Stay & pay

[bobertthecat]

I have been reading all of the threads on here about not reaffirming a mortgage after ch 7.
I do not think I will be re-affirming since I owe 67K on the first and 50K on the second. My condo is worth 72K. The only way I'd ever reaffirm is if my second let me settle for a good deal (10% or less) and my first would refinance to a loooow rate. Most likely not gonna happen.
So I am left with the choices of stay&pay vs. not paying/getting evicted eventually-(getting evicted sounds so scary right now).
I am curious what your experiences have been with stay and pay.
If you chose stay&pay...How long can you do this? Is there some point (say after 5 years) that you have tacitly re-affirmed your mortgage? would it be possible to stay and pay until the value of the condo makes it feasible to re-affirm?
Thanks ,
H.

[justbroke]

If you chose stay&pay...How long can you do this? Is there some point (say after 5 years) that you have tacitly re-affirmed your mortgage? would it be possible to stay and pay until the value of the condo makes it feasible to re-affirm?

Until the time that you sell the place, refinance the place, or "abandon" the place... whichever comes first. There is no such thing as a phantom reaffirmation and every court that I have read opinions for continuously rule that a reaffirmation cannot be done after the discharge (the so-called "back-door" reaffirmation). The only way to create a new obligation post discharge, is to actually create a new obligation!

If you chose stay&pay...How long can you do this? Is there some point (say after 5 years) that you have tacitly re-affirmed your mortgage?

So, to answer your second question see my answer to the first question. You can not reaffirm any debt post discharge (period). If the place appreciates, you settle with the second for a good deal (10% or at least a little over the "security" that they do have), and you're feeling good... JUST KEEP PAYING. No need to create a new obligation unless you are sure about it. If the interest rate isn't that bad, then I would probably keep the original loan terms and just try to pay down the mortgage quicker.

You are probably not in a bad position overall, if you want to negotiate with the second. They have $6-7K of "security" right now (even though it's under-secured), but you may be able to negotiate for $6-7K plus maybe 10% of the difference (another $4-5K).

Your problem right now is that there "may" be enough equity for the second to start foreclosure proceedings so that would always be hanging over you, should you choose to stay. As the place appreciates, the second would have more incentive to foreclose.

There are strategies for this and if you search BKforum, you'll see some excellent insight into the process of negotiating the second after a Chapter 7 discharge.

[tcreegan]

Hi bobertthecat,

Doesn't sound like you are too attached to your condo...the 'stay and not pay' might be a good option. I did a quick glance at WA foreclosure process and it takes 6 months minimum, and the BK delays that by a couple more months, and the lender may not be in any hurry to foreclose. Take your mortgage payments and use them to fund your post-BK life, you are looking at 8, 10, maybe more months of payment/rent-free living. The getting evicted part doesn't have to be scary, you have 20 days to vacate after the foreclosure sale.

Nice you have options, keep us posted!

Tom in Colo

[Pandora]

the bigger concern I'd have is that you are so close between your 1st and 2nd on balances that even without reaffirming (which as everyone has stated, is not recommended) - unless you can settle that 2nd relatively fast - once you start paying down the 1st and it decreases - the 2nd will/may enact their right to foreclose.

Something to think about....

[BKlooker]

I agree with tcreegan, if you aren't attached to the property emotionally, stay & pay is likely best since you are way upside down on it, and likely won't be recovering that value in any reasonable amount of time.

I am effectivly doing a stay & pay on my condo, which is also upside down, and plan to ride things out with the BK and save money so i can find a place to move once they finally foreclose on it. In my state, the average time it's taking them has been steadly increasing as they changed the laws to add some extra hurdles for the to fully foreclose, and my lender has been known to move exorbantly slow. Keep in mind they don't always sell these homes on the first try, especially given the overstock/backlog of foreclosures and the terrible climate for buying homes in general.

You may be in that home for well over a year or more without paying a dime in mortgage. My lawyer says his clients are currently averaging 13-14 months before actual 'eviction', and has 3 that have been in their homes over 2 FULL YEARS now and still no sign of a sale.

Like other people said, as long as you keep paying, they have no reason to evict you. In this climate, they are happy to just have warm bodies in the home to take care of the upkeep and pay every month, even without a firm agreement. Why would they put you out if you are giving them money every month?

[Chowder]

The only way to create a new obligation post discharge, is to actually create a new obligation!

The big question is, does a mortgage mod create that obligation.

Sorry for the hijack.......

[justbroke]

The big question is, does a mortgage mod create that obligation.

Absolutely, categorically... NO. As a matter of fact, the "smart" lender will make sure to include language stating that it's not a reaffirmation and not a new obligation. This is because a modification only "amends" the prior promissory note. Even if it contained new terms or a new principal balance, it does not create a "new" obligation.

What I wrote doesn't mean that some lender wouldn't try to tell you, later, that you signed up for new debt. The only way that's going to happen is that you completed an ENTIRE mortgage closing package. My modification paperwork was 2 pages with one signature! Big difference in the paperwork.

[Chowder]

What I wrote doesn't mean that some lender wouldn't try to tell you, later, that you signed up for new debt.

WHich is kind of where I was going....BoA likes to say continuing to make payments IS reaffirming. And even though their mods usually contain some loose verbiage alluding to not changing discharge status, I'm betting it wouldn't stop them from making threats later on.

[justbroke]

BoA likes to say continuing to make payments IS reaffirming. And even though their mods usually contain some loose verbiage alluding to not changing discharge status,

The nice thing is that if you are like me and filed pro se , you would POUNCE all over them if they ever sent one letter threatening to or actually trying to pursue the collection of the discharged debt. That would be contempt in violation of the discharge injunction. I would love for them to do it to me! I have some spare time.

[bobertthecat]

thanks for all of your helpful responses. I am really not attached to my condo. (Its 40 miles from my office and the walls are thin enough that I can hear my neighbor cough.) The stay and NOT pay option is looking better and better.

[Freddy03]

the bigger concern I'd have is that you are so close between your 1st and 2nd on balances that even without reaffirming (which as everyone has stated, is not recommended) - unless you can settle that 2nd relatively fast - once you start paying down the 1st and it decreases - the 2nd will/may enact their right to foreclose.

Something to think about....

I have a question about this since I'm going to "pay and stay".

So even if you are current on the 1st and 2nd and have been paying for years and now have equity what prevents either of them to start the foreclosure process? Anything?

My plan is to pay and stay and after discharge try to a non recourse loan mod and hopefully live happily ever after (in the house)

Thanks

[Faust]

I have a question about this since I'm going to "pay and stay".

So even if you are current on the 1st and 2nd and have been paying for years and now have equity what prevents either of them to start the foreclosure process? Anything?

My plan is to pay and stay and after discharge try to a non recourse loan mod and hopefully live happily ever after (in the house)

Thanks

Unless you live somewhere were prices are stable like San Fran or New York City, I highly doubt any lender would move to foreclose on a property that has payments that are current. They have enough to do with people who are not paying.

[Chowder]

...... have equity .......

You sure you want to dangle that cheddar?

[Pandora]

I have a question about this since I'm going to "pay and stay".

So even if you are current on the 1st and 2nd and have been paying for years and now have equity what prevents either of them to start the foreclosure process? Anything?

My plan is to pay and stay and after discharge try to a non recourse loan mod and hopefully live happily ever after (in the house)

Thanks

I dont believe as long as you are current on BOTH mortgages - regardless if reaffirmed or not - that they could just up and decide to foreclose due to equity - so no to that question. However, if you do not pay your 2nd for whatever reason, reaffirmation or no - eventually if the house gains equity and/or you're paying down the 1st - then yes, the 2nd can foreclose later. Or at least thats my understanding of how it all works

If I'm incorrect - someone feel free to correct.

[Freddy03]

I dont believe as long as you are current on BOTH mortgages - regardless if reaffirmed or not - that they could just up and decide to foreclose due to equity - so no to that question. However, if you do not pay your 2nd for whatever reason, reaffirmation or no - eventually if the house gains equity and/or you're paying down the 1st - then yes, the 2nd can foreclose later. Or at least thats my understanding of how it all works

If I'm incorrect - someone feel free to correct.

Thanks that's what I was thinking also.