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Why reaffirming a mortgage is a very, very bad idea.

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  • Than can not pursue you, harass you with phone calls, send you bills or collection letters or demand payment in any way. They can, though, send you an acceleration letter (notice of default) and send foreclosure paperwork. You may walk! It's not even strategic at this point because you already discharged the debt!!!
    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


    • Originally posted by newbie2 View Post
      Overit, please seriously consider rescinding the reaffirmation. Even if you stop making payments they still have to follow your states foreclosure laws and no, they cannot change the terms of your mortgage / note. They can't personally come after you for the money, their only recourse post bankruptcy is to foreclose. Just keep on making payments and please don't reaffirm.
      I did rescind the reaffirmation. I sent in a letter via certified mail with a return receipt, and my attorney filed paperwork with the court. I had things mixed up in my understanding, and thought that that rules were the same for my car and the house. Once my attorney understood that I was confused, he explained it in an different way. That, combined with what I read more here helped me decide to rescind.
      Filed 3/16/11 via attorney who was worth every penny
      341 04/21/11
      DISCHARGED! 06/21/11

      Comment


      • How long did it take for Wells Fargo to start reporting and did you have to ask them to report your payments. I have a Wells Fargo mortgage and have never been late and intend on keep paying and living in my home. I requested for the bank to reaffim and they denied it. I didn't reaffirm, just kept paying mortgage. Interestingly now Wells Fargo is reporting

        Status: Discharged through Bankruptcy Chapter 7/Never late.

        So that's nice[/QUOTE]

        Comment


        • I am glad I reread this thread. I was/am frustrated with CITIMORTGAGE in that I thought that since I didnt reaffirm and my BK case was closed (a Year ago this month) that the Mortgage would be "clean" of the BK. I was considering reaffirm steps but see the wisdom of just leaving it alone. Never late on a payment but it galls me that CITI makes it harder to deal with them based on BK laws (thier excuse). So I keep payin for the house and worry about more important stuff..............Like goin fishin.

          Comment


          • Im in CA and my chapter 7 was just discharged which wiped out my $250 2nd. I still have a $510K 1st mortgage through Cahse that we are currently behind on. Since the BK is now discharged will they put us directly into foreclosure? We would like to keep the home is possible, is there another option besides reaffirming the mortgage since we are behind in payments?
            Thanks

            Comment


            • Thanks to all for the info. We are discharged ch 7 for 4 months. Tried to do an in-house mod with Bank of America, we are about 95K upside down, they requested records for 3 months , then said we didn't qualify, our mortgage was only 28% of our gross (until is adjusts in 2014 to about 38%. We would really like to walk away, see no real options that isn't throwing money away on very hight rent here. Thank goodness we did not reaffirm. Would like to buy and bail, they won't talk about a better interest rate or anything else.We have a 6.5% int only for 10 years. This forum has been a big help to use over the last 6 months.

              Comment


              • I don't recall signing a reaffirmation agreement for my mortgage and don't see one in my paperwork. If I did, would I be able to find it on PACER?

                Comment


                • Hi Sricky,
                  Here is my situation: My BK7 was discharged on 6/20/2010. I had two house prior to my BK7. Both houses were included in my BK7. I let one house foreclosed and kept the other current but did not reaffirmed the mortgage. My questions are:
                  1. Can I walk away from this house anytime as long as the mortgage is not reaffirm? Will the mortgage lender foreclose the house?
                  2. If the bank foreclose the house, will my credit score show foreclosed on top of BK which is already on my credit report?
                  3. Will I be able to qualify for FHA loan after 24 month from my BK discharge (6/20/2010)? Or will it starts counting after my current mortgage foreclosed?

                  Thanks in advance for answering my questions.
                  Sako

                  Comment


                  • Originally posted by sako View Post
                    Myquestions are: 1. Can I walk away from this house anytime as long as the mortgage is not reaffirm? Will the mortgage lender foreclose the house? 2. If the bank foreclose the house, will my credit score show foreclosed on top of BK which is already on my credit report? 3. Will I be able to qualify for FHA loan after 24 month from my BK discharge (6/20/2010)? Or will it starts counting after my current mortgage foreclosed?
                    Sako,

                    I can only answer your first question(s) with absolute certainty. . .

                    Yes, you can walk away from the home since you did not reaffirm and yes, eventually the mortgage lender will foreclose.

                    As to the other questions -

                    I suspect a foreclosure can be reported but I am not sure.

                    It is my understanding that the FHA will not hold a bk against you 2 years after discharge. I cannot comment as to whether or not you would otherwise qualify for FHA financing.

                    Des.

                    Comment


                    • I have question I hope someone can answer:

                      First the story:

                      My wife has filed bk7 while we are going through a divorce, we have 3 accounts that are joint, Mortgage, car, credit card. Mortgage company (citi mortgage) will only tell me to keep making payments if I intend on keeping the house (wife is not going to reaffirm) but, they will not be reporting payments to my credit. I have verified that they have not reported for the last two months along with the car loan. Just as a side note the credit card no longer appears on my credit file. Citi has also said that if I didnt want the house that I could walk away free and clear since a bk7 has been filed on the loan. Here are my questions:

                      1. Is the bank correct in saying that I will not be held liable for the loan even though I did not file a bk, just my wife.

                      2. If the answer to questions 1 is yes, then what will happen to my credit report or score for that matter if I do walk away. What will Citi report on credit file.

                      3. If my wife quick claim deeds me the house in our divorce, and I decide to keep the house, will Citi ever report to my credit report that im paying?

                      Comment


                      • Originally posted by wsbrothers View Post
                        I have question I hope someone can answer:

                        First the story:

                        My wife has filed bk7 while we are going through a divorce, we have 3 accounts that are joint, Mortgage, car, credit card. Mortgage company (citi mortgage) will only tell me to keep making payments if I intend on keeping the house (wife is not going to reaffirm) but, they will not be reporting payments to my credit. I have verified that they have not reported for the last two months along with the car loan. Just as a side note the credit card no longer appears on my credit file. Citi has also said that if I didnt want the house that I could walk away free and clear since a bk7 has been filed on the loan. Here are my questions:

                        1. Is the bank correct in saying that I will not be held liable for the loan even though I did not file a bk, just my wife.

                        2. If the answer to questions 1 is yes, then what will happen to my credit report or score for that matter if I do walk away. What will Citi report on credit file.

                        3. If my wife quick claim deeds me the house in our divorce, and I decide to keep the house, will Citi ever report to my credit report that im paying?
                        If you did not file BK and you signed the note on the mortgage you are still legally liable. Having said that is it possible someone at Citibank won't figure that out and may simply see a flag on your mortgage that says BK -- sure. Your credit score would presumptively go down if it no longer shows your mortgage payments (assuming they were all current). Regardless of whether your wife quitclaims the property to you, you should be able to get Citibank to report your payments. However, unless you have positive equity in the house, are current, and intend to stay there I would not notify Citibank about anything.

                        Comment


                        • I reaffirmed two automobiles in my Chapter 7 at my attorney's advice. They were approx 12 and 18 months away from being paid off and his rationale was that if I intended to keep them anyway, I might as well get credit for paying them off.

                          Three months after discharge, one of the automobiles - the one with the larger payoff - suffered a complete engine failure and (besides being towed to/from the shop for diagnosis) has been sitting in the driveway ever since while I continue to make monthly payments. The loan balance is just now reaching the point where I might be able to sell it as a 'mechanic's special' and break even on the payoff. To say that it hurts to write that check every month, though, is a gross understatement. Had I not reaffirmed, I could have stopped making payments immediately and walked away from it, not to mention remove it from my auto insurance policy and save a whole lot of money on my premiums!

                          Those couple potential extra points on my credit report DEFINITELY won't be worth the many thousands of dollars I've thrown away. Learn from my mistake. If you're going to get a fresh start, don't drag your old problems along for the ride (no pun intended)!
                          Last edited by nceguyfromne; 11-15-2011, 05:45 PM.
                          4/2010 - Filed Chapter 7 no asset case w/car reaffirm
                          5/2010 - 341 meeting, no creditors present
                          10/2010 - Reaffirm finally approved and case discharged the same day

                          Comment


                          • We reaffirmed our cars, but not our house. I certainly glad we didn't. We may have to give it up if I cannot find a job soon and the future does not look very good in my field of work. If we have to walk it will be hard. I guess we all learn from our mistakes. My mistake was thinking after 22 years at the same job that I was secure. What a lesson to learn at this point in my life.

                            Comment


                            • I'm also currently in the process of filing bk. My bankrupcty attorney said she WOULDN'T let me reaffirm my primary home and I'm a little disappointed. My thoughts are if you are paying for it why not get credit for it. I'm also scared the lender can forclose at anytime they choose to. I'm very confused and can't seem to decide. My attorney would allow me to reaffirm my car but not the mortgage. If I don't reaffirm, is the title still in my name, can you write off the interest and taxes at the end of the year. I got a modification on the property not too long ago with a 2% interest rate with BAC for 5 years which makes my payment affordable and don't want to loose the home even though I don't have any equity in the home. I plan on staying in the home for a long time. Also I don't know if there is any provision in the modification contract about bk.
                              If you sell the property in the near future what happens? Any advise would be great. I'm new at this and need help.
                              Can you ever refinance in the near future 7 years from now or so.

                              Comment


                              • Babsy,
                                Yes, it is confusing, but your attorney is giving good advice. First, yes the title stays in your name until you default on those payments. Yes you still get all the tax benefits you always have. No, the lender cannot foreclose on you unless you miss your payments. Your modofication terms should stay in place (some, like me even got modified AFTER the BK). If you later sell the property and there is any money left over, you keep it. Bottom line is you get the benefits of keeping the house without the liability. So, if at some future date you can no longer make the payments you can walk away and not owe anything. Of course, the bank can then still get the house, and you will get a foreclosure on your credit report, but you wont owe any money. Matter of fact you can stretch out the process and save money if you ever decide you arent going to stay, and there is no "additional" damage on your credit report since you arent responsible for the payments anymore, they cannot report you "late". On the other side, a little negative is that your payments every month will not report as positive on your credit....but most feel that is small price to pay for the other benefits.

                                Now, all that said I do believe you can still request to reaffirm, but without your attorney approval you will have to go in front of a judge to get it approved, and most wont anyway, protecting your interests. But you can request the court hear your argument.

                                Comment

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