Why not Reaffirm the Mortgage???

[newbeginning]

we are planning to file chapter 7 in a bit here and our feeling is to reaffirm mortgage because:

1. Want to remain in the house (love it!)
2. Also feel that there is a better chance to negotiate better rates

Can anyone advise on how to deal with mortgage companies about renegotiating rates on mortgage? If we keep with current rates (have second mortgage), may not be able to keep up with payments, or at least, it will be tight. But, if we can consolidate to one mortgage or lower rates on both, it would be helpful.

Thanks. This thread was helpful. I will be speaking with an attorney next week.

[mgmadara]

2. Also feel that there is a better chance to negotiate better rates

I'm no expert on this situation and I could be wrong, but it seems to me that not reaffirming and having the ability to walk away in the future with no further damage to you gives you the upper hand when trying to negotiate a better interest rate. The bank won't want your house back and may be willing to work with you to make sure they don't get it back.

If we keep with current rates (have second mortgage), may not be able to keep up with payments, or at least, it will be tight.

This is a good reason to not reaffirm!!


We filed old law and didn't reaffirm our car or our house. Daimler Chrysler never reported our loan to the CRA's from day 1. Our mortgage is with our local bank. They never stopped reporting to the CRA's even when our bankruptcy was open. They did stop the automatic withdrawal from our checking account during the automatic stay but resumed it after we were discharged and closed. Our mortgage payments are only $900 and we aren't upside down on our house since house values haven't really dropped in my area, but it gives me piece of mind to know that if something happens and we can no longer afford the house we can walk away.

[Joe Farmer]

Some states do not allow you to be sued for deficiency, however.

Look up your state's foreclosure laws, like foreclosure dot com is good information. If you reaffirm, then are forced to foreclose later (a real possibility since the economy is collapsing, house prices are predicted to fall for YEARS more, etc.) then you will have a foreclosure on your record following a BK, whether or not you can also be sued for a loss to the lender on TOP of it all? I have heard some lenders insist on reaffirmations while other do not because without one they can foreclose sooner rather than later, but with falling prices, and etc. the industry has GOT to be in chaos and turmoil about how things shouls be played out nowadays? But as far as the OP- your $800 'equity' would really be a loss of 1000's if you tried to sell, so don't kid yourself about having any equity.

[newbeginning]

mgmadara,

Not certain when one declares reaffirmation, but i assumed that lawyers would have knowledge as to when and how to declare reaffirmation. If we cannot get better rates, we will certainly not reaffirm.

Anyway, will speak with lawyers about how best to deal with this.

Thank you.

[deafbroke]

mgmadara,

Not certain when one declares reaffirmation, but i assumed that lawyers would have knowledge as to when and how to declare reaffirmation. If we cannot get better rates, we will certainly not reaffirm.

Anyway, will speak with lawyers about how best to deal with this.

Thank you.

If you check the box in your BK petition to reaffirm the mortgage company will know when they recieve the notice and they will send you the reaffirmation paperwork to sign. Checking the box when you file BK does not obligate you to reaffirm. Once you get the paperwork from the mortgage company then you will need to make that decision.
I origionally was going to reaffirm but knowing I could in the future be held accountable for money after foreclosure IF I was to somehow lose the house I could be sued for the difference. I decided not to reaffirm. It may make you feel better reaffirming and you may say now you plan on keeping the house and not getting behind on payments so reaffirming isn't a problem. Maybe. But look at it this way. Two years ago, did you think you'd be filing bankrutpcy? There's no telling what the future holds and reaffirming only benefits one party, the mortgage company. Reaffirming can be a very very costly mistake AND it can be many many many years down the road before it happens.

DB

[mgmadara]

mgmadara,

Not certain when one declares reaffirmation, but i assumed that lawyers would have knowledge as to when and how to declare reaffirmation. If we cannot get better rates, we will certainly not reaffirm.

Anyway, will speak with lawyers about how best to deal with this.

Thank you.

I think I misunderstood your plans. I thought you were going to reaffirm now and then later try and renegotiate your interest rate. Your plan might work and is certainly worth it to try. Good luck!!!

[Reginac]

If you check the box in your BK petition to reaffirm the mortgage company will know when they recieve the notice and they will send you the reaffirmation paperwork to sign. Checking the box when you file BK does not obligate you to reaffirm. Once you get the paperwork from the mortgage company then you will need to make that decision.
I origionally was going to reaffirm but knowing I could in the future be held accountable for money after foreclosure IF I was to somehow lose the house I could be sued for the difference. I decided not to reaffirm. It may make you feel better reaffirming and you may say now you plan on keeping the house and not getting behind on payments so reaffirming isn't a problem. Maybe. But look at it this way. Two years ago, did you think you'd be filing bankrutpcy? There's no telling what the future holds and reaffirming only benefits one party, the mortgage company. Reaffirming can be a very very costly mistake AND it can be many many many years down the road before it happens.

DB

On my bk paperwork, the box is checked for my auto loan but for my mortgage it just says that i will retain the home and continue to make payments...is that the same as reaffirming? I was discharged in 2008 so I dont recall signing anything from the bank...is that something they must disclose to me or give me a copy of if i am in forclosure on my second? I am trying to decide whenther to walk away or short sale.....it is already known that i cant afford to keep my home.