Yet another reaffirmation question

[Seenthelight]

Our 342 was on Dec 7th and all went well. Our discharge date is around the 7th of February and no bad news on Pacer.

Believe it or not we "want" to reaffirm our mortgage. We have about 10k in equity and a great interest rate and have never been late. Credit cards we our big problem.

Our lawyer told me today that there are 2 judges in our state (Nebraska) that handle reaff's and both of them have made it clear that they "don't ever" sign off on them anymore because it isn't necessary and it is not in the best interest of the filer.

Our lawyer said that even if we don't reaffirm the mortgage, the bank is obligated to correctly report our payment history to the credit bureaus.

This is my main concern. I am looking forward to re-establishing our credit (not with credit cards) but was under the impression that mortgage companies will not report your payments if you don't reaffirm?

I feel uneasy about living in "limbo" by not reaffirming and don't want this bankruptcy to follow me around for 23 years (left on mortgage) since if they don't report the payments I'll never be able to claim I "own" my home.

Am I being a freak about this?

[mammamouse4]

Anymore, most attorneys advise to NOT reaffirm, in the event of unforeseen circumstances in the future. You can stay in your house and pay, you still hold the title in your name(s), you can still sell and take your equity all without reaffirming.
It is my understanding, and I am not a lawyer just research a lot, that once you file, the mortgage company will stop reporting to the credit agencies. If you do NOT reaffirm, it is marked 'discharged in bk' and show a 0 balance. They are NOT obligated to report, no matter how long you make payments. You need to double check that fact with your attorney, but I am almost certain he is incorrect. They are not allowed by federal court to report after a discharge if you don't reaffirm. They will never report on your account again, even if it goes into foreclosure, they legally cannot report anything after the discharge.
If you reaffirm, and you need to check with your company, they still may NOT report. I've read that some people that have reaffirmed still do not have those payments.
A couple of options here. You could NOT reaffirm just in case for the future. As long as you keep a paper trail of your payments, you can report those payments on your credit yourself. You have to submit evidence to the agencies and they have to post it.
You won't lose the equity in your house, or your interest rate, as long as you keep paying. And after about 2 years you can refinance into a standard mortgage again.
Once you file, your credit takes a hit. Yes a mortgage looks good to rebuild, but there are other ways as well. If you list your mortgage yourself and have proper paperwork, the mortgage company cannot dispute it and it will boost your credit as well.
You still 'own' your home unless it goes into foreclosure. Then you no longer hold the title.
I would recommend doing some more research and talking to your lawyer again. hope this helps!

[HakunaMatata]

Your BK isn't going to harshly affect you for 23 years (especially since it will be removed from your CR in ten years). If you decide to remain in the home and pay off the mortgage, you will officially own your home.

I don't think you're being a "freak". I understand your credit concerns; however, I think you need to expand your notions of rebuilding credit beyond the mortgage obligation realm. You're presently debt-free, you have equity in your home, you have a great interest rate, you don't need credit in the immediate future (ex/ securing a new mortgage), and time will mend your credit score. You're in a great position to not reaffirm.

[mgmadara]

They are not allowed by federal court to report after a discharge if you don't reaffirm. They will never report on your account again, even if it goes into foreclosure, they legally cannot report anything after the discharge.

It's up to the bank whether they report or not. We didn't reaffirm our mortgage and our bank has continued to report our payments. Most won't report, but some banks do still report.

[aces67]

I also think your lawyer is incorrect. If you don't reaffirm then all your mortgage company is legally obligated to do is state the truth that the debt was included in BK.

[Seenthelight]

Thanks for input everyone.

I think I'll take HakunaMatata's advice and concentrate on the fact that our financial situation has dramatically improved post bk and we just don't need credit.

It's just a natural urge to return to a sense of normalcy and fix all of the broken parts as quickly as I can.

I'll get over it.

Not having the mortgage company report to the credit bureau is after all a small concession in the overall scheme of things.

[HakunaMatata]

I understand your desire to want to fix the "broken parts". I've learned through my BK process that many of those perceived non-fragmented features were an illusion. My "rock solid" home investment transformed into a sinking ship. I decided to abandon the ship and my credit score began to sink with it. I was initially terrified of an awful credit score. However, I recall the good 'ole days when I was beginning to establish myself in the credit domain. I started without credit and built it. I can do it again if I choose. Ultimately, I had to fix my thinking...I surrendered the money pit house and my former friend, FICO.

Your credit will recover. No, it won't happen overnight. Thankfully, you have time on your side.

[CCsAreEvil]

It's up to the bank whether they report or not. We didn't reaffirm our mortgage and our bank has continued to report our payments. Most won't report, but some banks do still report.

That's interesting. So, on your credit reports, it shows you making payments on a $0 balance? If that loan was not reaffirmed, isn't the balance showing as $0 for your mortgage?

[kw1025]

I have called bank of America 10 times to get a straight answer on this, and they have said that they do not "re-affirm" anymore. After the case closes (about 90 days after), they DO start reporting payments again. If in the future you ever modify or refinance your current loan rate, you will then be "re-affirmed", becuase you are signing on for the debt. Until then, you are off the hook if you ever want to walk away

[OhioFiler]

I have called bank of America 10 times to get a straight answer on this, and they have said that they do not "re-affirm" anymore. After the case closes (about 90 days after), they DO start reporting payments again. If in the future you ever modify or refinance your current loan rate, you will then be "re-affirmed", becuase you are signing on for the debt. Until then, you are off the hook if you ever want to walk away

This is very interesting as I carry a mortgage via BofA. Thank you.

[Seenthelight]

Hi all,

A quick update on our situation.

Our attorney contacted the attorney for our mortgage company and they are sending reaffirmation papers for review.

Our attorney previously said the local judge doesn't approve any reaffirmation agreements as a matter of principle "but" because we actually have over 10k in equity that we protected with our exemptions, he now believes that it would not be a problem to reaffirm.

So apparently the equity situation is a game changer for our trustee and our attorney thinks reaffirming would be reasonable in our case.

While I have come to appreciate the real benefits of "not" reaffirming the loan, and frankly I had become ok with that, I think we will go ahead and reaffirm.

Our trouble has never been the house payment but rather the enormous credit card debt we amassed over the last ten years.

Lesson learned definitely there.

I think another lesson here is that every case is unique in some way and you have to be patient yet persistent while things evolve during the bk process.

Thanks again for all of the sage advice and good luck to all.

[mgmadara]

That's interesting. So, on your credit reports, it shows you making payments on a $0 balance? If that loan was not reaffirmed, isn't the balance showing as $0 for your mortgage?

No, they are still reporting the correct balance.