My lawyer FORGOTt to Mention!!!!

[justbroke]

So, I have to get back to my initial question. Check this out:

"A Middle District bankruptcy court ruled a couple years ago that a mortgage lender could demand an Orlando, Florida homeowner reaffirm personal liability on mortgage debt. If the debtor refused to sign a reaffirmation agreement then the mortgage lender could take the house just as a car lender could repossess a car if the debtor did not reaffirm the car debt."

http://www.bankruptcyorlando.com/201...reclosure.html

Since I'm in the Middle District of FL, I guess we HAVE TO reaffirm. Now, what happens if - due to this ruling - we want to reaffirm but the judge doesn't approve it?

Technically, yes, but if you read this, it is usually an "ankle-biter" credit union or small local bank that demands this. The case they refer to, but don't actually cite, is from 2009 (I believe). It was a small local bank and they demanded that the debtor reaffirm, redeem or surrender. The debtor ended up reaffirming. I can tell you that since then, and way more often than not, debtors have put "stay and pay" on their Statement of Intentions with no repercussions.

In every case that I know, it really depends on the lender. The order to compel is here. The bank was small (Riverside) and they were complaining about the non-reaffirmation. The debtor didn't even owe much more on the mortgage, relatively speaking. It was just Riverside being an ankle biter.

We are in middle district fl, reaffirmed vehicles, but not the mortgage. Didn't realize there was precedent to repo the house. It's been 4 months since filing, haven't heard anything from chase. We were near the end of the vehicle payments, but just didn't want the mtg obligation, just in case.

There is no precedence to "repossess" the home in Bankruptcy. What the ankle-biter lender did, was go to court and force the debtor to choose reaffirmation, redemption or surrender. If the debtor chose surrender and abandoned the property, the lender could then pursue foreclosure, as their remedy, in State non-bankruptcy court. It was more about forcing the debtor to choose than any mere repossession ordered by the bankruptcy court.

[IBroke]

Technically, yes, but if you read this, it is usually an "ankle-biter" credit union or small local bank that demands this. The case they refer to, but don't actually cite, is from 2009 (I believe). It was a small local bank and they demanded that the debtor reaffirm, redeem or surrender. The debtor ended up reaffirming. I can tell you that since then, and way more often than not, debtors have put "stay and pay" on their Statement of Intentions with no repercussions.

In every case that I know, it really depends on the lender. The order to compel is here. The bank was small (Riverside) and they were complaining about the non-reaffirmation. The debtor didn't even owe much more on the mortgage, relatively speaking. It was just Riverside being an ankle biter.

Thanks for the clarification, justbroke! The fact that they didn't owe much more than what the value was probably took the debtor's "best interest"-protection off the table, too.

So if we file the paperwork with the intention to reaffirm but in the end, no reaffirmation agreement will be executed and the lender has no problem with that, we should be on the safe side. I just wanted to make sure that the lack of an executed reaffirmation agreement wouldn't come back to haunt us at a later point in time - say in a couple of years, the lender could have claimed "oh, there is no reaffirmation so we can simply foreclose on you".

So correct me if I'm wrong, but you are suggesting that it should be our ultimate goal to get through the BK without reaffirmation.

Would we give up any RIGHTS by going with "stay&pay"? Could they foreclose on us any faster without a reaffirmation in case we should have financial trouble at some point or is the procedure the same as on a reaffirmed mortgage? Do we keep the same "right to cure" until a foreclosure happens? Are there any differences between a reaffirmed and non reaffirmed mortgage in regards to my right to assume the mortgage as my mother's heir?

BTW, my mother had terrible back pain over the last couple of days and I'm thinking of taking her to the ER tomorrow..

The 90-day rule prior to filing in order for debt to be dischargeable doesn't apply to that kind of debt, right?

[justbroke]

Let me see if I can provide my answer to your questions.

1. The 90-day rule prior to filing in order for debt to be dischargeable doesn't apply to that kind of debt, right?

   No. However, in order for a reaffirmation to be enforceable, the lender must make noise, file some sort of Motion to Compel, prior to the expiration of the 60 days unless they have cause. I have not seen any case where a lender came after discharge, seeking to get an order to compel reaffirmation, redemption or surrender. In the case that I listed, the Florida case, the lender didn't like the "Pay & Stay" that was on the Statement of Intentions. I would suppose a creditor could complain if you never attempted reaffirmation, but I have not ready any such case.
   
   

2. Would we give up any RIGHTS by going with "stay&pay"? Could they foreclose on us any faster without a reaffirmation in case we should have financial trouble at some point or is the procedure the same as on a reaffirmed mortgage? Do we keep the same "right to cure" until a foreclosure happens? Are there any differences between a reaffirmed and non reaffirmed mortgage in regards to my right to assume the mortgage as my mother's heir?

   No. Remember, bankruptcy rights and non-bankruptcy rights are different. In order for a lender to foreclose, they must follow State "non-bankruptcy" law in order to do so. Whether that motivates them to move faster, in case of default, is anyone's guess. In other words, the procedure and process is the same. You keep all rights! Assumption could be problematic if the debt is discharged; what are you assuming?
   

[Drazil65]

Hi, have to agree with NO REAFFIRM on the mortgage, why would you do that? You are going through the pains of filing bankruptcy so use it to your advantage and a fresh start. Do the pay and stay and if at some point in the future you can not pay the mortgage any longer (job loss or medical issues or whatever) you will no longer be personally liable for that debt.

The student loans will revert back to your name once the bankruptcy is discharged and closed. I understand you hired an attorney to get you through this process but you have a responsibility to yourself to research and find out as much as you possibly can about what the process is and your role in it. How do you know what questions to ask or what is coming next, what is your comfort level with the whole process at this point. This is a life changing (or should be anyway) decision and I cannot imagine not knowing everything I could about it (even just the correct terms and the consequences for each, even in layman terms would help) to feel comfortable with my decision.

Spend some time here and start reading the stickies at the top of each section, search for specific terms and experiences from those of us that have been there done that, it will be worth it. Make a list of questions for your attorney, if you have already signed the reaffirmation papers then ask your attorney to amend. Be proactive and educated it will be in your best interest to do so. There is alot of information here, use it. Hopefully you made several appointments for free consults with attorneys to interview them before you signed on with one so that you have confidence in the one you selected. The right attorney can make or break your case so start asking those questions and get the answers you need to feel comfortable with this process. Good luck and start researching....

[IBroke]

Thanks, justbroke!

Assumption could be problematic if the debt is discharged; what are you assuming?

Well, my ultimate goal would be to stay in our house even if - God forbid - something happens to my mother. The Garn–St. Germain Depository Institutions Act of 1982 would give me - as my mother's son and resident of the property - the right to keep the home by continuing to make the monthly payments. In that case, any due-on-sale clause would be void. So, by not reaffirming, wouldn't I have this crucial option?

[justbroke]

Too much to speculate on. I do not know the affects of a bankruptcy discharge on an assumable note. Assuming that the ability to assume the note is not affected, then it would just work as if nothing happened with the note. If your parent was to pass, is that considered a sale and would trigger the due-on-sale?

I don't know a bunch about assumable mortgages, although I was offered one back in 1996! Depending on the type of loan, it may be non-qualifying such as in my case. (I was going to assume a VA loan.) My query was more about what's the affect of discharge of a debt, on the assumability of the same debt. A question for an attorney who specializes in this area. (I could not find anything on this topic myself!)

[IBroke]

Too much to speculate on. I do not know the affects of a bankruptcy discharge on an assumable note. Assuming that the ability to assume the note is not affected, then it would just work as if nothing happened with the note. If your parent was to pass, is that considered a sale and would trigger the due-on-sale?

What I know so far is that usually, mortgages have due on sale clauses that would be triggered by the death of the homeowner. There are some old mortgages that do not have this clause but the majority of new contracts have them. I assume our mortgage has such a clause because it is relatively new.

The act of 1982, however, enables a close relative who is residing in that house (which would be me) to take over the payments and keep the home. Any due on sale clause would be unenforceable.

I'll have to ask our attorney if it matters if my mother was previously liable for such mortgage (=reaffirmed) or not (=not reaffirmed). If I'd had to guess I would say that the act has more to do with the lien than the personal liability of the mortgage and as long as the required monthly payments are made, the act applies.

[memama]

To the OP,
You said in your original post that all your student loans will revert to the cosigners? This did NOT happen with my husband's student loans. All collections ceased, and his father was listed as a cosigner on all of this student loans. We actually received a letter about 2 months after discharge indicating that our payments were being started again and if they were direct-debit before (from a joint checking acct. my husband and FIL had) then the direct-debit would continue. Well, the direct-debit did NOT continue and we got a nice, hefty bill with late fees Fortunately the debt was only a couple hundred bucks, but I did find it interesting that they were not taking payments while we were going through the bankruptcy. I wonder if our situation was not common?

[IBroke]

Sooo, I had a chance to talk to the lady who is preparing my mother's paperwork. She had a couple of questions and I had a chance to ask her about reaffirmations.

She told me that basically, they never reaffirm mortgages for their clients and when I asked her specifically about my option to assume the mortgage at one point in time, she told me that it wouldn't make a difference if the mortgage was previously reaffirmed or not. As long as the payments are made, I would keep the house.

Once she finalized the paperwork, we will get to their office to have my mother sign everything. I will take this opportunity to ask the attorney one more time - just to make sure.

[pinkpeanut01]

Not trying to muddy the waters, but when DH and I filed, we didn't have to keep paying on our student loans. They were automatically put into administrative forbearance. I wasn't expecting it at all, but we weren't considered defaulted and nor did any unpaid interest accrue like in a deferment. Your mileage may vary, but watch and see what happens from here on in as you might get a break from a few payments as we did.