Reaffirmations and Citimortgage (now unsecured)

[lizbebe]

I filed my Chap 7 bk papers on 3/14/08. This was a complete filing, so it included my statement of intention. I am representing myself and husband.

When I contacted my first mortgage holder, Chase, they were totally prepared to generate an affirmation agreement. When I called CS, they immediately connected me to my BK rep. Amazing. My rep generated my reaffirmation paperwork and sent it to me within 7-10 days (422,200 secured, 5700 unsecured). The whole process took less than 10 minutes.

Now let's talk about Citimortgage. I located their BK department after 1.5 hours on the phone with CS, etc. It was your typical CF.

Once I found someone who claimed to be my rep, I told her that the 66,500 loan was no longer secured because the value of my home had dropped. I wanted to negotiate a lower second mortgage. I am not against reaffirming this loan, but not at its current level.

I also let Citi know that I am filing an amendment to Schedule D (among others) to make sure that that the unsecured portion was accurately reported. (Don't ask me why I didn't think of this before -- my only excuse is that I am doing this alone).

Citimortgage has stop talking, at this point. I have left countless messages for my so-called rep and her supervisor. Great fun.

We have continued to make all mortgage payments on time.

Here are my questions:

1) Do I need to indicate on Sch D that this Citi loan is DISPUTED? Makes sense, but I know that I cannot assume the meaning of 'DISPUTED' in this court.

2) Will I be able to complete my reaffirmation process in front of the judge if only one of my mortgage companies is cooperating?

3) Will I be forced to enter arbitration, or can the judge force the creditor to move forward with a reduced affirmation? It makes no sense to me that the court would allow a creditor to avoid reaffirmation altogether.

4) If the loan is unsecured at this point, is there any reason why it couldn't be removed from Sch D & the Statement of Intention, moving it to Sch F instead?

[laurannm]

I may be wrong about this, but I thought that the only way a 2nd mortgage could be treated as unsecured in a BK would be if you were filing a Ch 13 and were doing what's called lien stripping.

I am sure others with more knowledge will chime in as well

[rfassett]

You may thiink that the loan is unsecured in theory, but it IS still a mortage secured with a lien on your real estate - irrespective of the current perceived value. To answer your questions directly:
1) You have nothing to dispute. What is there to dispute. The fact that the real estate industry tanked is not a reason to dispute the loan.
2) The judge will only take into consideration those reaff that have been filed with the court. I also filed pro se. Had six secured loans at the time of filing (3 vehicle and 3 mortages). We signed reaffs on two vehilces and two mortgages. (Citifi - the third mortgage never sent us reaff papers.) Only the two vehicle and one of the mortgage reaffs were filed with the court and those were the only ones that the judge addressed at the reaff hearing. I had response A and response B with me when I went into the hearing because I did not know what I just told you. So if the judge wanted to know about all of the reaffs, I had one response ready. If he just wanted to talk about the reaffs filed with the court, then I had the other response ready. Just for the record, I am treating Citifi and the other non-filed reaffs as being discharged. For pro se, the rule is very clear, the reaff has to be filed with the court. Since the other lender did not file, I am assuming the reaff was never perfected. It is also a second mortgage.
3) The law does not yet allow the bk judge to get involved in reducing or restructuring mortgages.
4) The loan is still secured.

I do not know the legalities here without doing further research, but I think in your case, the second mortgage holder could make your life pretty miserable if they decide to foreclose. But then, I just had another thought. As long as you keep your payment current on the first and second the second lien holder would have no reason to foreclose. And what if you sold the house, sometime down the road, for less than is owed. Does the balance on the second that did not get covered by the sale proceeds simply go away because it was discharge, ie, not reaffirmed. If my thinking here is correct, I would not fight for that reaff.

[blaze]

From what I have been told and done you really only need to reaffirm the first loan. That is what our attny said and what we are doing. We reaffirmed 1st mortgage - there is a 2nd (actually business LOC with our home listed as collateral) The 2nd loan did not send reaff. papers. Our atnny said that the 2nd loan would be included in the BK - BUT - the lien still exists - so we will have to pay it eventually - and it is in our best interest to keep up with some payments if you'll ever want to sell the house. Anyway - that is my experience and what I have been told. Our first loan is with CITI and other than being a huge pain to get on the phone they have been very cooperative. Then again they are the primary mortgage so I guess that makes a difference.

[lizbebe]

Thanks for your help!

Thanks to everyone for their input. I will stop asking for a reaffirmation from Citi. That takes one more thing off my plate!!!

My position remains, however, that companies like Citi must take responsibility for their own mortgage processes.

The agents who sold the home knew it was overpriced. The appraisal company (hired by agent) fell in line, of course. Within MONTHS of purchasing this home, the value was properly adjusted by the Assessor from 445K to 350K. In this case, the assessor's value is very close to the market value.

Who is responsible? Is it any wonder that no one wants to take responsibility, yet the problem is huge and beyond the BK courts.

Thanks again to everyone's input!