7 11/2011, 341 - 12/5/11, 12/6/11 - Trustee's Report of No Distribution - No Funds
                Deadline to file Objections: 2/3/12, DISCHARGED & CLOSED 2/10/12!!!

                Comment


                • #9
                  I get a little obsessive ...My payment would only go up about $100/month.

                  Here's the scoop...
                  http://www.makinghomeaffordable.gov/...agreement.aspx

                  I read through this and 5 banks are named as problem banks. Bank of America and Well's fargo are 2 of the 5. I noted Delphinus (reply #5) said WF would work with him, but at the last minute found that 'reaffirmation of the mortgage' was a problem.

                  Just yesterday, July 12, BOA did an 'electronic underwriting' and we passed
                  We have been moved on to manual underwriting.

                  Brokers and some other banks will not work with you. PERIOD... cuz they want to go through the refinance process to pay off mortgage #1 with their new mortgage. It also makes sense why the re-affirmation issue is coming up. There is no loan to pay-off... but since I am paying on outstanding debt that my home owns, the bank should be thrilled i'm making regular payments and should want me to refi with them to get back liability - right now there is none.

                  This is why I think if you go to your original lender they will work with you. I'm not a fan of BOA, but if they can get me what I want, I'll live with them a while longer.

                  I thought it was interesting that banks are going to get incentives for quick processing... that sounds to me that they will be motivated to get my loan done.

                  Comment


                  • #10
                    Originally posted by gamama View Post
                    Brokers and some other banks will not work with you. PERIOD... cuz they want to go through the refinance process to pay off mortgage #1 with their new mortgage. It also makes sense why the re-affirmation issue is coming up. There is no loan to pay-off... but since I am paying on outstanding debt that my home owns, the bank should be thrilled i'm making regular payments and should want me to refi with them to get back liability - right now there is none.

                    This is why I think if you go to your original lender they will work with you. I'm not a fan of BOA, but if they can get me what I want, I'll live with them a while longer.
                    Wells Fargo is my current lender. I thought the same thing, but they insist they can only work with a reaffirmed mortgage.

                    Please keep me posted on how it goes for you!! Good luck with it!!
                    Filed Ch7 11/2011, 341 - 12/5/11, 12/6/11 - Trustee's Report of No Distribution - No Funds
                    Deadline to file Objections: 2/3/12, DISCHARGED & CLOSED 2/10/12!!!

                    Comment


                    • #11
                      Originally posted by gamama View Post
                      I get a little obsessive ...My payment would only go up about $100/month.

                      Here's the scoop...
                      http://www.makinghomeaffordable.gov/...agreement.aspx

                      I read through this and 5 banks are named as problem banks. Bank of America and Well's fargo are 2 of the 5. I noted Delphinus (reply #5) said WF would work with him, but at the last minute found that 'reaffirmation of the mortgage' was a problem.

                      Just yesterday, July 12, BOA did an 'electronic underwriting' and we passed
                      We have been moved on to manual underwriting.

                      Brokers and some other banks will not work with you. PERIOD... cuz they want to go through the refinance process to pay off mortgage #1 with their new mortgage. It also makes sense why the re-affirmation issue is coming up. There is no loan to pay-off... but since I am paying on outstanding debt that my home owns, the bank should be thrilled i'm making regular payments and should want me to refi with them to get back liability - right now there is none.

                      This is why I think if you go to your original lender they will work with you. I'm not a fan of BOA, but if they can get me what I want, I'll live with them a while longer.

                      I thought it was interesting that banks are going to get incentives for quick processing... that sounds to me that they will be motivated to get my loan done.
                      They must tell everyone something different at BOA. I called about a Harp 2 loan and after the rep told me we qualified, got my permission to do a nice big old hit on my credit report, he all of the sudden said, "Oh, I can't do this because I can't pull the mortgage over from the bankruptcy since you did not reaffirm the debt".... yet, I had a friend who had no problem less than two years out of BK7 with refinancing her loan.

                      It really makes me wonder.... is it because we are upside down in our mortgage? Is it because they don't like the way our income looks? I have no idea. I called Fannie Mae and they told me there was NO reason what so ever for being told we do not qualify. I was told that since we never missed a payment, never have been late, we are upside down in our mortgage that we were the candidates that this program is supposed to help. So far, the only thing checking into a HARP 2 loan has done for me is get my hopes up, drop my Fico score a few points and then rain on my non-existant parade.
                      My kids better not put my FICO score on my headstone~ (quote by dspii)

                      Comment


                      • #12
                        Basically, it is because the banks don't really want to do modifications or refinances. The government, for better or worse, did not throw enough money or muscle behind these programs to make it in the banks interest (or more accurately, the servicers) to grant modifications.

                        HAMP was set to expire at the end of this year (which would have been good riddance to a bad program), But the Obama administration extended it until Dec.2013.
                        Last edited by HHM; 08-16-2012, 05:38 PM.

                        Comment


                        • #13
                          Originally posted by dneil View Post
                          They must tell everyone something different at BOA. I called about a Harp 2 loan and after the rep told me we qualified, got my permission to do a nice big old hit on my credit report, he all of the sudden said, "Oh, I can't do this because I can't pull the mortgage over from the bankruptcy since you did not reaffirm the debt".... yet, I had a friend who had no problem less than two years out of BK7 with refinancing her loan.

                          It really makes me wonder.... is it because we are upside down in our mortgage? Is it because they don't like the way our income looks? I have no idea. I called Fannie Mae and they told me there was NO reason what so ever for being told we do not qualify. I was told that since we never missed a payment, never have been late, we are upside down in our mortgage that we were the candidates that this program is supposed to help. So far, the only thing checking into a HARP 2 loan has done for me is get my hopes up, drop my Fico score a few points and then rain on my non-existant parade.
                          I'm in the same boat. I was really frustrated with the banks who I had to educate on the new HARP regulations, but even after that, they still said no. I've given up on the prospect of refinancing under HARP until, by some miracle, the banks start cooperating with people in our situation. I don't understand the point of removing the BK timeframe under HARP, only for banks to say they need at least 2 years post discharge anyway. And, hellooooo... A lot of (if not most) people who filed BK DID NOT reaffirm their mortgage. Did they not take these things into consideration when creating HARP?!? I'm starting to think they just put a bunch of words together to make it look like they're trying to help people, when in reality, they knew banks were going to be a pain in the butt about it anyway.

                          Ok, I'm done ranting about that... Back to our regularly scheduled programming...
                          Filed Ch7 11/2011, 341 - 12/5/11, 12/6/11 - Trustee's Report of No Distribution - No Funds
                          Deadline to file Objections: 2/3/12, DISCHARGED & CLOSED 2/10/12!!!

                          Comment


                          • #14
                            hhm hit the nail on the head. its as though the bank puts up a hoop and asks you to jump through it, once you have jumped and made it through, they put the loop up higher and say, now you have to go through this one and the more hoops you are able and capable of jumping through, the higher they continue to put that loop, finally until it's way to high to reach.

                            the fact they are asking for a reaffirmation when they know for a fact it cannot be done, is simply their way of saying we are just messing with you, we don't want to lend to you, never have and have no good faith, whatsoever. it's the same story over and over, one gets THIS close and then they pull the rug out from underneath. it's like all the stories of the HAMP, where people hand delivered their documents, even got receipts they were rec'd, yet the banks would say OH...we don't have this and that document you need to submit it. but, you say, i did submit it, i hand delivered it, someone actually signed for it. well, we don't have it, so you have to resubmit it. you resubmit it, wait 3 weeks to now be informed by the bank that yet another document is not submitted while you know for a fact you submitted it...i'm sure you get the point. just circles and no regulations from the government, no one overseeing these programs, what a mess!
                            8/4/2008 MAKE SURE AND VISIT Tobee's Blogs! http://www.bkforum.com/blog.php?32727-tobee43 and all are welcome to bk forum's Florida State Questions and Answers on BK http://www.bkforum.com/group.php?groupid=9

                            Comment


                            • #15
                              Hi - Yep! BOA and everyone involved is slippery!
                              So, I have been going down with HARP2 requirements with BOA since July. All seems to be clear to go, on auto-pilot. I was told from the onset to expect it to take 90 days.

                              A few weeks ago, I got a non-descript letter in the mail from BOA stating that they cannot process our request because they can't confirm our identity. Called the original processor - he told me that this was a mistake and that they will be opening the file again. BOA Sent me back the documentation to sign and fax back. OK, no problem (although, there were errors on the paperwork on the amount of escrow) - we signed, faxed back in a timely manner. Just yesterday, got the same non-descript letter stating the same info that they can't confirm our identity!

                              I'm so upset for BOA leading us on!

                              Most people filing for BK that own a home had to make that hard BK decision because of extraordinary circumstances...one most of us did not take likely. Now we are the very people that will rebuild the economy !!! Yet, we are being shut down by stupid rules that THEY put in place! And the rules are ambiguous. If rules of discharge are set - then why have the banks 'tease' us with giving us false hopes.

                              Comment

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