Question about not reaffirming mortgage

[bakergrl]

We have a 1st and 2nd mortgage through the same lender and the house is underwater, but we decided to keep it because the rent in our state for most apartments/houses are more than we currently pay.

We were suppose to renew our mortgage contract a year ago but because of our bad credit we were not able to and the lender said to just let it ride and take the mortgage rate as it readjusts on it's own each year.

Our lawyer says no to the reaffirming of these loans because the house is so far under in value. When the interest rate readjusts next year can the lender raise the interest rate up really high just because of the bankruptcy or do they have to leave it to the national rate? Also, what happens when we go to sell the house years down the road, will there be a problem?

[StartingOver08]

The adjustments that can be made to your rate are detailed in your mortgage note. There is a formula showing the index, the margin and the rate adjustment dates. That is what the lender has to abide by, plus whatever adjustments need to be made to your escrow account.

The only way to know is to read your note.

[kw1025]

Yep, the mortgage lender has to abide by the original terms on the mortgage. As fas as you selling your house, bk does not erase liens.