Can I set the terms of a Reaffirmation?

[xeniilia]

My 2nd mortgage sent me the paperwork for a reaffirmation. The original loan terms were 17,000 at 16%, in the reaffirmaton papers the new terms are $19,800 at 15%. I've been paying on this loan for over 3 years, sometime in the last 6 months we fell 2 months behind, but kept it floating, just unable to catch up. Our loan balance NEVER dropped over the years. So we've paid them thousands of dollars, but now they want us to agree on a high loan.

My husband wants to fill out new reaffirmation papers for the original loan amount and a lower interest rate, like 8%.

Can we do that?

[StartingOver08]

You can negotiate a reaffirmation. Some lenders will cooperate -others will not.

Does your house have any equity? If it does not have equity, I would not sign a reaffirmation at all. Just do a 'ride through'.

As to the balance, make them itemize what each charge is for and challenge the charges. You can also negotiate the balance, the length of the loan, the interest rate and anything else in the terms.

[xeniilia]

You can negotiate a reaffirmation. Some lenders will cooperate -others will not.

Does your house have any equity? If it does not have equity, I would not sign a reaffirmation at all. Just do a 'ride through'.

As to the balance, make them itemize what each charge is for and challenge the charges. You can also negotiate the balance, the length of the loan, the interest rate and anything else in the terms.

No there's no equity, with the market decline there's actually negative equity.

My concern witht doing a 'ride through' is that right now we are 4 months behind. Before we filed in February, we contacted them asking them to do something about the loan. Either forgive the 'fees' that never allowed the balance to go down, or drop the interest rate. My husband tried the threat of "we're going to claim bankruptcy and if you don't do something, you can have the house" they came back and said they had to think about it, and in the mean time don't make any more payments until we get the reaffirmation done.

So now, I'm afraid if we don't do a reaffirmation, they will want the past due right now, or forclose. And we just don't have it.

Or main mortgage last fall worked with us, dropping our interest rate from 12% to 3% for the first 2 yrs then 5% for the duration of the loan.

(btw I misquoted myself in the original post, the original loan terms were $17000 at 15%, new terms they want are $19800 at 15%, starting 4/1/09)

[StartingOver08]

Did they post the past due 4 payments on the reaffirmation balance? Probably.

If the house is upside down, you may want to walk away. I am assuming that the 1st modified the mortgage before your BK, right? Did you reaffirm your first or just ride through? Is the first upside down too? How large is it, the first?

I mention this because it is unlikely that the second would buy out the first. There are other threads on here regarding this. The reason the second wants you to reaffirm is because they know if you walk away they can get the $$ from you in the future. If you did not reaffirm the first - there is no way in the world you should reaffirm the second. In fact, even if you did reaffirm the first, don't reaffirm the second. Call their bluff. Yes they can foreclose on the second, BUT they would have to buy out the first to protect their interest and that is highly unlikely. I am not an attorney. Read some of the threads here on second mortgages. They do not play nice.

[xeniilia]

Did they post the past due 4 payments on the reaffirmation balance? Probably.

If the house is upside down, you may want to walk away. I am assuming that the 1st modified the mortgage before your BK, right? Did you reaffirm your first or just ride through? Is the first upside down too? How large is it, the first?

I mention this because it is unlikely that the second would buy out the first. There are other threads on here regarding this. The reason the second wants you to reaffirm is because they know if you walk away they can get the $$ from you in the future. If you did not reaffirm the first - there is no way in the world you should reaffirm the second. In fact, even if you did reaffirm the first, don't reaffirm the second. Call their bluff. Yes they can foreclose on the second, BUT they would have to buy out the first to protect their interest and that is highly unlikely. I am not an attorney. Read some of the threads here on second mortgages. They do not play nice.

The 'new' balance is more than 4 payments. When we called to try and talk to someone yesterday they said they were not allowed to talk to us about it, we need to speak to our lawyer. Unfortuanantly, we're representing ourselves.

Yes the 1st modified before any thought on bankruptcy. We haven't reaffirmed yet, but were planning on it.

[StartingOver08]

This is just my opinion - no way would I reaffirm the second. They have a BK dept more than likely it is the CSR's that can't talk with you. But even if there is no BK dept - if you decide to reaffirm the house you might consider reaffirming the first ONLY.

And really, with this market, just do a ride through - don't reaffirm anything. JMO

[TEW]

You can't reaffirm the loan unless it is up to date.
I second StartingOver08's don't reaffirm anything.

[xeniilia]

You can't reaffirm the loan unless it is up to date.
I second StartingOver08's don't reaffirm anything.

If I can't reaffirm if it's not up to date, then how do I just ride through? Just start making payments as if nothing happened? They won't take our payments right now. My husband got a hold of someone today, who once again, said they can't speak to us, but they gave him the credit union's lawyer's phone number. (who hasn't called us back yet)

I just did the math earlier, we've paid almost $8,000 on this loan, and the balance never dropped a penny, now they want to reaffirm a higher loan balance. Is it just me? or is this completely unfair? We're not even asking for the money we paid to be applied, just keep the original loan amount at a somewhat more reasonable interest rate.

[StartingOver08]

Oh, this is a credit union! Do you have a checking/savings/share account with them too? Do you have other loans with them; auto, cr card?

CU's are a little different because you are a 'member' and all of your debt is cross-collateralized. So if you default on the 2nd and you have, say an auto loan and savings account, they can also call the auto loan due and sieze your savings or checking.

If you do not have any other loans with them you are in a good spot - they will most likely NOT foreclose on your second once you file BK. The lien will stay there, but they are not going to buy out your first IMO.

[xeniilia]

Oh, this is a credit union! Do you have a checking/savings/share account with them too? Do you have other loans with them; auto, cr card?

CU's are a little different because you are a 'member' and all of your debt is cross-collateralized. So if you default on the 2nd and you have, say an auto loan and savings account, they can also call the auto loan due and sieze your savings or checking.

If you do not have any other loans with them you are in a good spot - they will most likely NOT foreclose on your second once you file BK. The lien will stay there, but they are not going to buy out your first IMO.

I think I have a savings account there with like .60 in it. I did have an autoloan w/ them, did a volunatary repo years ago on it, and ended up having to "pay them off" by taking out a 2nd mortgage. (Hadn't considered bk then, it was stupid, and I'm stuck w/ it unless I give up the house)

My 341 is on Monday, do I have to have this all figured out before then? Or is that part of the 341 meeting?

[StartingOver08]

You do not have to have it figured out before the 341. You obviously would be working on it (negotiating) with the CU. If the CU will not cooperate, you do not have to reaffirm. You have until just before discharge to work it out or not. (I believe the time period is 60 days from the 341, but don't hold me to that)

Most creditors do NOT show to the 341. Occasionally CU's will show up. IF they show up with the reaffirmation at the 341 you are NOT obligated to sign it there - and I would not. Even if they tell you that you must accept it as it is, that is not so. Remember the Trustees and the Creditors are working together to get $$$ from you. The only person that is looking out for your interest is your attorney (and some of them don't even do that!). So you need to look out for YOU.

[CCCrazy]

Man I'm confused. I have two mortgages both with the same bank - so it's a little different scenario. I'm definitely going to reaffirm the first. Do I need to reaffirm the second for them to negotiate with me? I have a 50K second mortgage and they talked me into thinking I could pay it back over ten years. I want to get a lower interest rate on my 2nd mortgage - it's 9.6 percent right now, or I want get the loan terms lengthened to 30 years, at least 20. Do I have to reaffirm the second loan for them to work with me? I'm one payment behind right now but I will be caught up on April 30 - the day of my 341.

[TEW]

Man I'm confused. I have two mortgages both with the same bank - so it's a little different scenario. I'm definitely going to reaffirm the first. Do I need to reaffirm the second for them to negotiate with me? I have a 50K second mortgage and they talked me into thinking I could pay it back over ten years. I want to get a lower interest rate on my 2nd mortgage - it's 9.6 percent right now, or I want get the loan terms lengthened to 30 years, at least 20. Do I have to reaffirm the second loan for them to work with me? I'm one payment behind right now but I will be caught up on April 30 - the day of my 341.

What is your plan if the Judge dinies the reaff?

[CCCrazy]

I didn't know a judge could deny a reaffirmation. Why would a judge do that if you can pay your mortgages? It's my mortgages that made it possible for me to file chpt. 7. I plan to stay in my home. What I would really like to know is the answer to my origianl question. Will a bank negotiate on the terms of a first or second mortgage if it is not reaffirmed in a BK?

[liz417]

The judge can deny a reaffirmation if s/he considers it "a hardship" on the debtor.