consequences of not Reaffirming mortgage?

[Moneypenny]

I understand that with some lenders if you dont reaffirm your car loan they might take your car even if you are current, and have the right to do so.

How does that work with homes? If I dont reaffirm my 1st mortgage, either by my choice or theirs, does that mean they can foreclose any time they want in the future? Let's say home prices bounce back big time in the next ten years: it would be profitable to foreclose, so could they?

I dont know about my 1st lender, but know that BoA, my 2nd and 3rd, do not reaffirm. Could they pull a fast one on me in the future, even if I am current?

I also learned on the forum today that you can settle your 2nd and 3rd after bk. never heard that before. i guess that's another question for later though.

thanks,

MMP

[justbroke]

How does that work with homes? If I dont reaffirm my 1st mortgage, either by my choice or theirs, does that mean they can foreclose any time they want in the future? Let's say home prices bounce back big time in the next ten years: it would be profitable to foreclose, so could they?

This is District and State-specific. In the 11th Circuit, which includes Georgia, Alabama and Florida, you must reaffirm, redeem, or surrender. However, it's up to the lender to really make noise about you not living up to your intentions.

Foreclosure is a specific State process and if you are paying on time, they can't foreclose. However, if you surrendered it or didn't redeem or reaffirm it during the bankruptcy, in many States, the lender could go back into the Bankruptcy Court to force you to turnover and vacate the property.

I dont know about my 1st lender, but know that BoA, my 2nd and 3rd, do not reaffirm. Could they pull a fast one on me in the future, even if I am current?

The problem with having the same lender for 2 or more liens, is that they could leverage the junior liens if you're not paying them... even with it being underwater. Remember, they are the only entity losing money in that deal, so it's irrelevant that you're paying the first. Whether that would happen is extremely low.

In the end, if you do not reaffirm a mortgage, you must be prepared for any and all consequences of your decision. That includes the second deciding that it wants to foreclose despite being under-secured.

Settlement is an option for junior lienhodlers, but you need money to do so. It's usually a lump sum payment and can be as much as 20% of the balance of the note.

[Moneypenny]

So, if I am understaning you correctly, depending on the district, it is possible that BoA, by refusing reaffirm a 2nd and/or 3rd mortgage, is leaving its options to forclose at any moment in the future, even if I am current on payments.

As I understand it, this is not a choice on my end. I have heard that BoA is not reaffirming home equity loans. So, by going through the bankruptcy it means I could lose the home at any time, even if I keep up payments?

And does the 1st mortgage have any rights here? Can the 2/3rd just decide the time is right to strike, and the 1st has to go along with it?

thanks for any clarification

MMP

[justbroke]

So, if I am understaning you correctly, depending on the district, it is possible that BoA, by refusing reaffirm a 2nd and/or 3rd mortgage, is leaving its options to forclose at any moment in the future, even if I am current on payments.

Absoutely not.

First, foreclosure is based on State non-bankruptcy law. In order to foreclose in any State, the person must be in actual default do to non-payment. (Okay, maybe that's oversimplified, but it works for this purpose.) In other words, they can only foreclose if you don't pay.

However, if you "surrendered" it in a bankruptcy, they can go back to the Bankruptcy Court to force you to either surrender or reaffirm. There wa a recent Middle District of Florida case which perfectly showed this. The judge found in favor of the lender, and the debtor ended up reaffirming. This was a small local bank. I have never heard or read about a larger bank doing this.

If it's Bank of America, I don't see you having any problem with "retain and pay". As you write, the 2nd and 3rd can always lie in wait and pounce when you regain equity. It is always a chance that you take and you must be willing to accept the consequences of that choice.

I think a good strategy is to not reaffirm the 2nd and 3rd. However, you should pretend to still be paying them by setting aside the amount equal to what the payments would have been. Once you saved up 10%, of both mortgage balances, make an offer!

[Moneypenny]

Maybe I am not being clear. There is no chance that I want to take. If BoA refuses to reaffirm, that is not a chance I am taking, but something they are forcing on me.

I dont know if my 1st will reaffirm or not (most likely will), but have heard that BoA is not reaffirming even if I want to.

So I am wondering if this means they can get to me at any time in the future, even if I continue to pay.

If I could I would reaffirm, but apparently I cant

thanks,

MMP

[SMinGA]

Justbroke said they can only foreclose due to nonpayment. So if you continue to pay all your mortgages, they cannot foreclose. If you stop paying one, it is possible they will foreclose but 2nd & 3rd probably won't if the house is upside down on the 1st. (They would have to pay off the 1st mortgage with the sale proceeds, and not receive any $.)