Reaffirmation of mortage during chapter 13

[bruyere475]

Hello,

I came across your website and have a few questions that I am not finding answers to anywhere on the web. I was hoping that you might be able to help me out.

I got a divorce almost a year ago. My Ex-Husband got awarded the house in the divorce. Unfortunately the housing market was so bad during our divorce that we were upside down on our mortgage and had no equity in the home. There was no way for my Ex-husband to refinance the house in his own name, and my lawyer advised me against forcing a sale of the house because if we had to sell it for less than what we owed then I would be responsible for half of the negative equity that is still owed after the house was sold.

To make matters worse after our split my ex-husband started having financial issues and started missing house payments. He got put on some type of Obama Plan for interest only payments on the house for 6 months or so and then tried to do a few different modifications on the house to get back current on the mortgage but he ended up letting it go into foreclosure. The last time I called the mortgage company they said he was 17 months behind but I think that includes the slow payments.

My ex has now just filed for a chapter 13. It is my understanding that he will be able to reaffirm the mortgage on the house and that will all go through the courts. Once the bank agrees to the reaffirm the debt and he resigns all the paperwork then the papers will be modified in such a way that I will no longer be on the mortgage.

I need to know if this is true or if my only option to get my name off the house would be to file bankruptcy myself?

I find this hard to believe and am worried the mortgage company will start coming after me for the payments, even though I have not lived in the house for two years and they have copies of the divorce papers stating he was awarded the house in the divorce. If I could afford the house I would take him back to court and take over payments and move in but it is a $260,000 mortgage and I only make $45,000 a year. I would be in the same boat that he is in now struggling to make interest only payments. I am not sure what to do. Do I wait out his bankruptcy and see what happens or start making provisions to file bankruptcy myself.

Any advice would be helpful.
Thank you

[boomer2298]

Bruy,

I am going to play the devil’s advocate, because I am in somewhat the same situation but just on the other side. As far as I have been able to figure out is unless you are specifically removed from the “promise to pay” you are still obligated to pay the debt. If he (or I) filed chapter 7 the promise to pay is still on your responsibility after the foreclosure for any amounts owed. If he enters chapter 13 from what I have been able to understand from several lawyers and the bank, you can be removed from the deed but your promise to pay would remain. If he reaffirms (at least in the case of my first mortgage) they are telling me my ex can be removed as long as a quit claim is executed. If anyone else on here has any experience on this or would like to comment it would be appreciated.

[bruyere475]

Up until the point where my Ex filed chpt 13, I was working with the mortgage company and they said they were working on a modification for him. The modification stated that he would put all the late payments that he was behind at the back of the note and be brought current to avoid forclosure, if the modification was accepted then the forclosure would stop.

If he would have signed those papers (because it was a modification of our original contract and he was the only one resigning the modification) then my name would automatically be taken off the house note and would only be on the deed in which you are right I must file a quick claim to remove myself from the deed. That I know to be true I spoke with the people at the mortgage company myself.

But the Chapter 13 has thrown me for a loop. I know that he does not want to lose the house and plans on reaffirming the debt, but does that just put me back to square one again or will there also be modification papers drawn for that when they agree to let him reaffirm the debt and get current on the mortage by putting the past due at the end of the loan? I know nothing of bankruptcy laws. I know the mortgage company was more than helpful and trying to work with us before he filed, but am worried all chances of a modification to the current mortage are thrown out since he filed?

[Pandora]

the only way to remove your name from the mortgage is for your husband to have refinanced the original note. Quit claiming only removes your interest in the property - not your obligation to pay (do a search on quit claiming on here and you'll find how it works).

A mortgage modification will not remove your responsibility either - you both signed the org. note - therefore both are still responsible. Even if you quit claim your interest - and hubby gets his mod -... unless the mortgage company agrees to remove your name from every document on file (org. loan docs, etc) and consider the mod a refinance under your husband's name only - you will still liable since you signed org. loan docs.

Check with your attorney or his attorney to ensure how it will all work in the long run, so that all of your bases are covered.

[boomer2298]

Pandora,
Strangely enough Wells Fargo offered this to me regardless of my impending BK. They said as long as I "assume" the mortgage and have a legal quit claim they would remove her from the note. I have forwarded this to my atty. I thought it was strange, but they said that there is a clause in my contract that allows this. Still researching and learning...

[Pandora]

Pandora,
Strangely enough Wells Fargo offered this to me regardless of my impending BK. They said as long as I "assume" the mortgage and have a legal quit claim they would remove her from the note. I have forwarded this to my atty. I thought it was strange, but they said that there is a clause in my contract that allows this. Still researching and learning...

Yeah, that is strange. I'd definitely want to see that clause in writing and presented in a signed letter / offer by the lender before I agreed to anything. Keep us posted!

[bruyere475]

Boomer, Exactly my point, We are with Chase manhatten and this is what they offered before he field for chapter 13, a modification removing my name from the origial documents and reinstating only my Ex on the paperwork , putting all of his late payments at the back of the note and bringing him current, once those papers were signed I would be removed from the note. It almost sounds to good to be true but I spoke with them myself.

But you are saying that you were offered this as well while your BK was pending, that's what I need to know if it is even possible. I currently do not have a BK lawyer to ask which leads me to this forum desperatly searching for an answer.

From what I have researched, it would be in the banks best interest to go through with this and get the note in good standing and get a reaffirmation through the courts while the BK is in progress, becasue then they will be guarenteed to be paid through the courts RIGHT ?? it is all very confusing. I would love to hear what your attorney has to say about the paperwork that wellsfargo sent you.

[Pandora]

bruyere475

Sorry you're in this mess . I can tell you how it worked for us as we went through a mod before we filed Ch. 13. Nearly 8 months of trial payments before our perm mod was approved, 1 month after lender signed perm mod documents were received by us, we filed for Ch. 13 to strip our 2nd mortgage. This took 6 months for confirmation and approval to strip the 2nd.

It may be that since no mod is in place as of yet, the 13 plan will have to include arrears to the mortgage as well as the regular mortgage payment, any lawyer fees, any other secured items, trustee fees, and unsecured creditors. The way I see it, the mortgage company could go 2 ways here: they could decide to go ahead before the plan is confirmed and offer to put just the arrears at the end of the loan, making the mortgage essentially "current" and keep the current payment the same; OR - they could do the above, mod the payment and provide signed documents to the lawyer and trustee, essentially skipping over any trial payments to see if the payments could be sustained.

Realistically the plan will more than likely be based upon the regular mortgage payments and not modified until its in concrete. If the lawyer decides to list a temporary mod payment (i.e., trial) and it doesnt get approved to a perm mod, then the plan will change. Keep in mind that if the trustee doesnt believe the plan is feasible, he/she will not approve it - mod or no mod.

Its a nightmare to say the least and there are people that have been waiting for their permanent modification packages for over a year now, yet still havent received them, but keep getting told "continue to send the trial payments". Whatever you decide - be sure to get everything in writing from the lender stating your name will be removed as of or once such-and-such is received / completed.