Chapter 7 and reaffirmation

[jubilee]

I really hate posting a question if the answer is out there, but I think I've been looking for 2 hours and cannot find what I'm looking for.

Hubs and I filed Chap 7 in November. Spent over a year trying a mortgage modification with Chase, ha ha I know that now. During most of that time, we were told over and over to not pay the mortgage by Chase because it changes the numbers they are trying to work with and they have to re-do the paperwork, so needless to say, we are severely behind on our mortgage (I think 11 months at this point). Had our 341 last week, report of no distribution received on pacer.

Atty emailed FINALLY a copy of the reaffirmation agreement that Chase sent. Their terms are about 15K more than the balance on our mortgage with the same interest rate and payment amount as pre bk filing. It states that payments are to begin October 1 2009. (??) Which I assume when the paper was filled out was our due date (we've made a few payments since this form was sent to our atty).

What are the benefits of signing this form, if any? And what will likely happen if we do sign?

What are the cons to signing?

We want to stay in our house and the unemployment situation that got us in trouble has been rectified so we can make our payments and plan to make extra payments to catch up, but it will probably take 12-18 months to get completely caught up. I am SO confused by the agreement and why they would state for payments to begin October 2009? Wouldn't that be absolutely NO different (essentially) than we are right now and the minute we sign the agreement we are already in default of the terms of the agreement since we cannot go back to October 2009 and make payments.

Your help is VERY GREATLY appreciated. Our atty has turned out to be a big dud and we basically felt like we were grinning and bearing it through the 341 when our relationship basically ceased.

[Pandora]

do NOT reaffirm the note - you can simply continue to pay the mortgage on time every month and continue to live there. If however, you reaffirm that note - and something happens down the line (another job loss, serious illness, etc) - you will be on the hook for the entire amount.

[sjades]

Having a retroactive due date sounds a little fishy to me. I would question that (like when do the payments REALLY start…now if it’s worded differently saying that they’re asking for payments retroactive to 10/2009 that’s another story, but to say they’re due back then…it seems off). Can you possibly hire another attorney to look over the papers, if you feel more comfy with that?

[discouraged]

Do you have a state or City sponsorerd Making Home Affordable Office? For example, the City of St Paul (where I live) has an office that works with mortgage companies, free of charge, on your behalf. They were willing to help me but the unemployment has gone on too long and they can't, especially since I sitll do not have a job.

Otherwise, try Lutheran Social Services. I believe they are authorized to help also. These folks have speical programs just to help in this situation. I think that not paying for so long may jeapordize things, but not sure.

The retroactive date sounds fishy to me too. Since you haven't paid, they have recourse to foreclose. Just be careful and investigate all avenues before believing anything the mortgage company tells you.

[tcreegan]

Hi jubilee,

I would worry about the back-dated payment due...like you said, you are immediately in default. I wouldn't sign unless they explicitly put the arrears on the back end of the loan or a litttle extra on the payments for X months to get caught up.

The other factor is going to be your discharge, once that gets entered the reaffirmation goes out the window. And you should be close to discharge, might not have enough time to get the reaffirmation done before discharge. And even if you do, your attorney or the judge has to approve it.

Reaffirming is generally not a great idea, if you stay current on the loan the lender is not going to foreclose. The sticking point in your case is getting the late payments caught up.

The other variables to consider are the recovery of your local housing market, terms, equity, condition of the house....personally I wouldn't reaffirm unless it was a newer house, at least 5 digits of equity, 2% to 4% fixed interest, and a market predicted to recover in the next 10 yrs.

Good luck with this,

Tom in Colo

ps: important to stay in contact w/ the lender. They have restrictions on contacting you, so you contact them.

[jubilee]

Thanks everyone. I'm researching avenues to help us out on this without reaffirming. Our attys office contacted us on Friday to let us know that we were on an "old" agreement and our atty actually WOULD sign the re-aff if we choose to (before she said as of the 341 their services were done, which is their new contract). But, of course we don't agree with the re-aff so...we would still need negotiations on it.

Tom- we've tried contacting the lender....they won't talk to us. Will they now if we say we are no longer represented by an atty??

I hate all this stress and I'm not good at living in an "un-known world" guess I should get more used to it.

Thanks again....I'm sure I'll be back with more questions!

[tcreegan]

Hi jubilee,

Tom- we've tried contacting the lender....they won't talk to us. Will they now if we say we are no longer represented by an atty??

Probably yes, talking to you directly would be talking behind the back of your lawyer, a professional faux paus. Fire your attorney, then they can speak freely to you w/o burning any bridges.

Good luck it!

Tom in Colo

[OhioFiler]

Unless you have reasonable equity in your home (to the extent it is financially a good foreclosure situation for the lender) there is no real benefit to accepting a reaffirmation on your mortgage.

If you don't have equity the decision to reaffirm creates too much risk as any loss incurred by the lender in the event of a future foreclosure will follow you as unsecured debt for a long time (in most states).