Florida reaffirmation laws -- lawyer making me nervous

[baker21]

We filed in July, had our 341 on 8/20/13. We have completed the reaffirmation agreement for our car. We bought it in May knowing we needed a reliable vehicle and knew we'd reaffirm. That was a no brainer.

The question is regarding our home. We plan on staying here indefinitely, but know the downside of reaffirming and don't want to reaffirm. However, our lawyer is making me nervous stating that the bank could foreclose if they really wanted the house (unlikely these days) and think they can make money on it. The specifics are:

1st mortgage with Fifth Third: $193,690
2nd (Heloc) with Suntrust: $23,120
The house value is approx. $200k, however the Fifth Third reaffirmation paperwork shows $252k (??)

What exactly are the Florida laws regarding NOT reaffirming and going the Stay and Pay route? Would we truly be at risk from either Fifth Third or Suntrust?

Yes, I'm a worry wort

[baker21]

Let me add that we have never been late with a payment to either Fifth Third or Suntrust.

[LadyInTheRed]

I don't know about FL law, but you should first check your mortgage agreements to see if filing BK is a default. If it is, the next question is whethet that is enforceable under FL law. Based on what your lawer told you, it sounds like it is.

I have yet to hear of a bank foreclosing when payments are kept current. Your lawyer has to tell you what is possible. That's not the same as what is likely. The banks have plenty of homes to foreclose on. They'll make more money from you by letting you continue to make paymemts.

[jst4f]

I don't see why a bank would foreclose if they are getting paid each month. It simply would not show up on their radar as a problem to be resolved. Even if they wanted to, they know you can quickly sell it if there is equity so they won't benefit. Why force a short sale if they are getting paid? Keeping paying on time each month and stop worrying.

[stevie2012]

I am in FL and was NOT allowed to reaffirm. But I have zero equity in my place.

[AngelinaCat]

I found nothing in the Florida Statutes about having to reaffirm a mortgage.

As other posters have said, it is unlikely that the bank would foreclose as long as you are making payments in full and on time. There are too many vacant homes that have NOT been foreclosed on. The bank really doesn't want any more on their hands.

Whereabouts in Florida are you?

[IBroke]

The has been a case in Florida involving a small CU where it was actually ruled that the CU could foreclose IF the debtor was unwilling to make a selection on the statement of intention (surrender, redeem or reaffirm). If I recall correctly, the CU rejected "retain and pay" and insisted on one of the other three choices. Now, if you actually indicate that you are willing to reaffirm and either the judge, the lender or your attorney don't execute/approve a reaffirmation, I highly doubt you are going to lose your property as long as you continue to pay your mortgage.

In our case, we indicated that we wanted to reaffirm but the lender never followed up, probably due to the fact that no judge would have approved it in the first place.

[despritfreya]

Florida is in the 11th Circuit. There is old case law that prohibits the "ride through" as an option. There is also newer case law that links the old case law to mortgages under BAPCPA (bk law that went into effect 10/05). If the lender wants the reaff but the borrower refuses then the lender will be free to foreclose even if payments are current. HOWEVER since foreclosing is unlikely if payments are current, entering into a reaffirmation agreement seems too risky. Florida is a recourse state. If you reaffirm and then cannot pay, the lender will be free to foreclose and then go after you for the balance on the loan.

Ask your attorney if the bk judges have carved out a way to get around the reaff process. In my state, judges routinely deny Motions to Approve the agreement. Once denied, so long as payments are made, the property insured and taxes (if applicable) are paid, the lender is stuck. The law requires a debtor to act on their intention to reaffirm by signing the agreement. The law does not require that the agreement be approved by the court. Bk judges do not like reaffirmations because entering into such agreements defeats the purpose of the “fresh start” a debtor is suppose to get so they tend to find ways around the problem.

Des.

[ellis2156]

I am in Florida and was told by my lawyer to re-affirm. Pacer shows reaffirmation paperwork filing by my lawyer. Would I get anything from the bank or court, once the case is closed that states I re-affirmed?

[IBroke]

Florida is in the 11th Circuit. There is old case law that prohibits the "ride through" as an option. There is also newer case law that links the old case law to mortgages under BAPCPA (bk law that went into effect 10/05). If the lender wants the reaff but the borrower refuses then the lender will be free to foreclose even if payments are current. HOWEVER since foreclosing is unlikely if payments are current, entering into a reaffirmation agreement seems too risky. Florida is a recourse state. If you reaffirm and then cannot pay, the lender will be free to foreclose and then go after you for the balance on the loan.

Ask your attorney if the bk judges have carved out a way to get around the reaff process. In my state, judges routinely deny Motions to Approve the agreement. Once denied, so long as payments are made, the property insured and taxes (if applicable) are paid, the lender is stuck. The law requires a debtor to act on their intention to reaffirm by signing the agreement. The law does not require that the agreement be approved by the court. Bk judges do not like reaffirmations because entering into such agreements defeats the purpose of the “fresh start” a debtor is suppose to get so they tend to find ways around the problem.

Des.

Thanks for the detailed info, Des. That was the scenario I recalled.