Mortgage being reported Incorectly question

[the1adman]

Hi my ch. 7 bankruptcy was discharged on 12/20/10. Ive been working since January to fix errors on my credit reports. Included in the bankruptcy was one of 2 homes a 1st mortgage with bofa and a second mortgage with green tree. Our primary residence home is with bofa as well and was not listed or included in bankruptcy but they are reporting it as included in bankruptcy with no payments being made in 10 months. I filed a correction complaint with all 3 credit bureas and was told it is correct. I have called bofa and they told me that even though the loan wasnt included it is attached to my name and that bankruptcy law allows them to report it as included in bankruptcy. I went all the way up to the credit reporting dept manager. This has to be incorrect according to everything I have read. What can I do? Thanks in advance...

[ka2sie]

I think as long as it shows Included in bankruptcy with $0 balance its correct. They cannot keep reporting on it negatively every month though. Were trying to fix a BOfA credit card that they keep reporting as charged off but was IIB 2 years ago. Good luck

[the1adman]

Thanks ka2sie, but we have always made payments on this mortgage and still do. We are always early never been late. So how can they list this mortgage as iib and no payments for 10 months. From some research Ive done, my lawyer didnt have me sign a reaffirmation agreement and just listed retain and pay on the bk form. So even though we are keeping this house and have always made payments can they list this account as debt IIB with no payments made? If so is there any way to fix it so I get proper credit reporting for made payments on my credit reports?

[ka2sie]

Oh ok sorry I misread the question. I know that we were getting the same thing on our credit reports.. we had a joint vehicle loan which re reaffirmed during BK and when we checked our report it was marked as " IIB" with no payments being reported but also said " paying as agreed" we have never disputed it since we traded in the car a year or so after bk for a new one. If its a mortgage and your currently still paying on it i would dispute it with the 3 credit burerus and put in the notes part " reaffirmed debt/loan up to date on all payments or call the lender directly and ask them to change it with all 3 bureaus.

[Amy26]

If you did not reaffirm the loan then they have every right to list it as IIB and 0 balance and that is how it should be. Because technically the loan does not exist. It was discharged in your bankruptcy... the only way to "not include it and retain it" is to reaffirm it. And if you didn't, then the loan was included in your bankruptcy. They are just being nice and letting you keep it if you still make payments. By law, they could still foreclose on you if they wanted to. But, generally when you do a ride through you are ok as long as you pay on time.

On the flip side, if you ever want to get out of that home all you have to do is stop paying on it and walk away. They cannot do anything about it.

So, unfortunately when you don't refaffirm a debt this is how it reports. Even if you keep making payments on it most lenders will never report you as paying as agreed because you didn't agree, you BK'd the loan.

Similarly, I had a car that I actually did want to reaffirm and keep that I had purchased 3 months before I filed. My lawyer was a ding bat and they didn't file my reaffirmation papers on time and the loan was never reaffirmed. So, after my discharge the loan was IIB and zero balance even though I was paying on it. I did not want to keep a car with a loan for 5 years and not have it report positively on my credit report so I called them up and told them to come get their car and I bought a new one.

[considering7]

Our primary residence home is with bofa as well and was not listed or included in bankruptcy...

I hear a lot people saying that certain loans or lines of credit were "included in bankruptcy" or "not included in bankruptcy". Is this a legal term? My lawyer had advised that EVERYTHING must be included in the petition. It was as if I didn't have a choice to leave an account off of the bankruptcy. Am I misinterpreting what he said? (BTW, mine was a non-consumer Ch7 if that makes a difference)

[IBroke]

I hear a lot people saying that certain loans or lines of credit were "included in bankruptcy" or "not included in bankruptcy". Is this a legal term? My lawyer had advised that EVERYTHING must be included in the petition. It was as if I didn't have a choice to leave an account off of the bankruptcy. Am I misinterpreting what he said? (BTW, mine was a non-consumer Ch7 if that makes a difference)

Your attorney is right. If you owe something, it is part of your CH7 BK. You don't have a choice - all debt at the day of filing is included.

What you are referring to is the possibility that a loan was obtained after the BK-filing or paid off prior to the BK-filing. In this case - logically - the loan/debt was NOT IIB.

[the1adman]

So since my mortgage wasnt reaffirmed and we want to keep this house and have no intentions to ever leave or sell. What can I do to make sure I have a legal right to keep it since it was IIB and to get reported on my credit since we have 27 years of the mortgage left and I need to rebuild my credit?

[HHM]

The loan and the lien (deed of trust or title) are different things. The BK only discharges the loan. YOU are still the owner and the bank simply has a security interest in the event you stop making payments. The house is yours.

Don't worry about your credit report. Your score will recover in about 2-3 years regardless if the mortgage is reporting. Also, if this is the ONE house you intend to keep, then your credit really doesn't matter. For other types of consumer loans, CC's and car loans, you will be just fine.

In the event you ever do need another mortgage, the mortgage broker can do what is called a "Rapid Re-Score" which re-scores your credit "as if" the mortgage payments were recorded.

Don't worry, you do not need the mortgage payments to rebuild your credit.

[Amy26]

The house is only theirs if they pay it off... if they stop making payments on it before the loan is satisfied they will foreclose. Hense people that do ride throughs and then let the bank take it back afterward.

[IBroke]

The house is only theirs if they pay it off....

I think what HHM posted is technically more accurate. The house IS already theirs and it only becomes the bank's house in case of a foreclosure. As I said, it's a technical question..

[Amy26]

Hmmm ok guess I'm still confused... cause I thought he was saying the house was still theirs if they stopped paying. But I could just be reading it wrong.

[IBroke]

Hmmm ok guess I'm still confused... cause I thought he was saying the house was still theirs if they stopped paying. But I could just be reading it wrong.

I guess HHM was trying to say that the house still belongs to the OP although the loan wasn't reaffirmed.

[HHM]

When you buy a house, even with a mortgage, YOU own the house. The bank just has a security interest. A security interest gives the bank to the right to TAKE OWNERSHIP in the event you stop paying. A BK discharges the loan, but not the security interest. Reaffirmation agreements only go to brining "the loan" back to life. Meaning, if, in the future, the homeowner defaults, the bank can pursue the homeowner for the deficiency (assuming a recourse state) and the IRS can tax the deficiency if the bank forgives it.

However, regardless of reaffirmation, if the homeowner stops paying, the bank gets the house back.

[IBroke]

When you buy a house, even with a mortgage, YOU own the house. The bank just has a security interest. A security interest gives the bank to the right to TAKE OWNERSHIP in the event you stop paying. A BK discharges the loan, but no the security interest. Reaffirmation agreements only go to brining "the loan" back to life. Meaning, if, in the future, the homeowner defaults, the bank can pursue the homeowner for the deficiency (assuming a recourse state) and the IRS can tax the deficiency if the bank forgives it.

However, regardless of reaffirmation, if the homeowner stops paying, the bank gets the house back.

Yep, that's exactly how it works. I found out that my deficiency after the foreclosure was forgiven only because the IRS send me a nice letter. Fortunately, the mortgage forgiveness act applied.