What is a "ride through" and how does it work?

[mgmadara]

Is it also worth noting that if you do a ride through and not a reaffirmation, the debt stops reporting to your credit report? This was a deciding factor for me as well. Just thought I would mention it.

This is different for every lender. In our case we are doing a ride through on our mortgage and they are still reporting to the credit agencies.

[DustinLH00]

Is this an agreement that you have with them? Or are the obligated to? Or have they just been reporting it so far? I wonder if they will stop at some point. Here at the bank I work at we purge credit files every few months...

This is different for every lender. In our case we are doing a ride through on our mortgage and they are still reporting to the credit agencies.

[timeouts1]

Ride Throughh vs Reaffirmation

We had initially thought we would reaffirm our mortgage and then when we talked with the bk atty about surrendering in Chap 7 she discouraged us as she thought we would not meet DMI guidelines (we are a family of 4 21 year old college age twins just over the median income guidelins). However, we are very concerned that we need to get out from under the house payment as well. We have already had petition prepared, but not filed yet. Is it possible to do a "ride through" on the mortgage even though paperwork states reaffirm? Any thoughts from anyone would be appreciated.

[mgmadara]

Is this an agreement that you have with them? Or are the obligated to? Or have they just been reporting it so far? I wonder if they will stop at some point. Here at the bank I work at we purge credit files every few months...

We didn't have any kind of agreement with them, they aren't obligated to do it, they just kept reporting. I don't think it is going to stop either because we were discharged almost 3 1/2 years ago. They also removed our PMI this year without us having to ask. I wasn't going to ask them about that because I figured they wouldn't ever remove it since we didn't reaffirm. Did I mention I love our bank?

[bkc]

Our experience is that people really want our money. As we have talked with our lenders, they have had absolutely no problems with doing a ride through. Bank of America told us several times that we are welcome to keep the truck as long as we continue making payments. There are so many bankruptcies right now, that as long as you keep making payments, they will probably let you keep the property.

[downsized]

If you sell your home for its market value and are able to pay off the mortgage in full, then you are fine. It's when you sell the home but *can't* pay off the loan that's it's great to NOT have a reaffirmation agreement. In this situation, you get to walk away from whatever loan shortfall is left after the home sale not owing anything.

I'm confused. Why would someone even bother trying to sell an upside down home that was IIB and not reaffirmed? Doesn't that seem like a complete waste of time with no benefit at all? Our plan is to not reaffirm out home that's way under what we owe and to walk away as soon as the time is right (provided the home doesn't have more value than we owe...in which case we'd sell it). Am I missing something? It's better to sell either way....upside down or not?

[StartingOver08]

I'm confused. Why would someone even bother trying to sell an upside down home that was IIB and not reaffirmed? Doesn't that seem like a complete waste of time with no benefit at all? Our plan is to not reaffirm out home that's way under what we owe and to walk away as soon as the time is right (provided the home doesn't have more value than we owe...in which case we'd sell it). Am I missing something? It's better to sell either way....upside down or not?

Downsized, you are right. It makes no sense whatsoever to sell a home that is not reaffirmed and is upside down.

Many of the lenders require the sellers to sign a note at closing for part of the shortfall. Or to bring money to closing. Recently the lenders are not accepting short sales unless the seller either brings X amount to be paid to the mortgage insurance company or signs a note at zero interest for X years to the mortgage insurance company. Why would anyone sign a note after they have discharged the debt. Of course the lenders/servicers do everything in their power to get the note signed to complete the sale - but when you are discharged you have the upper hand.

Just walk away when the debt is iib.

[Tom_Mi]

Hold the phone everyone, please forgive me but I need a bit of clarification.....

In *this* thread I'm hearing great quotes like:
- "With a ride-through you just walk away! Let them take it!"
- "Pay as long as you want...then leave!"

but....

Go to the foreclosure area and you'll hear a different song:
- "Foreclose the house you didn't reaffirm, and your next mortgage won't happen for 3 years!"
- "The 3 year clock begins 3 years after the name changes"

The real confusing part is that I see some of the same people saying a ride-through is great, are the same people saying that when you leave, the foreclosure hoses your chance of getting another mortgage for 3 years.

I chose a ride through to save for my next house...but am I shooting myself in the foot??????

[justbroke]

Everything is true. Yes, you can ride-through and just leave when you want. However, for lending purposes (not credit reporting purposes), it's treated as a foreclosure. One of the primary loan types for people coming out of Bankruptcy is an FHA-backed loan. This requires 3 years since any foreclosure. FHA treats a home surrendered in Bankruptcy (or otherwise discharged and then foreclosed upon) as a foreclosure.

So, it's the same song, just different perspectives of the issue.

[questionsGA]

IRPRN's comments brought up a question I have on reaffirming a home. Let's say the home has one mortgage, we "ride through", and eventually pay enough that there is now equity in the home. Can the mortgage company decide that it is worth it for them to foreclose which would totally pay off the loan plus extra in their pocket?

In other words, even if we are paying on time, do they have the right to take the home if we don't reaffirm?

Thank you.

[justbroke]

IRPRN's comments brought up a question I have on reaffirming a home. Let's say the home has one mortgage, we "ride through", and eventually pay enough that there is now equity in the home. Can the mortgage company decide that it is worth it for them to foreclose which would totally pay off the loan plus extra in their pocket?

No. Most States have provisions where a secured lender cannot foreclose upon a person unless they are in default. Also, those same States have rules which make Bankruptcy not a default. You would actually have to miss payments and be in default of the Mortgage/Note.

In other words, even if we are paying on time, do they have the right to take the home if we don't reaffirm?

Absolutely not.

(I'm not sure which States have such "bankruptcy" is not a "default" under a secured debt contract. I know that many have such a provision.)

[downsized]

Everything is true. Yes, you can ride-through and just leave when you want. However, for lending purposes (not credit reporting purposes), it's treated as a foreclosure. One of the primary loan types for people coming out of Bankruptcy is an FHA-backed loan. This requires 3 years since any foreclosure. FHA treats a home surrendered in Bankruptcy (or otherwise discharged and then foreclosed upon) as a foreclosure.

So, it's the same song, just different perspectives of the issue.

Just making sure I understand.....
If I go for an FHA loan in 3 years, which is our plan, the 3 years starts from the time we filed BK and they'll consider the IIB home a foreclosure? Then it's important for us to always remain current on the mortgage until the day we leave? I guess I was thinking that once we we decided to house hunt and new for absolute certainty that we'd be leaving and had a new mortgage approved, we could stop paying and bank up some cash. no? Oye...just when I think I have it all understood, lol.

[justbroke]

If I go for an FHA loan in 3 years, which is our plan, the 3 years starts from the time we filed BK and they'll consider the IIB home a foreclosure?

It's from the actual foreclosure date... when the property changed hands legally (new title).

Then it's important for us to always remain current on the mortgage until the day we leave? I guess I was thinking that once we we decided to house hunt and new for absolute certainty that we'd be leaving and had a new mortgage approved, we could stop paying and bank up some cash. no? Oye...just when I think I have it all understood, lol.

Well, the strategy wouldn't be to wait unti you actually wanted to buy something, as then you'd have issues because it's 3 years from the actual foreclosure. That's my understanding.

[Tom_Mi]

Well, the strategy wouldn't be to wait unti you actually wanted to buy something, as then you'd have issues because it's 3 years from the actual foreclosure. That's my understanding.

So, a ride-through pretty much guarantees anyone must rent for 3 years after you leave your home?

I think I just screwed myself. I'll save for 2 years for a downpayment, then have to live 2 more years in an apartment???

[justbroke]

So, a ride-through pretty much guarantees anyone must rent for 3 years after you leave your home?

Of course, everything depends on lending policies and practices at the time. Right now, people with no-bankruptcy and 700+ credit scores are having problems getting the types of credit that use to flow freely.

I think I just screwed myself. I'll save for 2 years for a downpayment, then have to live 2 more years in an apartment???

Again, who knows what lending will be available. I'm suspecting that to clean up the glut of inventory, the federal government and/or lenders will come up with some new programs. However, I wouldn't hold my breath. I had only mentioned the FHA programs. There may be new programs or other programs that come about offering lending to the formerly bankrupt.