Don't Reaffirm Mortgage

[kingmartin06]

I am in the process of a loan modification right now, I am awaiting on the final paperwork for the loan modification, I was planning on getting that worked out and finalizing the final paperwork, however am also thinking of bankruptcy by November. What happens if I don't reaffirm the mortgage in a chapter 7, how likely is it that the lender will make you reaffirm the mortgage? I would prefer to keep paying to stay without reaffirming which I have read a lot of people do.

[justbroke]

No one can make you reaffirm a mortgage. At least in the 11th Circuit Court of Appeals (Florida, Alabama, Georgia), the relevant case-law is Taylor v. AGE Federal Credit Union (In re Taylor), 3 F.3d 1512, 1517 (11th Cir. 1993). While it may not influence Texas bankruptcy laws, it's still interesting. Florida still uses the In Re Taylor case and it even became more interesting late 2015 in a case named In Re Lapeyre, 544 B.R. 719 (2016).

The key really is whether your lender will complain. Large lenders usually don't care so long as you actually "pay" to "stay". I used a strategy in my Chapter 7, here in Florida, where I received a permanent modification as part of my Chapter 7. I had asked my bank for a modification so that I would be current (because I was converting a Chapter 13 with arrears). To my disbelief, they said yes and did the modification without any "trial period" and did this all before the discharge! Your mileage may certainly vary, but there are willing banks (mine was Bank of America).

I can't tell you how this is treated in Texas and your Appellate Circuit. The 11th Circuit and Florida have recently heated up on this issue with a cuople of lenders (one of them was Wells Fargo), pushing this issue. In the past, only the ankle biting Credit Unions (CUs) pursued this. However, the banks are trying to clear their foreclosure backlog here in Florida and trying every single tactic to make sure the debtors can't fight the foreclosure lawsuit if the debtor didn't reaffirm (or redeem) a mortgage.

(If anyone is wondering, that case In Re Lapeyre, 544 B.R. 719 (2016) is based on Failla v. Citibank, N.A., 542 B.R. 606. The banks are getting "smart" and aggressive with the foreclosure of a property that was "surrendered" in bankruptcy and the Bankruptcy and District Court judges are listening in Florida.)

So, the answer to your question is that for Texas, I really can't answer. But I thought that the Florida cases are becoming more interesting.

[kingmartin06]

No one can make you reaffirm a mortgage. At least in the 11th Circuit Court of Appeals (Florida, Alabama, Georgia), the relevant case-law is Taylor v. AGE Federal Credit Union (In re Taylor), 3 F.3d 1512, 1517 (11th Cir. 1993). While it may not influence Texas bankruptcy laws, it's still interesting. Florida still uses the In Re Taylor case and it even became more interesting late 2015 in a case named In Re Lapeyre, 544 B.R. 719 (2016).

The key really is whether your lender will complain. Large lenders usually don't care so long as you actually "pay" to "stay". I used a strategy in my Chapter 7, here in Florida, where I received a permanent modification as part of my Chapter 7. I had asked my bank for a modification so that I would be current (because I was converting a Chapter 13 with arrears). To my disbelief, they said yes and did the modification without any "trial period" and did this all before the discharge! Your mileage may certainly vary, but there are willing banks (mine was Bank of America).

I can't tell you how this is treated in Texas and your Appellate Circuit. The 11th Circuit and Florida have recently heated up on this issue with a cuople of lenders (one of them was Wells Fargo), pushing this issue. In the past, only the ankle biting Credit Unions (CUs) pursued this. However, the banks are trying to clear their foreclosure backlog here in Florida and trying every single tactic to make sure the debtors can't fight the foreclosure lawsuit if the debtor didn't reaffirm (or redeem) a mortgage.

(If anyone is wondering, that case In Re Lapeyre, 544 B.R. 719 (2016) is based on Failla v. Citibank, N.A., 542 B.R. 606. The banks are getting "smart" and aggressive with the foreclosure of a property that was "surrendered" in bankruptcy and the Bankruptcy and District Court judges are listening in Florida.)

So, the answer to your question is that for Texas, I really can't answer. But I thought that the Florida cases are becoming more interesting.

Thank you very much. This was a very interesting read.

[skyblue69]

I live in Michigan, filed chapter 7 four years ago. Did the "Stay & Pay", no reaffirmation on home mortgage. Received a notice from the mortgage company acknowledging the intent to stay & said as long as I continued to make payments, there would be no changes, things would continue along as normal. Four years now and no issues, everything has worked out fine.