I received my papers from my lender today. In the area that describes the 'Annual interest rate' the lender has put in a APR of 8.398%. This was the APR at the time of the orginal note. The interest rate I'm paying today is 3.75%. I have a varible rate mortage. Should the papers have the original APR or the current APR?
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I see you are from Arizona. Is this a mortgage? If so, why are you even thinking about signing a Reaffirmation Agreement?
Des. -
Des,
I see no reason not too. Arizona is a non recourse/non deficency State for purchase money first mortages. The 9th circuit has leaned somewhat towards a non-retain and pay stance. I do not want it left up to the creditor to decide if they will 'take the house'.
Steve
PS. I was hoping that you would respond. Can you advise me on the orignal question?Comment
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Timber,
The concern over reaffirming in Arizona stems from the language of the lead case coming from the State Supreme Court which interpreted the interplay between the State’s anti-deficiency statute and the statute that allows for an election of remedies. The case is Baker v. Gardern, 160 Ariz. 98, 770 P.2d 766 (Ariz. 1988).
In Baker, the court considered the interplay of Arizona's Anti-Deficiency and Election of Remedies Statutes which allows creditors to elect remedies. The Baker court concluded that when a purchase money deed of trust is involved the anti-deficiency provision prevents a creditor from waiving the security and bringing an action on the note.
However, in a supplemental opinion, the Baker court clarified its initial holding. It addressed the question of whether, under Baker, creditors who made non-purchase-money loans secured by deeds of trust were prohibited from waiving the security and suing on the note. The court noted that the mortgage Anti-Deficiency Statute, only applies to purchase-money mortgages, but the deed of trust Anti-Deficiency Statute, is not limited to purchase-money collateral. As a result the Baker court concluded that if a non-purchase money deed of trust beneficiary chooses to foreclose judicially, the creditor can elect to waive the security and sue on the note. Accordingly, by choosing judicial foreclosure, the creditor can obtain a deficiency judgment in all cases except those dealing with purchase-money collateral on the residential property of 2.5 acres or less.
Based upon Baker, a concern arose that signing a Reaffirmation Agreement could somehow take away the character of the purchase money loan since the debt, but for the Reaffirmation Agreement, would have been discharged. The issue of the affect of a Reaffirmation Agreement as it relates to the character of what was originally a purchase money loan has never been directly decided by the Arizona Supreme Court and I am not aware of any cases from the bk Court.
However, in 1997 the Arizona Court of Appeals, Division 1 (Phoenix division) did decided Bank One, Arizona, N.A. v. Beauvais, 934 P.2d 809, 188 Ariz. 245 (Ariz. App. Div. 1, 1997). In this case the Court of Appeals determined that an extension or renewal of credit did not change the character of the original loan. This decision would tend to support the argument that reaffirming does not take the loan out of the protection of the anti deficiency statute (assuming the loan was purchase money and the property is 2.5 acres or less), however since there is no Arizona Supreme Court case (that I am aware of) specifically addressing the affect of a Reaffirmation Agreement, why would you want to run the risk, no matter how small that risk may be. If, by reaffirming, you somehow turn a purchase money loan into a non purchase money loan (as ridiculous as that may sound) and the lender chooses to foreclose by way of a judicial foreclosure (not a Trustee Sale), the lender just might be able sue for the deficiency (albeit that the suit must be brought within 90 days of the foreclosure). IMHO, just not worth the risk unless you want to end up the test case.
Hope this helps.
As to your question about the interest rate, I cannot answer. My clients do not sign mortgage reaffs and therefore the issue has never come up.
Des.Comment
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Timber,Originally posted by timber View Post
I forgot to address this. The 9th Circuit, until the advent of BAPCPA, was a ride-through jurisdiction. It is still a ride-through jurisdiction as it relates to real property since BAPCPA did not address a reaffirmation requirement for real property (only personal property). A mortgage lender cannot accelerate the note solely due to the filing of the bk and/or a failure to reaffirm. Filing of a bk is not an enforceable default under the terms of the note and/or deed of trust.
Des.Comment
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Des,
OK, if after digesting all of what you have said, and I decide not to sign the reaffirmation, do I need to amend any of my paper work?
SteveComment
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OK,
It looks like I only need to admend form 8, statement of intention.
SteveComment
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You don't even have to do that. A Statement of Intentions is just that, a statement of what you intend to do. Your intentions can change.Originally posted by timber View Post
Now remember, I am just one attorney. My above posts have been my position since 1988 when the Baker decision came out and have not changed with subsequent cases that interpret Baker. I simply do not see any benefit to my clients in the signing of a Reaffirmation Agreement. Some may say the benefit is the reporting on the credit report. Well, there are other ways to reestablish credit and signing a mortgage reaffirmation is not the only way to accomplish the goal.
Des.Comment
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