Question about Re-Affirmation

[kw1025]

I was discharged 12/16. Case is still open pending any tax refund. On my filing, i am re-affirming 3 properties which Bank of America holds mortgage on. It is discharged, and i got no papers, no nothing from Bank of America. I am current on everything. I called and they said they don't "do re-affirmation agreements anymore".

Who does this benefit? They said just keep paying everything normally. I would think the the banks would want to re-affirm a debt? Am i not correct? What does this mean?

[jdcat]

I've had a few phone consultations with attorneys over the last week or so and was told by one attorney that it used to be that mortgage lenders would always send reaffirmation papers right away but that most of them aren't doing it much anymore. I don't understand the reasoning behind it either. There has to be a reason though.

[dspii]

If you do some research in this forum and other BK websites, you'll find that for the most part reaffirmations are not recommended. The way it works with no agreement is if your financal situation worsens in the future, you can walk away from your "discharged" property without owing a dime. They will still foreclose, but if the property is sold for less than the note, they legally cannot come after you for the shortfall. If you continue to pay as agreed they will do nothing, most likely. The downfall for you is, from what I have heard, they may not allow you online access for payments and they will not report your payment history to the credit bureaus.

I have the exact situation in my case with B of A and I too was discharge on 12/16, so I will watch this thread for more updates from the Guru's. Remember, you can still sell the place like your bk never happened, just wait until your case is closed.

[ready2live]

I have Bank of America for mortgage too and no reaff. Attorney said in a year if we decide, we can just walk away. Only bad part is, the on time payment won't go on your credit report.

[Llelxon]

So how does this work if you move in 2 years and sell the house? Do you still get the equity in the home? Does it complicate things when closing to sell to the new owner?

[StartingOver08]

It works the same, you pay off the note at the closing and receive whatever proceeds are above the costs to sell. The bank can not keep your proceeds if you are current on your note.

[tlcabk]

Waht about: We have car with loan through Suzuki Financial and they have not sent reaffirmation agreement, form what I am reading I would prefer not to reaffirm. My spouse is now out of work we are at day 15 of our 60 days to CH 7 discharge. If they do send the reaffirmation agreement that we stated we wanted in our original filing, do we HAVE to reaffirm?

[kw1025]

You say that if you continue to pay as usual, on time, etc, the "most likely" cannot do anything. What does "most likely" mean? Can they possibly take back a property if they feel like it?

Also, with the credit reporting, is this for sure that they do not report to credit? I talked to B of A and they said they "don't do" re-affirmations anymore, but they do report to credit. Like my excellent BK attorney said, he cannot explain why these banks do the nonsensical things they do...

[ready2live]

No, if you are on time, you are still going by your original contract when you purchased the house.

[dspii]

You say that if you continue to pay as usual, on time, etc, the "most likely" cannot do anything. What does "most likely" mean? Can they possibly take back a property if they feel like it?

Also, with the credit reporting, is this for sure that they do not report to credit? I talked to B of A and they said they "don't do" re-affirmations anymore, but they do report to credit. Like my excellent BK attorney said, he cannot explain why these banks do the nonsensical things they do...

Banks and nonsense are oxymoron's right.

They will not take your property if you continue to agree to the original terms, like keep making payments. The ride through means that you and the bank will keep your original contract valid. If you break the contract ie non-payment, they will collect the property. In this case, they get the property and you get to walk with no financial responsibility, it was discharged in bk.

The bank can ask a judge to foreclose on a property when the payments are current, but he would not allow, because the original contract is still valid. In bk the contract is not discharged, only your financial responsibility...they have secured interest. Maybe one of our member attorneys can shed some light on the legalities of ride throughs.

I hope they report my payments as I intend to discuss this with them after the first of the year.

[jdcat]

It makes total sense for a person going through bk to not re-affirm, but it doesn't make any sense at all for a mortgage company to not want a reaffirmation. That part of this mortgage reaffirmation stuff makes absolutely no sense. What does *not* reaffirming do for the *bank*? What is the benefit to them?

[keepmine]

It makes total sense for a person going through bk to not re-affirm, but it doesn't make any sense at all for a mortgage company to not want a reaffirmation. That part of this mortgage reaffirmation stuff makes absolutely no sense. What does *not* reaffirming do for the *bank*? What is the benefit to them?

Lawyers won't sign off on a reaffirmation if they don't feel it's in the clients best interest. Many lawyers routinely refuse to sign reaffirmations for below median filers or, someone heavily upside down in a car or home. There is plenty of caselaw that says, all you need do is offer to reaffirm. It does not say the reaffirmation must be approved in order to keep your property.
At the end of the day, most lenders don't push the issue. They surely don't need to add another foreclosed home to the pile or another auto in the impound lot.

http://www.georgiabankruptcyblog.com/archives/miscellaneous-cases-arizona-bankruptcy-court-ride-through-still-available-for-secured-debts-after-failure-of-timely-filed-reaffirmation-agreement.html

I've found a few other districts where this is treated the same.

[kw1025]

I spoke with a wise friend of mine, and he suggested there had to be "some" reason that a bank would not want to re-affirm a debt. Maybe it costs money in paperwork, maybe there are tax issues, but whatever the reason, you can be sure the bank has thought it out. It just seems to me that it is "too" easy for the consumer! Down the road, i don't want the bank taking my property anytime they want. I just cannot picture that they would make it this easy for someone who was discharged on chap 7. Why then even have an option for re-affirmation on the filing? It is indeed interesting.

[onwards]

I spoke with a wise friend of mine, and he suggested there had to be "some" reason that a bank would not want to re-affirm a debt. Maybe it costs money in paperwork, maybe there are tax issues, but whatever the reason, you can be sure the bank has thought it out. It just seems to me that it is "too" easy for the consumer! Down the road, i don't want the bank taking my property anytime they want. I just cannot picture that they would make it this easy for someone who was discharged on chap 7. Why then even have an option for re-affirmation on the filing? It is indeed interesting.

I think the option is there for cases where you have significant equity in the home but you can't pay off the loan and don't want to sell the house

As for the bank, the main reason NOT to try and get a reaffirmation for an upside down loan is simply that it might cause the borrower to walk away right there and then, whereas otherwise they are likely to keep making payments for at least a while, and maybe never fail to make payments at all.