Not reaffirming mortgage-purpose?

[HOMEBODY]

I am curious as to why we cannot reaffirm a mortgage to try and bring up our credit scores as soon as possible.

If there is no deficiently judgement in California and the bank will foreclose on you anyways if you dont pay the mortgage, what is the point of not reaffirming the loan?

I have 3 properties and one is in foreclosure. I understand that I will have a BK and a foreclosure on my credit report anyways. Its not like the BK is wiping out the foreclosure...so why not reaffirm my other mortgages or at least one of them to bring my credit score up?

Either way, pay or not pay according, the bank forecloses and screws up your credit again at a later time after the BK.

[pepperoncini]

The bank can forclose on a property that they have a lien on after one files BK. But they cannot further ding a person's credit post BK on a mortgage that was not reaffirmed.

For instance, we filed BK& in 2004. We filled out the reaffirmation papers but our mortgage holder did not complete theirs. We've been paying on our mortgage for the past 6 years and never had an issue. No, we're not building credit with it either, but if we needed to move in a moment, we could. Drop the keys on the counter and move out. There would be no credit repercussions to it.

It's the best of both worlds...if I sell the house, I keep the equity. If I cannot sell the house, there is no drama that unfolds as a result.

[helpmeout]

While banks looking into giving you a mortgage will be able to find the foreclosure if they look, getting foreclosed on won't have an impact on your credit score as long as you don't reaffirm. If you do reaffirm, it will have an impact on your score. And will be shown on your credit reports, along with your bankruptcy. If you don't reaffirm, the foreclosure will not show on your credit report.

[wonderingrov]

From what I understand, if you reaffirm - then the creditor forecloses and can't get enough money from the sale of the house to cover the balance of the loan, you are still on the hook for the remainder of the balance. If you don't reaffirm, you are able to walk away with no worries about still being obligated for the loan amount. Of course, this is primarily a concern if you are upside-down on the loan, or are not sure if they will be able to get enough from a sale to cover the loan. In my case, I'm upside down on the loan, so the attorney recommended I not reaffirm - and that is the way I plan to handle it.

I have heard that different states have different laws regarding this, so the state you live in could be a factor in this as well. As always, it is best to check with your lawyer regarding whether it is a good idea to reaffirm or not.

[HOMEBODY]

I read somewhere here that both BK and foreclosure will be on my report. That with a BK I can buy a property in 2 years again and with foreclosure 3 years after foreclosure so now I am confused.

Anyway, I am waiting to be discharged and Wells Fargo started the foreclosure on a rental I have. They have also gone through the trouble of filing a Motion for Relief which I thought was kind of stupid because I will be discharged end of August and their motion is set for August 5th. They can keep the house if they dont want to give me a modification so I dont lose anymore of my cash as I am negative on the rental payment vs the mortgage payment by $200 plus if anything things to be fixed, it comes out of my pocket.

I also have a rental property that is positive cash flow that I have owned for 20 years and its in the same city I live in so I can manage that and keep the repair bills manageable. I do have some equity in and I would like to reaffirm but my attorney's office said they do not reaffirm real estate. I want to have a credit based on this payment as I know I will keep this property until I pay it off and I want it to count towards my credit score.

How do I get this property reaffirmed after my attorney has stated no on the reaffirmation? Maybe I do another post on this?

But anyways, I did read somewhere that I would have both a BK and foreclosure so I need to have that clarified so I dont feel so bad about giving up one of my properties in foreclosure. I am still trying desperately to get it modified if it is financially good for me. I put $17,000 downpayment and have been paying down the mortgage the last 6 years so I will lose some money on it.

[helpmeout]

You won't have both a foreclosure and bankruptcy on your credit report. It's on the public record, which has nothing to do with your credit rating, that it would show. I would imagine that a foreclosure on a property that you did not reaffirm will look better than a foreclosure on a property that you did reaffirm and state you would pay them back.

Another thing you may want to look into is if they can come after you should you reaffirm and get foreclosed on if you move to a state that does allow the creditor to go after the balance.

Personally, I would just save myself the headache and not reaffirm.

[pepperoncini]

If a foreclosure occurs BEFORE you get you BK papers filed, then both a BK and FC will show.

If you have a foreclosure AFTER BK papers are filed and you don't reaffirm the debt, ONLY the BK will show.

Maybe someone else can address your other issues...

So your BK papers have been filed and you did not reaffirm? Am I reading that correctly?

[HOMEBODY]

BK filed on June 2nd and I believe they filed foreclosure on May 27th or so. They filed a Motion for Relief to continue with the sale on August 20. That is one property I was not going to reaffirm. Its the property that has the most equity here in California that I have owned for over 20 years. I only want to reaffirm a property that I know I am going to keep. The one on foreclosure right now they can keep it if they dont want to do modification.

[mrskal]

If a foreclosure occurs BEFORE you get you BK papers filed, then both a BK and FC will show.

If you have a foreclosure AFTER BK papers are filed and you don't reaffirm the debt, ONLY the BK will show.

Maybe someone else can address your other issues...

So your BK papers have been filed and you did not reaffirm? Am I reading that correctly?

If you have already filed for BK, when you say "foreclosure occurs before", does that mean fully foreclosed, like in sold at auction? What if you file, say Aug 1st, but you receive letter July 28 that they will foreclose? Will it still just so BK on credit report? Hope my question makes sense.