Need help clarifying mortgage after bankruptcy... trying to collect past due payments

[ecsclb1724]

So DH and I filed bankruptcy pro se in Dec 2009. Everything went perfect, no issues at all.

At the time we were two payments past due on our house. We decided to reaffirm the mortgage due to the fact that we are not upside down, and would like the payments to show up on our CR for when we'd like to buy in 3 years or so.

We received our reaffirmation letter in Jan. saying payments were to start Feb 1, 2010 in the amount of $1289. Signed it, sent it off, no problems.

Well yesterday I get a letter in the mail dated 5/4 saying we are three payments past due for over $4000 (including late fees) for payments of 3/1, 4/1, 5/1. I double checked my account and we have paid every payment since the reaffirmation stated payments to start 2/1/2010. May's payment was paid 5/10 (we're not "late" until the 15th and I have direct deposit 5/10 so that's when they get paid).

I e-mailed the lady (since that is my preferred mode of contact so I have everything in writing) and she said that the bankruptcy does not take away the 2 missed payments we had before filing.

My understanding was the reaffirmation was to reaffirm everything you currently owed into a new payment. That the bankruptcy either canceled the past due payments due to the fact they were IIB, or when they reaffirmed, they reaffirmed the entire balance of the mortgage and put it into your new payments.

I'm just wondering if what they're saying is correct. I really don't have $2700 right now to pay straight out for two past due months of mortgage payments, I just had a baby and our medical copays came out to approx $1500 which we had saved up for in advance and they were just paid so our savings account is minimal.

Can anyone give me any insight? I have the reaffirmation paperwork at my work in my desk but since I'm on maternity leave right now and have my three boys with me, I can't just run in and grab it.

Thanks

Erin

[SMinGA]

Reaffirmation reinstates the original mortgage, as if the bankruptcy was never a factor in it. You owe the missed payments. If you reaffirmed, then nothing pertaining to your mortgage was discharged or "IIB". If you did not reaffirm, the obligation to pay would be gone but you'd need to keep paying in order to remain in the house.

You said you filed pro se, and the only thing you mentioned about the reaffirmation was 'sending it off'. Was it filed with the court, did a judge sign off on it? When you file pro se it must be approved by the court. I find it hard to believe you would have gotten this approval when you were behind on your mortgage to begin with. What I'm trying to figure out - is did you actually reaffirm?

You may be able to ask about a modification of some sort, either to split the missed payments up to pay over 3-6 months. Or perhaps something different. If the reaffirmation was actually finalized as part of your bankruptcy, you may still be able to cancel it. I believe you can void it within 60 days of your discharge but I'm not certain.

[justbroke]

It's true. A reaffirmation doesn't reset the debt or past due payments. Only a modification can do that. I really wish I wasn't reading that you reaffirmed a mortgage debt, just so that it would report as a trade line. It's too late now to correct this and the damage is done.

You will need to seek a modification that will either remove the past due payments or put them on the end of the loan, or otherwise re-amortize the loan with the arrears added to the balance.

You have totally misunderstood what a reaffirmation is and does. While it can change terms, it has to be very specific as to those terms. For example, if the reaffirmation were to take the arrears and add them to the balance, your reaffirmation agreement would show an inflated balance, and should have a note that the arrears were added to the balance and the payment "recalculated" based on some amortization rate and time period. This is another reason not to negotiate a reaffirmation agreement without an attorney. I don't know why the Judge approved this reaffirmation.

I believe your only choice, unless the reaffirmation specifically took the arrears and put them into the balance, is a modification. Unfortunately, a foreclosure now would be real bad for you.

If you have no other choices, you can do a Chapter 13 to catchup o the arrears. However, I really would want you to think about this, perhaps consult an asset protection attorney, and do the right thing. I hope you have a lot of equity in that property, or all this will be for naught.

[ecsclb1724]

Thanks everyone,

I have to check up on the reaffirmation on Pacer I guess and see what it says, the balance of my mortgage on the reaffirmation was inflated, which I believe is why we thought the past due payments were added to the reaffirmation and why our payments went up a little every month. I don't remember exactly what it said but I looked at it very closely before we signed it. It was signed and faxed, and sent through mail. Pacer showed they received it but I don't have my pacer password with me to actually access the reaffirmation that was sent in

[justbroke]

If you never had a court hearing to approve the reaffirmation, then it is an invalid reaffirmation. Anyhow, the inflated balance and recalculated payment is usually an indication that the arrears and fees were added into the loan and the loan re-aged to current.

You have some work to do. Pull it from PACER.

[ecsclb1724]

No, I never did have a reaffirmation hearing.

I sent in a forgotten password request so I'm just waiting for that to pop up in my e-mail and I'll see what it says.

I'm wondering if they were willing to reaffirm with adding the payments to my loan balance during reaffirmation, if they would be willing to do that now. I've been paying the reaffirmed amount since Feb anyways.

[ecsclb1724]

ok, I looked at my reaffirmation papers and it does include the two past due payments in the reaffirmation (which is why we signed it).

About a week after the courts received it this was entered:

REVIEW of Reaffirmation Agreement - Finding: The reaffirmation agreement has not been reviewed because the agreement is for a consumer debt secured by a mortgage, deed of trust, security deed or other lien on real property. (RE: Reaffirmation Agreement (pro se debtor) 13 ). (ERC) (Entered: 02/03/2010)

Call me dumb but I thought this was a good thing that it wasn't being reviewed, thinking it wasn't being reviewed with more scrutiny.

[justbroke]

This is EXACTLY what I hoped for! Your court does NOT approve reafirmations and you are LUCKY! I was going to ask you if there was an "Order on Reaffirmation", but this is even BETTER than that.

You are NOT responsible for the loan on that home. You need to do a couple of things. I would go for a modification if you want to stay around. The modification will NOT resurrect your loan responsibilities at all. You should be fine on that accord. Second, let them understand that you can and will walk. This should make them do the modification quicker.

[music12]

gosh justbroke, you are amazing. if i ever have a legal problem i'll consult you before any other attorney...

[CCsAreEvil]

You are NOT responsible for the loan on that home. You need to do a couple of things. I would go for a modification if you want to stay around. The modification will NOT resurrect your loan responsibilities at all. Second, let them understand that you can and will walk. This should make them do the modification quicker.

Wait.. a loan mod through your 1st mortgage lender is possible "after" the loan is included in a BK? I'm thinking "how can they modify your loan which you don't legally owe anymore?" Wouldn't they have to go through the whole credit check/your income process for this? If this is indeed possible, I will be seeking this route.

[SMinGA]

Sounds like you're referring to a refinance. Loan modifications are done to change the original loan terms, so the original loan is still in place. A refinance pays off the original loan and takes out a new one.

A loan mod will include verification of income, but its not a new loan.

Wait.. a loan mod through your 1st mortgage lender is possible "after" the loan is included in a BK? I'm thinking "how can they modify your loan which you don't legally owe anymore?" Wouldn't they have to go through the whole credit check/your income process for this? If this is indeed possible, I will be seeking this route.

[justbroke]

Wait.. a loan mod through your 1st mortgage lender is possible "after" the loan is included in a BK?

Then can modify it. I thought the same way in the past, that they couldn't legally modify the Note, but they can modify the Note! You just have no legal obligation to pay the Note as it is discharged in the bankruptcy.

My Modification, that I signed under oath before a Notary, specifically tells me that it does not create a "new" obligation and that the debt is discharged and I have no responsibility to pay it.

As stated, they do the same normal underwriting things, only a modification is less dependent on your credit score. However, you must income qualify.