To reaffirm home or Not reaffirm Mortgage

[Keebler]

Keebler - how did it go? What was asked?

Just got home and I need to head of to work.

The whole hearing was surreal. We got there with ten minutes to spare and my attorney barely said anything to me. (I wasn't too interested in small talk either.) We then sat and waited while a few attornies shot the breeze.

The people before me reaffirmed an engagement ring they bought under their name for a Brother-in-law.

We were the last ones to get called before lunch and the judge was in the mood to be long winded. I litterally said nothing and stood there as he delivered a sermon on how reaffirmation should never be allowed and he's against it. My attorney chimed in saying "I don't even know why I should bother filling out these things" as she motioned toward the paperwork.

He went on and on and on about the economy and how more companies will be failing and how nobody is safe. His whole point was how he's somehow giving me a fantastic gift by NOT letting me reaffirm.

At one point in his sermon he asked hypothetically if I really wanted to reaffirm and I just shrugged my shoulders while my wife and attorney were shaking thier heads "no". I really wanted to argue my reasons for reaffirming but I decided it wasn't worth it.

So, we'll keep making payments and keep living here for as long as we'd like.

My bet is that some day in the future something will happen, like trying to sell the place, and we'll find that the lack of a mortgage will cause us some different kind of trouble instead. But, we'll just have to deal with that when it happens.

[happy_ira]

EXACTLY!

My hearing is scheduled for tomorrow morning regarding the presumption of hardship.

Keebler - how did it go? What was asked?

[Keebler]

Not speaking from experience but only from what I have read...

The reaffirm agreement must be signed not only by you and the creditor, but your lawyer must also sign and certify that it is not an undo hardship. If you are showing negative on your schedules and you are trying to reaffirm, a judge MAY decide to schedule a hearing, in which case you would have to explain why this is not a hardship.

Even if a hearing was scheduled, it doesn't mean that the UST will take a renewed interest in your case.

EXACTLY!

My hearing is scheduled for tomorrow morning regarding the presumption of hardship.

[laurannm]

Not speaking from experience but only from what I have read...

The reaffirm agreement must be signed not only by you and the creditor, but your lawyer must also sign and certify that it is not an undo hardship. If you are showing negative on your schedules and you are trying to reaffirm, a judge MAY decide to schedule a hearing, in which case you would have to explain why this is not a hardship.

Even if a hearing was scheduled, it doesn't mean that the UST will take a renewed interest in your case.

[happy_ira]

Anyone??

[happy_ira]

bump... for my question above on info on a reaffirmation hearing??

[happy_ira]

reaffirmation hearing?

Here's a follow-up question:

Let's assume that the mortgage company is very aggressive about "signing a reaffirmation" (or something like that), and one decides to do so. If the ONLY thing one is reaffirming is a real property (i.e., mortgage) loan, does this require going before a judge and being questions/certain that it is not an "undue hardship"?

Reason I ask is because in my situation, I do NOT want to drudge up everythign since I've managed to get both the Bankruptcy Trustee and the US Trustee to drop the case and they are no longer interested. However, I do intend to keep my home and keep making payments. BUT if the mortgage company becomes aggressive about my signing the reaffirmation (or else!!), then will this somehow get "re-opened" at a reaffirmation hearing with a judge prior to the actual discharge?

Anyone know what occurs in such an instance?

Thanks.

[HHM]

Here is my take

1. Courts have almost universally affirmed that "default on BK" clauses are unenforceable.
2. Keep in mind, if you do not reaffirm a mortgage, your personal obligation on the debt is discharged; thus, only the lien survives. As a result, under state law, the only remedy foreclose a lien is non-payment. All other clauses of the mortgage contract are essentially discharged. At that point, only non-payment can trigger a foreclosure.

[happy_ira]

Wait a second... question: What about so-called adhesion clauses that are present in *most* home mortgages? You know, the ones that state something like "Hey, you are considered to be in Default if you file a bankruptcy (and 13 other reasons usually listed like not making payments, etc.).."

Any thoughts? I am in a similar position as Mi and others (and my mortgage also happens to be with Wells Fargo). My attorney highly recommended NOT signing the reaffirmation (unless they come knocking furiously before the discharge or file a motion prior to discharge). That said, can they or can they not wake up in 5-10 years and say "Hey, this house is ours based on the loophole that you have a discharged bankruptcy... blah blah blah."

??

Anyone?

[happy_ira]

Mi - in addition to the posting here which I would liek to get input on my latest comment from HHM and others abotu the "adhesion clause"), I sent you a private message: http://www.bkforum.com/private.php

[Mi Bankruptcy]

I know..It can drive you nuts...Everything(inside) tells me to not reaffirm. However, do I really want to roll the dice and make my situation worse. There is absolutely no way I can find a home or apt for what I pay for my mortgage. It is escrowed for insurance and taxes too.

[happy_ira]

If the lender does not file anything in the BK, and you get your discharge, the lender cannot foreclose based solely on the fact that you failed to reaffirm. (just keep making your monthly payments on time and in full).

Wait a second... question: What about so-called adhesion clauses that are present in *most* home mortgages? You know, the ones that state something like "Hey, you are considered to be in Default if you file a bankruptcy (and 13 other reasons usually listed like not making payments, etc.).."

Any thoughts? I am in a similar position as Mi and others (and my mortgage also happens to be with Wells Fargo). My attorney highly recommended NOT signing the reaffirmation (unless they come knocking furiously before the discharge or file a motion prior to discharge). That said, can they or can they not wake up in 5-10 years and say "Hey, this house is ours based on the loophole that you have a discharged bankruptcy... blah blah blah."

??

[happy_ira]

The key is, you have time. You can reaffirm at any point before discharge.

If it were me, I would wait and see if the lender does anything. If they file a motion in your BK, THEN you can reaffirm. No need for you to make the first move. If the lender does not file anything in the BK, and you get your discharge, the lender cannot foreclose based solely on the fact that you failed to reaffirm. (just keep making your monthly payments on time and in full).

I am in complete agreement with HHM based on firsthand experience as a Ch 7 filer and received the same precise advice from a very experienced attorney.

[Mi Bankruptcy]

If this is your main concern, that if you die or are disabled, your wife would be stuck with the debt, then get some life and disability insurance.

If I'm getting this right, you're current.

While the "lenders don't want your home" line is untrue (the truth is they don't care one way or another), it's highly unlikely Wells is going to be instructed to begin foreclosure because you didn't re-affirm... in MICHIGAN!

Now, should you subsequently default, then it could get a little tricky trying to do anything but a full re-instatement, but that depends on a whole host of other factors.


You're acting like a "maximizer" when you should be a "satisficer."

Google those terms if you'd like further explanation.

Bottom line, you're torturing yourself with "what if's."

Stop it!

There is no "perfect."

Make your best decision with the info you have, and get on with the business of getting back on your feet and moving forward.

Best of luck.

R.M... Although I appreciate you input I respectfully disagree with your conclusion. I am a balanced combination of both. In terms of the welfare of my family I am a "maximizer". However, I am generally a "satisficer"

My final decision is based on this. Reaffirm because my wife has not been in the workforce for 7 years and has no hardskills to immediately fall back on IF something did happen to me.She a resourceful women and could make things work in the end.

My home is still worth more than I purchased it for. Additionally, because I was a "maximizer" when buying my home this help me from falling into the trap of Adj rate mortgages and taking the higher fixed rate.

R.M. By all means Bankruptcy & Bankruptcy planning is not the place to be a "satificer".

[laurannm]

From a practical sense, why would a lender want your home if say 5-10 years from the now the market has rebounded? If you have been making your payments on time, chances are they will make alot more money continuing to accept your payments (and all of the interest) then they will foreclosing your house. Plus as HHM as said, they cannot foreclose strictly because you didn't sign a reaffirm. You would have to default on the loan (i.e. late payments) in order for them to foreclose.

One other option would be to refinance when/if the market rebounds and you have equity in your house (assuming you have been dilligent about rebuilding your credit when the time comes).

Another thing I also remember reading about is that the BK code only mentions personal property when it comes to reaffirming, and not real property.

And lastly, I remember reading something about a "doctrine of laches", which I think is a legal term that says that a plaintiff (i.e. the lender) cannot sit on their rights for a long period of time and then try to exercise those rights at the 11th hour.