Mortgage Question

[gary36]

Hi! Does anyone know how it works with the house when you file for chapter 7? Im filing alone without my wife but we are both on the mortgage. Could they do anything to the house if she doesnt file and I do? We want to keep the house.

[poorme]

Plenty of reading here to cover your question. Basically, for a ch 7 you need to be current on the payments in order to keep the house. You'll have to sign a reaffirmation agreement with the lender, effectively moving the mortgage out from under bk protection. Complications can arise based on how much equity you may have - lots of it can push you over the exemption amount and even disqualify you from the means test - eliminating your chance to use ch 7...you may be forced into a 13.

[SinkingFast]

When you're joint on most any debt and one spouse files BK, the burden of repay for the entire amount shifts to the other spouse.

You share joint responsibility for the mortgage. You file BK. You discharge your responsibility to the mortgage note. At that point, your spouse becomes solely responsible for the full amount of the loan.

If you have excess equity you cannot cover with your Homestead Exemption, and you do not have the resources to pay the Court what's due, you may be able to get a Redemption Loan to pay what you owe. That would be like taking a 2nd mortgage on your home.

Redemption Loans are most commonly associated with cars but can be used to save a house in Ch 7 also.

As Poorme said, you cannot be in arrears on your mortgage payments at the time you file. With Ch 7, you must be current on your mortgage in order to keep your house.

[gary36]

Yes we are current. Im not reaffriming because my lawyer charges to much. Just say we keep paying on time for the next few years. Then one month I go over the due date into the grace period. Should I need to be worried. I read that they could forclose but it doesnt seem fair if she didnt file bk. Can they do that if only one of us filed and we are both on the mortgage?

[HHM]

Yes we are current. Im not reaffriming because my lawyer charges to much. Just say we keep paying on time for the next few years. Then one month I go over the due date into the grace period. Should I need to be worried. I read that they could forclose but it doesnt seem fair if she didnt file bk. Can they do that if only one of us filed and we are both on the mortgage?

A default by one, is a default by both. Whether your a community property state or not, a married couple, for all intents and purposes is a SINGLE financial unit. If both your names are on a mortgage, it really doesn't matter who files BK, it's a BK for both with regards to the mortgage. Also, Mortgages are NOT discharged in BK, the mortgage is still enforceable against the property that secures the mortgage. If you fail to reaffirm, that failure is technically an event of default, allowing the mortgage company to foreclose whenever they want.

You do not need your lawyer to reaffirm. It seems like the few extra hundred dollars the lawyer charges for a reaffirmation is an awfully small price to pay to bring certianty to your status vis-a-vis your house.

[BKTango]

Do you intend on keeping the home or surrendering it? Both my husband and I filed CH7 jointly, while we were told we did not have to reaffirm the mortgage we did so by choice. It is a smart move to make actually. Think of it this way, if you reaffirm the mortgage, you take responsibility of that loan on again, same terms, nothing changes. Should you ever be "late" the mortgage company will treat you like any other person and be more willing to work with you and get you caught back up. If you do not reaffirm and you are late on a payment, they are more than likely not going to work with you and possibly start foreclosure proceedings. Of course also by not reaffirming the mortgage, at any time you can walk away. This is how it was explained to us. So in the end, knowing we did not want to jeopardize losing our home over a piece of paper, we signed the reaffirmation forms with no hesitation.

[jblaska]

I know i posted in another thread about some other things, but I have a question about my house. I live in Michigan and currently have this:

1st mortgage: $102,000
2nd Mortgage: $35,000
My home only is worth maybe $110,000 or so and I have been here about 2 years.

If I put this in my chapter 7, how long do I have to leave?

Sorry if someone else has posted this question. I have read and read but I cant seem to find an answer.

[SinkingFast]

Here's a decent summary of what to expect in MI.

http://www.foreclosurelaw.org/Michig...losure_Law.htm

The Redemption Period varies:

Michigan Foreclosure Statutory Redemption Period:

1. For a mortgage on residential property not exceeding 4 units and not more than 3 acres in size, if the amount claimed to be due on the mortgage at the date of the notice of foreclosure is more than 66-2/3% of the original indebtedness secured by the mortgage, the redemption period is 6 months.
2. If the property is abandoned as determined pursuant to the statute, the redemption period can be shortened to 30 days.
3. In any other case, the redemption period is 1 year from the date of sale.

http://www.foreclosureuniversity.com...s/michigan.php

[jblaska]

And this is after I am already behind like 3 or 4 payments right?

[SinkingFast]

Foreclosure is a complicated thing. Some of what might happen depends on your Lender. Some of what happens in a Foreclosure can be market dependent. Some of what happens is based on who the investor backing your loan is.

If you've had delinquencies in the past, the Lender can move to Foreclose after one missed payment. If you've always paid in a timely fashion, the Lender can move as quick as the day after the end of your grace period of you 2nd missed payment.

After our 2nd missed payment is what happened to us. Our payment was due on the 1st with a grace period to the 15th. On the 16th, after the 2nd missed payment, the Lender sent a letter of Default and Acceleration giving us 30 days to Cure. Cure is "pay up or else".

If the Lender is already carrying a lot of REO, Real Estate Owned, property on their books, the Lender may not be so quick to jump to Foreclose. Carrying lots of REO properties does not look good on the bottom line to prospective investors.

The Investor backing your note has an impact on how quickly the Lender will move as well. A private investor may allow some time. A loan backed by a Federal program such as Fannie Mae or Freddie Mac will typically move to Foreclose quicker.