Reaffirmation - What Atty. says...OMG!

[lillaimof2kids]

OK, my Atty. has received reaffirmation papers from my 2nd mortgage, but not my first mortgage. I told her I refuse to sign for the 2nd before my 1st mortgage is signed (if I sign at all). SO, she says..."If you don't sign the reaffirmation papers before your case is closed, the bank can foreclose on your house." I told her that I don't think that makes any sense to me at all. I'm current on both loans, always have been. On what grounds do they have to foreclose?

Atty. says 1st mortgage hasn't sent reaffirmation papers, may not send the papers at all, but won't foreclose on me, while 2nd mortgage did send reaffirmation papers and will foreclose on me if I don't sign...WHILE I'M CURRENT! I refuse to guarantee a 2nd mortgage without a guarantee on the 1st mortgage.

The whole point here is...I have to go thru this whole BK7 thing, I want to protect myself every step of the way. I work in the pool and spa industry, which everyone knows is a luxury item. I don't know how long things will stay good with this economy. My job is secure as long as pools and spas are selling. DH works in the environmental/hazardess materials field. Some weeks he works a lot of hours, other weeks he doesn't. If the economy would sink any deeper than it already has, and one of us would loose our job, I don't want to be responsible for a 2nd mortgage while I could walk away from my 1st mortgage.

I know I'm rambling, but I'm just frustrated right now. And of course I get to deal with this while I've had a migraine for the last 6 days.

[keepmine]

First thing to do is look at the big picture. If you have minimal or negative equity in the home I'd not sign a reaffirmation agreement under any circumstances.
The bk code does require a reaffirmation agrement to keep secured property but, some districts and creditors ignore it. Nobody needs to add another foreclosure to the pile.

[lillaimof2kids]

We have about $8000-$10,000 equity in our home. That's for now, who knows what's in store for the next 6 months.

[PoorGrammyinBK7]

Is this something specific to the habits of your lender for the 2nd that your lawyer knows?

'Cause I would think most lenders for 2nd mtg's would not be in a hurry to foreclose, especially since you are current. Lord knows, they have enough to worry about with those that are NOT current on payments. It could happen, I guess, but even of they do, it takes a lot of time and, depending on your state's laws, they may not even be able to do it as long as you remain current.

[Minnymouth]

I definetly would not sign a reaffirm on the 2nd mortgage and not have one on the first. That's guaranteeing the lender you will pay the 2nd mortgage "no matter what" happens in the future, whether you file BK or not.

Some companies are demanding that you sign a reaffirm, but it not a state law that I am aware of......

If you are current on both mortgages, most companies will not do anything as far as foreclosure as long as you pay each month....... especially now as bad as foreclosures are......

Don't reaffirm one without the other....

[BassBoy]

I agree

I agree with Minny.

After a foreclosure, the 2nd lien holder usually stands to lose because the sale at foreclosure is usually far less than what is owed (the opening bid is usually 2/3 of FMV). This is why the 2nd is asking for reaffirmation. Like Minny says, "That's guaranteeing the lender you will pay the 2nd mortgage "no matter what" happens in the future, whether you file BK or not."

[PoorGrammyinBK7]

Our attorney said we couldn't reaffirm just one of them - not sure if he meant "by law" we couldn't, or if he meant it would just be a very bad idea.

I agree with Minnie and Bass Boy though. I would not reaffirm it, especially if you are concerned about your job!

[lillaimof2kids]

I agree with everyone else. I'm not signing anything. If the bank is stupid enough to foreclose on the 2nd mortgage while receiving monthly payments then I don't want to deal with that bank anyway. I guess time will tell. We'll see what plays out.

[lillaimof2kids]

I talked to the bank our 1st mortgage is through. They do not do reaffirmations when your current and they don't have issues of being late. So we won't be signing the 2nd mortgage reaffirmation. Cross your fingers for us that all works in our favor making this decision! Time will tell!

[Frogge]

Good luck to you on this! I think you are definitely doing the right thing by not reaffirming.

[laurannm]

Our lawyer told us the exact opposite of what yours told you...we are upside down on our house with a 2nd mortgage being partially unsecured. He strongly recommended not reaffirming either, but if we really wanted to then reaffirming just the first was the best way to go

[Priceless ProSe]

Since you are in Ohio, which utilizes only judicial forclosure and allows deficiency judgement I personally dont think it would be a good idea to reaffirm the second mortgage. Furthermore, in Ohio they can auction the house for as little as 2/3 of the appriased value, meaning that the 10k in equity probably would not save you from a judgement if they were to forclose after you reaffirmed.

Since when can the Junior lender initiate a forclosure on a house? I was under the impression that it was the sole right/responsibility of the senior lender to initiate any proceedings.

If they are accepting your payments then I think your attourney is blowing smoke (what could his motivation be?).

Call the servicing company for the loan and see whats up.

[deafbroke]

Since you are in Ohio, which utilizes only judicial forclosure and allows deficiency judgement I personally dont think it would be a good idea to reaffirm the second mortgage. Furthermore, in Ohio they can auction the house for as little as 2/3 of the appriased value, meaning that the 10k in equity probably would not save you from a judgement if they were to forclose after you reaffirmed.

Since when can the Junior lender initiate a forclosure on a house? I was under the impression that it was the sole right/responsibility of the senior lender to initiate any proceedings.

If they are accepting your payments then I think your attourney is blowing smoke (what could his motivation be?).

Call the servicing company for the loan and see whats up.

The jr lender probably can initiate the foreclosure, especially if someone reaffirms the 2nd. No matter what happens at the foreclosure sale the jr lender can then get a deficiency judgement for the amount of the 2nd mtg.

Absolutely do not reaffirm. Very worst case, you can find a different place to live. reaffirmations are only good for the leinholder, never the debtor.

I'd seriously consider a different lawyer if one told me to reaffirm.

DB

[lillaimof2kids]

Thanks for all your input! I let my attorney know today we won't be signing our reaffirmation papers on the 2nd mortgage. I'm current on my loan, I always have been, so I'm doing my part.

Scares the sh*t out of me though! This is the house I grew up in. I love my pool and spa. We have swim parties/cookouts probably 2-3 x's month. I would miss that like crazy!

Anyway, I did talk to my bank with my 1st mortgage and they'll still be reporting to the credit bureau. Thank goodness! I was a little worried about that.

[Priceless ProSe]

The jr lender probably can initiate the foreclosure, especially if someone reaffirms the 2nd. No matter what happens at the foreclosure sale the jr lender can then get a deficiency judgement for the amount of the 2nd mtg.

Absolutely do not reaffirm. Very worst case, you can find a different place to live. reaffirmations are only good for the leinholder, never the debtor.

I'd seriously consider a different lawyer if one told me to reaffirm.

DB

I dont know about Ohio but I am almost 100 percent positive that here (Cali) only the 1st mortage holder can initiate the forclosure (kinda like 1st "dibs"). The only actions ive seen by jr lenders are filing for judgements once the 1st mortgage is settled if there want enough left over for the jr. But it is really a mute point because even if the junior lender did have the power to initiate forclosure (before the 1st morgate holder took any action) they are getting paid so why bother.