Why reaffirming a mortgage is a very, very bad idea.

[despritfreya]

When you mention legal fees and it being part of the payoff what does that mean....could they come after me for that?

I am glad I could ease some of your concerns.

A lender will add the "legal fees" to the payoff amount of the lien. This allows the lender (if it so chooses) to set the "bid/redemption" price for any potential buyer who wishes to acquire the property out of the foreclosure sale, at an amount that covers the balance owed on the loan and all additional fees. It just sets the amount of the "opening bid" and has nothing to do with future collection against you.

Hope I explained it so you understand.

Des.

[shadowb]

Hey Des! Thank God you saw this. Yes, it has been discharged and I did not sign any reaffirmation agreement that I recall, for the mortgage. My attorney knew at the time I definitely had no wish to remain there nor could I financially afford it. I am feeling so much better. I was panicking because I read that I live in a recourse state and when I talked to the sheriff's office, they made it a point to reiterate that they knew my ex gave me his interest in the house in the divorce. I didn't do anything with my interest or his for that matter legally. As a matter of fact, I am all for the foreclosure and have no desire to stop it. Before the divorce was final, I tried to help facilitate a short sale and the ex wouldn't produce the paperwork needed for that, so the buyers walked. When you mention legal fees and it being part of the payoff what does that mean....could they come after me for that?

[despritfreya]

To shadowb,

I will assume the Chapter 7 has been Discharged and will further assume that you did not sign a Reaffirmation Agreement for the mortgage. If both assumptions are correct you have no financial obligation to the mortgage lender.

It sounds like you are being served with Judicial Foreclosure papers. Assuming I am correct you should accept service and just let the process move forward as the lender would only be seeking to regain ownership of the property. There should not be any request inside the Complaint for payment of $$ from you personally. The lender may ask for legal fees but that becomes part of the "payoff" for the lien on the property. The lender is simply foreclosing as is its right if payments are not being made.

Des.

[shadowb]

News I think keeps getting worse

This forum is educational. Why the heck wouldn't my bankruptcy lawyer not share this news with me? I just did some research and found out lucky me...I live in a recourse state. From what I understand this means if there is a deficiency, the mortgage company can indeed come after me. I was forced to file a chapter 7 in the middle of my nasty divorce. At that point my ex was countless months behind in payments. And, somewhere in everything between the divorce papers he filed and his modification he did on his chapter 13 he gave me his interest in the house. I told my then divorce attorney I didn't want the house and nothing to do with it because I couldn't afford it and she did nothing to that paragraph and the judge signed the dang court order.

[shadowb]

Oh, I am sorry....this was for another poster whose user name started off with desp. He was an attorney. However, would love some feedback/reassurance if there is any that would let me know that the chapter 7 does protect me as far as the house mortgage company is concerned.

[shadowb]

I have a question for the above poster. I am in an unfortunate situation. I am coming through a nasty divorce. While still married to my slimy ex-hubby we had to get into a chapter 13. In the chapter 13 we were still in our house and paying the house notes. Several months and an affair later which the ex had, he blindsided me with divorce papers which also said he was giving up his interest in the house. Shortly after that I receive in the mail a notice from our mortgage company stating how far behind he was in the payments. I thought he was paying these notes. He wasn't. I had 2 children and at the time nowhere to go. He had left to parts unknown, only to appear for meetings with our attorney. Through the course of this he verbally agreed to pay the mortgage in lieu of spousal support and failed to do so. Financially for me things got quite bad. Somewhere in all of this he hired a new bankruptcy attorney and they filed a motion to split the 13, dropping me off. Our previous attorneys filed a motion to be dismissed citing conflict of interest. I couldn't afford a new attorney. Then after so many days his attorney filed a motion that forced me into a chapter 7. I was able to find a wonderful chapter 7 attorney who did the paperwork and included my mortgage company in the chapter 7. He assured me everything was fine and I wouldn't get stuck holding the bag regarding our house because at that point (10 months later), the ex still hadn't paid the mortgage. I just found out today via phone call from the sheriff's office that the mortgage company has filed paperwork, something about for a default judgement. Apparently because the ex gave up the interest to me, they were serving me for this. I am now worried sick about this. I have no idea what any of this means. I just can't afford to be held responsible for any of this mess he created. I thought the chapter 7 protected me from all of this.

[justbroke]

if you really want to keep the house then don't get behind. if your case is not too complicated go with another attorney instead of paying $3000. at first,my attorney did not want to reaffirm my mortgage in order for my loan modification offer to go through. then i told him that that's what i want, i gave him a lots of reasons and then he agreed to do it.

Under the law, a reaffirmation is not a requirement for a modification (period). If the lender forced you into or coerced you to sign a reaffirmation in exchange for a modification, then they were wrong and the reaffirmation could possibly be rescinded. The lender could actually modify the terms in the reaffirmation agreement so having you do both is coercion to me.

With the sole exception of an (ankle-biting) credit union or small bank compelling the debtor to redeem, reaffirm or surrender (in the 11th Circuit and several other circuits), there is absolutely no financial reason to enter into a reaffirmation agreement.

[ljadams08]

Hi all,
Here's our situation:

*Filed chap 7 in April 2010 and were fully discharged July 2010. Yea!!
*Both FIRST and SECOND mortgages (Wells Fargo) were discharged.
*We live in FL and are still in the home 'saving money'. We have not made payments in over a year. We have been working with Wells for months trying to get a loan mod only to buy even more time. We are WAY upside down with just the FIRST mortgage and DO NOT want to reaffirm this mortgage! Wells just offered us a very affordable TRIAL payment, no signature required, but the first payment is due Feb 1, 2011. This amount is about what we would pay for RENT around here if we moved out now. No terms were listed for the possible perm mod but I'm guessing there will be no principal reduction...due to our family events in the next 5 months (2 weddings and a graduation!) we would LOVE to move AFTER the events.

Questions:
1. Does PAYING a trial payment reaffirm the First mortgage? There are no signatures required on the trial mod docs
2. If it DOES reaffirm the First, is the second mortgage reaffirmed as well?
3. If we didn't pay by Feb 1st, what is the timeline for foreclosure post BK? How soon can we expect to have to be out of the house?

Thanks so much for ANY insight!!!

A few questions:

1. If

[mrslick]

if you really want to keep the house then don't get behind. if your case is not too complicated go with another attorney instead of paying $3000. at first,my attorney did not want to reaffirm my mortgage in order for my loan modification offer to go through. then i told him that that's what i want, i gave him a lots of reasons and then he agreed to do it.

[justbroke]

Larger banks don't play the "Compel to Abandon" game.

[Memphisbelle]

Thanks IBroke and Justbroke, looks like you brokers found each other, LOL

Anyway, so do think the banksters of america would go that route for someone who is just 1 month late or would they go with the usual 90 days late foreclosure policy? I know they can go after the house any time you are in default but it seems it is usually 90 days. Thanks!

[IBroke]

Not a typo. However, they can't do a "normal" foreclosure. They would need to seek an order from the Bankruptcy court to Compel you to Abandon. Once you abandon, you'd be in "actual" default of the terms of the Security Instrument (your Mortgage or Deed of Trust), thereby allowing an "actual" foreclosure.

Ah yes, the legal route some small credit unions took in recent cases but where you still have the option to reaffirm should it really come that far.

[justbroke]

That's a typo, right?

Not a typo. However, they can't do a "normal" foreclosure. They would need to seek an order from the Bankruptcy court to Compel you to Abandon. Once you abandon, you'd be in "actual" default of the terms of the Security Instrument (your Mortgage or Deed of Trust), thereby allowing an "actual" foreclosure.

[Memphisbelle]

Thanks for pointing that out IBroke. I meant to say that if you AREN'T current on you mortgage and you DON"T reaffirm the bank CAN take your house. I don't believe it but it makes me wonder. I will be 1 month behind when I file.

[IBroke]

I heard that if you are current on your mortgage and you don't reaffirm, the bank can forclose.

That's a typo, right?