Please help..Mortgage Question!

[drummer1]

We have two, a first and a second mort. The first Mort, is the large one and they have no plans on reaffirming, they told us on the phone and in writing that as long as we make our monthly payments we are fine the only thing is they will not report the payments to the Cr. Bur...In fact the bill we just got says "if you s
chose to make your payment, its due on dec.1st" etc..it also says that they would only exercise there rights against the property and not us personally etc...should we miss payments...Ok Fine..

The second Mort. on the other hand is pushing our attorney to get us to sign a reaffirmation aggrement and so far she has held them off...the attorney told us that this has all been via phone calls so far and nothing in writing, from the mort. companys law firm...the Mort. company is HSBC..For the second..we owe them about $37K....fIRST OF ALL WHY ARE THEY PUSHING FOR THIS ?? and secondly, it seems to me that we can completely stop paying this second after discharge and there isnt a whole lot they can do about it since they are second in line from the first Mort?? am I right in this thinking?? is that why they are pushing? because they stand to be out the money?? Isnt the only way they can recover there money is if we sell the home or the first mort forclosed??

What can they do if we just stop paying the second? I know its secured by the home but how can they foreclose ahead of the first?

Would your advice be to keep paying the second? or can I stop after discharge?? or is this just russian roulette and I should just keep paying the second...Sorry it is very tempting to just not pay that second anymore..Thanks for all your answers! Happpy holidays!

[BassBoy]

If you default on the second mortgage, they will probably foreclose. This may be the push to have a reaffirmation because once you affirm a debt, you WILL BE responsible for the debt. A good way to think about this is, the debt is basically excluded from the BK when you reaffirm it.

You're best bet is to continue to pay both loans if you want to keep the house, but do not to reaffirm.

[busbis]

The 2nd is wanting the reaffirmation so they know it will be paid outside the bk. If you sign the reaffirmation, you are responsible. If you choose not to continue to pay the 2nd they can excerise there rights and foreclose. If it sells at the court house steps, it is likely the 2nd mort will by out the first mortgage and they become new owner of the home. Typically no other investors bid out the 1st execpt the jr lien. So be careful on how you handle this. I would recommend you not sign the reafirmmation agreement if you are not signing one on the first mtg.

[drummer1]

The 2nd is wanting the reaffirmation so they know it will be paid outside the bk. If you sign the reaffirmation, you are responsible. If you choose not to continue to pay the 2nd they can excerise there rights and foreclose. If it sells at the court house steps, it is likely the 2nd mort will by out the first mortgage and they become new owner of the home. Typically no other investors bid out the 1st execpt the jr lien. So be careful on how you handle this. I would recommend you not sign the reafirmmation agreement if you are not signing one on the first mtg.

How can they buy out the first mortgage behind our back? it would seem they would have to go though us to do that because we are current on out morts?? I am not trying to lose my home just trying to understand why they want to reaffirm so bad and the first doesnt care? They must stand to lose something or they would not push so much?? If it comes down to it we will certainly pay both, losing our home is not what we want, just wondering how the chain goes....it seems like a mechanics lein where the subcontrators always get there money last and when the house is sold etc..

[BassBoy]

busbis did not mean to just buy the home behind your back, but rather on the court house steps if you default, the loan is foreclosed and the home goes to Sheriff Sale (the final step in the foreclosure process). You see, when a home is sold at auction, 2nd lien holders (and 3rd's) usually get nothing from the sale because the home is usually sold for 2/3 of the fair market value....so.....since you are continuing payments without a reaffirmation on the first mortgage, the second lien holder wants to ensure they get paid something because without a reaffirmation, you can walk away from theh ome at any time and not be liable for the deficency balalnce(s).

[busbis]

They stand to lose their money if you don't reaffirm. The process is this...if you pay your first, but not your 2nd, the 2nd mtg company will start foreclosure and notify your 1st mortgage company that your home is in foreclosre process. The 1st mortgage company has no concerns because they will get their money regardless. If it forecloses than their lien gets paid off 1st. The 2nd mortgage makes a choice, typically before they even start the foreclosure process. Either they bid the high bid at your court house steps to cover the 1st and 2nd mortgage or they walk away from your loan completely. They would typically only walk if the value was not there and it is more cost effective for them to do this. Their lien still stands, so if you ever sell the house they still might stand a chance to get paid.

But with all that said your original question was should sign a reaffirmaiton agreement and the answer is no. If you sign one you are responsible for the debt. If you do not sign you will be able to walk away if you choose to and the debt becomes discharged. If you want to keep your house, your best bet is not sign and just keep paying. Mortgage companies are not going to foreclose if they have money coming in each month to cover the loan.

[drummer1]

They stand to lose their money if you don't reaffirm. The process is this...if you pay your first, but not your 2nd, the 2nd mtg company will start foreclosure and notify your 1st mortgage company that your home is in foreclosre process. The 1st mortgage company has no concerns because they will get their money regardless. If it forecloses than their lien gets paid off 1st. The 2nd mortgage makes a choice, typically before they even start the foreclosure process. Either they bid the high bid at your court house steps to cover the 1st and 2nd mortgage or they walk away from your loan completely. They would typically only walk if the value was not there and it is more cost effective for them to do this. Their lien still stands, so if you ever sell the house they still might stand a chance to get paid.

But with all that said your original question was should sign a reaffirmaiton agreement and the answer is no. If you sign one you are responsible for the debt. If you do not sign you will be able to walk away if you choose to and the debt becomes discharged. If you want to keep your house, your best bet is not sign and just keep paying. Mortgage companies are not going to foreclose if they have money coming in each month to cover the loan.

Thank you, I was worried about that also, without a reaffirmation, they could just start the forclose process whenever they feel like it...but your saying as long as we keep paying that will not happen right? and again, your advice is to not reaffirm!

Can they force us to reaffirm? Thanks again

[BassBoy]

Yes, as long as you continue to pay, nothing will happen.

[busbis]

Yes...as Bassboy stated...

You must continue to pay the 2nd mortgage, otherwise they can come after you.

[needafreshstart]

You might have to read the loan documents you signed. There may be a clause that states filing bk is an act of default, thus they would have the right to foreclose even though your current on payments. If there is little equity they probably would not do that, but they very well could have the right. What they can do and what they will do, is probably different things.

[RickInMich]

As far as affirmations on first or second mortgages, can you refuse (or not offer) an affirmation and keep the house as long as you keep current? To put it another way, can you be forced to sign an affirmation if you want to keep the house?

[RickInMich]

bump.

As far as affirmations on first or second mortgages, can you refuse (or not offer) an affirmation and keep the house as long as you keep current? To put it another way, can you be forced (by the mortgage company) to sign an affirmation if you want to keep the house.

[monkatom]

another bump/thrad jack. If you do not reaffirm like my lawyer says not too but you're paymnet is due on the 1ST and late on the 15th if you pay on the 8th every month will this be considered late and will tehy foreclose. my lawyer said it is not late since its ebfore the 15th but I thought I read on here that it is due on the 1st and therefore late after that time??

[HHM]

bump.

As far as affirmations on first or second mortgages, can you refuse (or not offer) an affirmation and keep the house as long as you keep current? To put it another way, can you be forced (by the mortgage company) to sign an affirmation if you want to keep the house.

If you had read through the post or any of the numerous posts on this subject the answer is...the mortgage companies CANNOT force you to sign a reaffirmation agreement. So long as you continue to make your regular payments on time, the mortgage companies cannot foreclose.

As for when to make payments, most if not all mortgage servicing companies abide by the original grace period provisions, so if the payment is due on the first, but not considered late until the 15th, you can make the payment anytime between the 1st and 14th of the month.

Keep in mind, in this market, the mortgage companies do not want to foreclose...they are not going to foreclose over a technicality, but if you miss payment and go into arrears, then they will foreclose.

Regarding not making payments to the 2nd mortgage. The 2nd mortgage has the same right to foreclose as the 1st, however, because the 2nd mortgage lien is inferior to the 1st mortgage, if the 2nd mortgage were to foreclose, they would have to satisfy the 1st mortgage before they see any money. When the real estate market is good, that is usually not a problem, or if the house has substantial equity, again, doing so is not a problem. In more troubled real estate market, if the 2nd really wants to foreclose, they will try to buy the 1st mortgage and then foreclose. It is a risky proposition to blow off (i.e. not pay) the 2nd mortgage and "hope" they don't do anything.

In any event, DO NOT sign a reaffirmation on a 2nd mortgage, ever.

[RickInMich]

If you had read through the post or any of the numerous posts on this subject the answer is...the mortgage companies CANNOT force you to sign a reaffirmation agreement. So long as you continue to make your regular payments on time, the mortgage companies cannot foreclose.

Not that I'm easily offended or anything, I DID read through the post. You know, you have spent a heck of a lot more time on this board than most people, so you know this stuff inside and out. Not all of us have that advantage. I have read so much on here trying to keep it all straight, that I start wondering did I read such and such or not. Additionally, all I ever see is "don't sign a reaffirmation," but I couldn't recall if you could be forced to or if it's possible for them to foreclose if you choose not to reaffirm, but continue to make the payments.

In any event, I wouldn't have asked if I knew it. I'll be much more carfeful about posting questions from this point forward. Yeah, I can read, read, read, read old posts and try to find the info, but usually the whole concept of a discussion board is discussion. Please do not feel compelled to answer any question from me from this point on. There's lots of people on here that have the info besides you.

In any event, DO NOT sign a reaffirmation on a 2nd mortgage, ever.

Great information. Thanks.