More Ride Through Questions

[fortknox]

From what I've read, it's my understanding that ride throughs are no longer allowed on property such as cars.

When it comes to ride throughs on mortgages is where I'm confused. I'm reading conflicting things. I've read that they are only allowed in certain states? I've read that they are allowed, they aren't allowed, etc. What's the true story here?? I'm so confused!

Also, I'm just filling out my BK questionaire and it doesn't give me an option to pick for a ride through. The 3 options are: 'Reaffirm, Redeem, or Surrender'?? Is it Redeem that I need to choose or does that mean I have to pay it all off at once?

Here's a quote from another thread that seems to indicate that they aren't allowed? I'm in WI if that makes a difference.

Posted on November 29, 2009 by Jonathan Alper
Bankruptcy Court Requires Reaffirmation Agreement For Homestead Mortgage
Chapter 7 bankruptcy debtors often own cars subject to a car loan and lien. The new bankruptcy law states that debtors must reaffirm loans on all personal property in order to maintain the property through their Chapter 7 bankruptcy. So, debtors who want to keep automobiles must sign a reaffirmation agreement making them personally liable to pay the loan until paid in full. The Chapter 7 bankruptcy discharge will not discharge the debt and will not protect the debtors if they cannot pay the loan after the bankruptcy is closed.

Real property is different. The new bankruptcy law does not expressly require reaffirmation of debts secured by real property such as mortgage debt. Therefore, I have advised my clients not to reaffirm home mortgages in bankruptcy because they were not so required. I did not think debtors should obligate themselves personally on mortgage debt if not legally required to do so. That way, if after their bankruptcy the debtors could not pay the mortgage and had to walk away from their house the mortgage lender could not sue them personally.

A new ruling by an Orlando bankruptcy judged ends the option to "ride through" a mortgage debt. The judge said that if a debtor wants to keep real property after bankruptcy the debtor has to reaffirm their personal obligation to pay the mortgage debt just like they have to do with their cars and other personal property. The judge cited a ruling by the Eleventh Circuit Court of Appeals that debtors mus act to either surrender or reaffirm a debt if the debtor desires to retain the collateral. The judge said the Eleventh Circuit made no distinction between real property and personal property and that no distinction is merited.

[BobMango]

Reaffirmation vs. ride-through on real estate is an area that the courts will need to clarify before too long. Some lenders are refusing to do reaffirmation agreements, Wells Fargo being one of them.

In terms of vehicles, it's also all over the map. My credit union was willing to go either way but convinced me to reaffirm by lowering my payment and advancing the loan to bring it current.

Ride-through is not an official option. On my forms I checked "Other" and wrote "Retain and Pay" in the space provided.

[coolmom04]

Sorry to bring up an old topic here, but I was searching for info regarding reaffirmation of mortgages. I'm trying to explain to my husband why we are not required to reaffirm our mortgage here in NC and what that means, but he is totally confused and thinks it makes absolutely no sense.

Anyway, I saw you said WF is refusing to do reaffirmations and our mortgage is through WF. What does that mean if they are refusing them? Does it mean they just expect us to get out of the house or will they let us ride through?

[Dst1]

Who knows. As BobMango said, it's all over the map. State laws play a role as well.

Right now there is no such thing legally as a ride through. But it still can happen as a matter of fact.

The changes in the law were actually designed to end ride thoughs because of the legal confusion surrounding them. But what appears to have happened is that it has made the confusion worse, not better.

[coolmom04]

Thank you for your reply. I know I keep trying to explain what it means to not sign a reaffirmation for the mortgage and he just keeps beating his head against the wall saying, "That just doesn't make any sense!" Meaning - how is it possible to stay in a home and continue paying for it even though the debt really isn't there... who is keeping up with how much you've paid and when it's actually paid off.. and when you sell the home, what would stop you from just walking away with the profit if you don't legally have any debt there to "pay off" with the money you make from the sell.

It's definitely ALL confusing.

I think right now I am mainly freaking out b/c if WF doesn't allow reaffirmations, does that mean we have to move when we file even if we want to keep the house b/c my husband's head is really going to roll if that's the case. We're both just so ready for all this crap to be over with.

We're having our final meeting with the attorney on Wednesday to file either then or Thursday so hopefully the attorney can get it through my husband's head.

[yomann]

Also with WFB. Our attorney advised us the check the box "intend to keep house" but do NOT reaffirm. They will keep accepting the payments.
If fact, he told us WFB does not reaffirm anyways .......

[CCsAreEvil]

I think right now I am mainly freaking out b/c if WF doesn't allow reaffirmations, does that mean we have to move when we file even if we want to keep the house b/c my husband's head is really going to roll if that's the case. We're both just so ready for all this crap to be over with.

No. For most cases, if you are up to date on your payments and keep paying monthly, WF will most likely keep letting you stay. If they didn't, you'd receive a NOD. You would know if you had to vacate in the near future.

It's almost like a mutual agreement. You keep paying, the bank lets you stay. They'd rather you keep paying forever.. it's just steady income for them. Also, you can't sell the house without satisfying the legal note since the secured lenders have a lien on the property.

This whole "retain and pay" is very bizarre but many appear to be doing it.

Only issue is when your home's value starts to exceed the amount you owe on the mortgage note(s). The lender will probably pull the trigger and force you out of the home so they can sell it and make a decent profit. But, based on how the last couple of years have been, home values won't be going up for at least the near future (1-2 years?).

On a side note, you can google about the guy who bulldozed his home in Ohio because the bank was forcing him to foreclose since the bank would make a huge profit. Owner said, "you aint getting *$&@!". Just google "foreclosure bulldoze home Ohio" or something like that.

[coolmom04]

No. For most cases, if you are up to date on your payments and keep paying monthly, WF will most likely keep letting you stay. If they didn't, you'd receive a NOD. You would know if you had to vacate in the near future.

It's almost like a mutual agreement. You keep paying, the bank lets you stay. They'd rather you keep paying forever.. it's just steady income for them. Also, you can't sell the house without satisfying the legal note since the secured lenders have a lien on the property.

This whole "retain and pay" is very bizarre but many appear to be doing it.

Only issue is when your home's value starts to exceed the amount you owe on the mortgage note(s). The lender will probably pull the trigger and force you out of the home so they can sell it and make a decent profit. But, based on how the last couple of years have been, home values won't be going up for at least the near future (1-2 years?).

On a side note, you can google about the guy who bulldozed his home in Ohio because the bank was forcing him to foreclose since the bank would make a huge profit. Owner said, "you aint getting *$&@!". Just google "foreclosure bulldoze home Ohio" or something like that.

Wow! I can't believe he bulldozed.. that's pretty awesome! lol Thanks for your reply. I will just keep my fingers crossed that the value doesn't exceed our mortgage. I think my husband would rather reaffirm than deal with that possibility, but if WF isn't allowing them, I guess that's not an option.

[sadbutinneed]

Ok - so what will happen to all of us in ride throughs in 5 years with home prices (hopefully) increase? Will we be forced to either surrender the home or get a new loan at a higher rate considering our bk status?

[coolmom04]

From what everyone is saying, they can force us out of our homes. And, I've also read that reaffirmations weren't generally allowed after BK is discharged, but I am not 100% on that.. still learning and trying to understand it all.

[Overmihead]

You guys are making me a bit nervous, reading this thread. We have our mortgage through WF and intend to stay in this home (forever). We are planning on filing Ch 7 and have had one consult and the attorney didn't even blink an eye...he said as long as we are current (which we are) that nothing would change with the mortgage. He said we'd just keep paying as usual. Also, I have a close friend in the area who went through a Ch 7 about 5 years ago and said that was the case...that nothing at all changed with their mortgage. We are in TX...does that make a difference? We have a consult set up with another attorney next week, and I'll be sure to ask about this again.

[BCA2009]

No. For most cases, if you are up to date on your payments and keep paying monthly, WF will most likely keep letting you stay. If they didn't, you'd receive a NOD. You would know if you had to vacate in the near future.

It's almost like a mutual agreement. You keep paying, the bank lets you stay. They'd rather you keep paying forever.. it's just steady income for them. Also, you can't sell the house without satisfying the legal note since the secured lenders have a lien on the property.

This whole "retain and pay" is very bizarre but many appear to be doing it.

Only issue is when your home's value starts to exceed the amount you owe on the mortgage note(s). The lender will probably pull the trigger and force you out of the home so they can sell it and make a decent profit. But, based on how the last couple of years have been, home values won't be going up for at least the near future (1-2 years?).

On a side note, you can google about the guy who bulldozed his home in Ohio because the bank was forcing him to foreclose since the bank would make a huge profit. Owner said, "you aint getting *$&@!". Just google "foreclosure bulldoze home Ohio" or something like that.

It doesn't work like that. If your lender foreclosed and you had equity in the house, the bank would get the payoff amount and you would receive the balance. The bank can't "make a profit" off foreclosing on you. Therefore since the most they can get from foreclosure is the amount you owe, they have no incentive to foreclose if you are still making payments. Actually there is a disincentive because they will have to pay the foreclosure fees and take the risks that they can't sell it for enough to cover there costs.

The only way it would make sense for a bank to foreclose if you are current on your payments would be if you definitely had enough equity to satisfy the loan and interest rates shot way up. Then the bank might want the get the money back from you and lend it to someone else at a higher interest rates.

I believe I have read that some states have laws against foreclosing on a property where the payments have always been made on time, even after BK.

I'm not saying it could never happen, if you are upside down on your home by more than 10% - 20%. It will takes years for you house to get back into positive equity. By then you could have re-built your credit and buy a new house.

The whole re-affirm issue is a huge fiasco. In some districts re-affirming is almost not allowed, because judges don't think it is in your best interest. Then you have that idiot judge in Orlanda that set a precedent in that district that if you want to keep you home you HAVE TO re-affirm.

The decision in that case was due to a bank requiring the debtor to reaffirm if he wanted to keep the property. So the judge side with the bank, but she went even further and said it doesn't matter whether or not the bank demands re-affirming, but that she (the judge) interpreted the law to be that the only way you can stay in the home is to re-affirm, whether the bank cares or not.

She's an idiot because she failed to realize (or she ignored) that she can't require a third party to enter into a contract. The reaffirmation is a contract between you and the bank agreeing to honor the original terms of the contract after BK. Well the judge has power over you because he/she can dismiss your case if you don't do what she says. And she can force YOU (the debtor) to sign the re-aff, but she has no power over the Bank.

So, now we have Bank of America and Wells Fargo that are refusing to do re-affirmations. So I wonder what she (the judge) is going to do now in her district when someone want's to stay in there home after BK. Is she going to say "Tough luck, since you don't have a re-affirmation you have to move out of the home", even though you are willing to sign one?

Of course not! What the end result will be is that if the Bank requires you to re-affirm, you will have to and if the Bank doesn't care it will be your choice, and if the bank refuses, you will have to do a ride thru.

This is what the BK law should have said in the first place. The bank ought to be able to decide if they are willing to let you stay without re-affirming, they are the ones with a vested interest in you home, not the BK judge.

Whew!, that was a long rant!

[CCsAreEvil]

I do not know the answers. I am just speculating on the possible outcomes for the future. Some say that as long as you keep making your payments on time, they CANNOT legally force foreclosure because you have not broken the agreement to pay monthly (per your mortgage contract) until the mortgage is paid in full. So, if you keep paying both your 1st and 2nd on time forever (until the principal balances reach $0 owed), you should be fine.

However, at least once in one of these other threads, one guy said in a clause in his mortgage contract, it says by filing BK, the debtor broke the original contract, and it gives the bank the right to foreclose -- again, this is probably the rare instance of this.

For me, zillow is claiming my property to be worth about $15k over what I owe on my 1st. I'm risking the chance of the 2nd foreclosing having stopped paying them 2 months ago. I'm willing to take that chance because it simply isn't worth it financially to keep paying the 2nd since it will be "years" before the house value exceeds what is owed on the 1st + 2nd. At that point, I'd just leave.

[Mensa1]

Ride-through on real property is not standardized; it is allowed in some circuits and rulings have eliminated in others (specifically the 11th circuit).

Now realistically if one is in the 11th circuit, (AL, FL, GA), and you do not reaffirm your mtg, then you are surrendering the property. Now what does that mean.? It surely doesn't mean that you can't go home there that night, nor any night, for that matter. Certainly it is more complex than you checking off a box on the Bk Form.

So what does surrendering the home mean? Unlike a vehicle, the Lendere ISN'T going to come out and put the hook on your house, nor can they come out and say "You didn't reaffirm so you gotta go". They still have to use the court or legal system to foreclose your title interest from the property since you are still the property owner at this point. So from a practical standpoint not reaffirming ends up meaning little. The lender will most likely continue to accept mtg payments, although they are not obligated to do so. Today with the real estate conditions lenders aren't looking for ways of acquiring more property so if you are current on payments and paying in a timely fashion, everyday life should go on with you enjoying homeownership just as you had before filing Bk.

Depending upon your states laws, the lender may or may not be able to accelerate (foreclose) at any time in the future since you haven't reaffirmed. Again, from a practical standpoint this isn't going to happen. The mortgage lending community is a long way from having enough time and energy to go out and look for hornets nests to stir up. Of course all of this is just my opinion, but I have some knowledge on the subject.

The specifics of your situation may vary from the opinion above. Be sure to consult your Atty before relying on the opinion above.

[BCA2009]

Now realistically if one is in the 11th circuit, (AL, FL, GA), and you do not reaffirm your mtg, then you are surrendering the property. Now what does that mean.? It surely doesn't mean that you can't go home there that night, nor any night, for that matter. Certainly it is more complex than you checking off a box on the Bk Form.
.

This is where it gets complex. I checked the box to intend to keep and re-affirm. Bank of America no longer does re-affirmations and the Court doesn't have the authority to force them to sign a re-affirmation with me. So I am NOT surrendering. But I wont have a re-affirmation agreement. BOA doesn't want me to surrender, they just don't want to hassle with re-aff's.

This was a law that wasn't thought out before they passed it.