Phfa mortgage question

[wesleyh09]

Good morning. Weird question. Just filed chp 7 in 11/2013 and had my 341 hearing 12/06 and all went well. That was a relief. Now we have one mortgage with phfa that we were never late on and my last payment through my bank via ach did not go through because apparently I didn't have enough funds. Ugh. My fault. Now I noticed that I cannot log in but I think that is normal in the stay before the discharge. The question is should I be worried about this late payment? Will they use this an excuse to foreclose? I doubt it. Also we did want to reaffirm this debt (I know a lot of people say no but we want to move with our life and we like our house) but our lawyer has not seen anything from phfa regarding the reaffirmation. Is that normal? How long do mortgage reaffirmations take? Thanks. Love the forums by the way. So helpful.

-Wes

[BobMango]

One late payment will not trigger a foreclosure, and how late is the payment? Most mortgages have a 10-15 day grace period before the late fee even kicks in. I'd call the lender and find out what the payment needs to be and how they will accept it. Even if you can't log on, you may still be able to pay through your banks bill pay.

On the reaffirmation, let me add to the chorus against such a move. Reaffirmation does NOTHING to protect you or ensure that you can keep your house, you are just guaranteeing that you get to keep the obligation. Unless the lender is offering some significant principal or rate reduction you should not be doing this. It will do nothing about helping you move on. The reaffirmation must be executed prior to discharge in order to be binding, but really, the bank is doing you a favor by not getting that paperwork to you.

I kept a house that I did not reaffirm when I filed in 2009 and I still have the house. The loan was even sold from GMAC to Ocwen and I haven't had a single issue. Please don't sign a reaffirmation agreement, you never know what the future holds and there is no reason to throw yourself back in the fire.

[wesleyh09]

Thanks for the reply. I think the reason I want to reaffirm if for it to be reported to the credit agencies. If I don't reaffirm then it will not be listed. Just figured it will help me. As for phfa, I tried calling them and they said I speak to a specific person and they are never there. Very frustrating.

[justbroke]

This is me being very firm... never, ever, ever, reaffirm a mortgage so that it will be reported to the credit bureaus.

There are very few reasons to reaffirm a mortgage debt, even if you have significant equity in the property. Reaffirmation has absolutely nothing to do with "liking" your house or wanting to keep your house. The sole purpose of reaffirmation is to keep the property where it is required, by law, that you reaffirm. There should be nothing that requires you to sign a reaffirmation agreement.

What is your percentage of equity in the property anyhow?

[vee1]

Don't reaffirm. I have a mortgage taken over by Ocwen and according to them, if I pay on time, it will be reported as such. I didn't reaffirm. I'm a few weeks away from my discharge. I can't have automatic payment withdrawals from my checking account while I have an active bankruptcy, but once I'm discharged I can go back to that. I've been mailing my payments in early to avoid any problems. But I think after two late payments that's when they could start foreclosure proceedings. One late payment won't start foreclosure.

[wesleyh09]

Interesting comments folks. So is there any difference legally with reaffirming and not reaffirming? It truly scaredme not to reaffirm. I hear you folks but that seems like they can do anything they want. Also the last comment by vee1 was interesting. My auto payment from my bank did not go through this month. You think they did not allow it since I am not discharged yet?

[justbroke]

Here's the bottom line.

Whether your reaffirm or not reaffirm, the creditor is only allowed to proceed under your State's non-bankruptcy laws. That means, they must follow your State's foreclosure laws should they choose to proceed with foreclosure. That means, there must be some material default of your Mortgage such as non-payment, then an acceleration and demand for payment. If you're paying on time, there is no material default (period).

(In some limited cases in Florida where the lender/creditor was a "ankle-biting" credit union, they have "forced" -- based on the law -- the debtor to reaffirm. I have not read of any cases outside Florida; and even in Florida, those "forced" cases were about 3 in 300,000 cases, so quite rare.

Talk to your attorney.

[wesleyh09]

Thanks everyone. So I spoke to PHFA yesterday and they said they everyone thinks that when you don't reaffirm you can just walk away. She stated while that is technically true, it will still be listed as a foreclosure on your credit report. Is that true?

[Drazil65]

The foreclosure should not be listed, I believe it will only be listed as IIB like everything else that was discharged. Our short sale a yr after discharge still shows as IIB on credit report. From my understanding it should only show IIB on all debt discharged, unless you have gone through a bankruptcy situation (or you are an atty maybe) I do not believe most people know or understand how that works. Good Luck!

[LadyInTheRed]

Thanks everyone. So I spoke to PHFA yesterday and they said they everyone thinks that when you don't reaffirm you can just walk away. She stated while that is technically true, it will still be listed as a foreclosure on your credit report. Is that true?

Let's assume she is right about that. So, you reaffirm, default on your mortgage later and the bank forecloses. The foreclsoure will still show up on your credit report and the bank can get a deficiency judgement against you. If you didn't reaffirm, there could be no deficiency judgment.

Two members recently stated in another thread that they walked away from discharged mortgages and the foreclosures did not appear on their credit reports. Besides, as already said, your credit report is not a good reason to reaffirm.

[BobMango]

Thanks everyone. So I spoke to PHFA yesterday and they said they everyone thinks that when you don't reaffirm you can just walk away. She stated while that is technically true, it will still be listed as a foreclosure on your credit report. Is that true?

That's exactly what you can do. That does not mean there are no consequences. Not reaffirming is not exactly a "get out of jail free" card, but it relieves you of any financial obligation for the mortgage. Until the foreclosure you would be responsible for any HOA fees, for example. In my case my foreclosure occurred before filing and the only indication of it is the mortgage account listed as IIB with a $0 balance on my credit report. That has not prevented me from reestablishing credit and purchasing a new home just 3 years after the foreclosure.

I did reaffirm on a truck because I had lots of equity in it and didn't owe all that much, plus the credit union lowered the monthly payment from $650 to $400 without changing the interest rate and just extended the loan. That line item showed IIB, Reaffirmed and Pays as Agreed all at the same time. Not sure what impact that had, positive or negative.

As far as the house reaffirmation, there is nothing for you to gain and lots to lose, don't reaffirm.

[LadyInTheRed]

That has not prevented me from reestablishing credit and purchasing a new home just 3 years after the foreclosure.

That reminds me of another point I wanted to make. If you have a foreclosure in your past and apply for a new mortgage, the potential new lender will find out about it county recorder records, even if it doesn't show up on your credit report. In fact, anyone who cares whether or not you have had a foreclosure in your past, can find out by searching public records.