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

[wsbrothers]

I have question I hope someone can answer:

First the story:

My wife has filed bk7 while we are going through a divorce, we have 3 accounts that are joint, Mortgage, car, credit card. Mortgage company (citi mortgage) will only tell me to keep making payments if I intend on keeping the house (wife is not going to reaffirm) but, they will not be reporting payments to my credit. I have verified that they have not reported for the last two months along with the car loan. Just as a side note the credit card no longer appears on my credit file. Citi has also said that if I didnt want the house that I could walk away free and clear since a bk7 has been filed on the loan. Here are my questions:

1. Is the bank correct in saying that I will not be held liable for the loan even though I did not file a bk, just my wife.

2. If the answer to questions 1 is yes, then what will happen to my credit report or score for that matter if I do walk away. What will Citi report on credit file.

3. If my wife quick claim deeds me the house in our divorce, and I decide to keep the house, will Citi ever report to my credit report that im paying?

[despritfreya]

Myquestions are: 1. Can I walk away from this house anytime as long as the mortgage is not reaffirm? Will the mortgage lender foreclose the house? 2. If the bank foreclose the house, will my credit score show foreclosed on top of BK which is already on my credit report? 3. Will I be able to qualify for FHA loan after 24 month from my BK discharge (6/20/2010)? Or will it starts counting after my current mortgage foreclosed?

Sako,

I can only answer your first question(s) with absolute certainty. . .

Yes, you can walk away from the home since you did not reaffirm and yes, eventually the mortgage lender will foreclose.

As to the other questions -

I suspect a foreclosure can be reported but I am not sure.

It is my understanding that the FHA will not hold a bk against you 2 years after discharge. I cannot comment as to whether or not you would otherwise qualify for FHA financing.

Des.

[sako]

Hi Sricky,
Here is my situation: My BK7 was discharged on 6/20/2010. I had two house prior to my BK7. Both houses were included in my BK7. I let one house foreclosed and kept the other current but did not reaffirmed the mortgage. My questions are:
1. Can I walk away from this house anytime as long as the mortgage is not reaffirm? Will the mortgage lender foreclose the house?
2. If the bank foreclose the house, will my credit score show foreclosed on top of BK which is already on my credit report?
3. Will I be able to qualify for FHA loan after 24 month from my BK discharge (6/20/2010)? Or will it starts counting after my current mortgage foreclosed?

Thanks in advance for answering my questions.
Sako

[captss]

I don't recall signing a reaffirmation agreement for my mortgage and don't see one in my paperwork. If I did, would I be able to find it on PACER?

[larryt]

Thanks to all for the info. We are discharged ch 7 for 4 months. Tried to do an in-house mod with Bank of America, we are about 95K upside down, they requested records for 3 months , then said we didn't qualify, our mortgage was only 28% of our gross (until is adjusts in 2014 to about 38%. We would really like to walk away, see no real options that isn't throwing money away on very hight rent here. Thank goodness we did not reaffirm. Would like to buy and bail, they won't talk about a better interest rate or anything else.We have a 6.5% int only for 10 years. This forum has been a big help to use over the last 6 months.

[BKbills]

Im in CA and my chapter 7 was just discharged which wiped out my $250 2nd. I still have a $510K 1st mortgage through Cahse that we are currently behind on. Since the BK is now discharged will they put us directly into foreclosure? We would like to keep the home is possible, is there another option besides reaffirming the mortgage since we are behind in payments?
Thanks

[bgns56]

I am glad I reread this thread. I was/am frustrated with CITIMORTGAGE in that I thought that since I didnt reaffirm and my BK case was closed (a Year ago this month) that the Mortgage would be "clean" of the BK. I was considering reaffirm steps but see the wisdom of just leaving it alone. Never late on a payment but it galls me that CITI makes it harder to deal with them based on BK laws (thier excuse). So I keep payin for the house and worry about more important stuff..............Like goin fishin.

[bc0kwri]

How long did it take for Wells Fargo to start reporting and did you have to ask them to report your payments. I have a Wells Fargo mortgage and have never been late and intend on keep paying and living in my home. I requested for the bank to reaffim and they denied it. I didn't reaffirm, just kept paying mortgage. Interestingly now Wells Fargo is reporting

Status: Discharged through Bankruptcy Chapter 7/Never late.

So that's nice[/QUOTE]

[overit]

Overit, please seriously consider rescinding the reaffirmation. Even if you stop making payments they still have to follow your states foreclosure laws and no, they cannot change the terms of your mortgage / note. They can't personally come after you for the money, their only recourse post bankruptcy is to foreclose. Just keep on making payments and please don't reaffirm.

I did rescind the reaffirmation. I sent in a letter via certified mail with a return receipt, and my attorney filed paperwork with the court. I had things mixed up in my understanding, and thought that that rules were the same for my car and the house. Once my attorney understood that I was confused, he explained it in an different way. That, combined with what I read more here helped me decide to rescind.

[justbroke]

Than can not pursue you, harass you with phone calls, send you bills or collection letters or demand payment in any way. They can, though, send you an acceleration letter (notice of default) and send foreclosure paperwork. You may walk! It's not even strategic at this point because you already discharged the debt!!!

[sac42375]

Question??? Our BK7 was discharged Nov 2010 our home was included in BK and we continured to pay. We Have NOT reaffirmed (thank god!!) but have now decided on pursuing a strategic default.. We are more than 200,000 underwater and just don't feel any loan mod outside a principle reduction will be worth our while. Now my question is can BofA pursue us with endless phone calls as they normally due in foreclosure proceedings or does the BK prevent them from pursuing us for past due payments?

[Snax]

A 5-year escrow payback plan is what Citimortgage did with us after we completed our modification, pre-ch7.

[BoxerLover]

I am having my attorney put that we want to keep our home on our statement of intentions. We have an escrow advance of about $12,000, but we are current on our monthly payments. They haven't started billing us for the escrow advance account yet because we were in a chapter 13 and they haven't done as escrow anyalysis. I am pretty confident when they do they'll give us 60 months to pay it (I hope anyways). The CSR says that's what they normally do and that if I'm late on any actual payments they'd most likely want to work with me. Will the lender decide if they want us to reaffirm or not, or will they not even bring it up unless we do? It is with Litton.

[justbroke]

Many lenders have been granted final summery judgment of foreclosure and still don't actually foreclose. Nothing is guaranteed these days. If you're willing to play the game, you just have to understand that the rules seem to not make sense anymore.

[Snax]

Perhaps I'm trying to read between the lines too much based on this synopsis -

http://www.loansafe.org/forum/foreclosure-laws/442-oregon-foreclosure-law.html

Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.