Why should I NOT re-affirm my mortgage?

[Fallonedward]

As I've been reading the forum, everyone states DO NOT re-affirma your mortgage? Why is that?

If I don't re-affirm and then 10 years later sell the house will I get to keep the proceeds or does the house go back to the bank? I'm confused? thanks

[BobMango]

Reaffirming your mortgage does nothing for you, but it does recommit you to the loan. You don't get a reduction in the payment, the rate, the amount owed, anything. If you later can't pay for the house the bank can still pursue you for any deficiency balance.

On the other hand, if you simply retain and pay you can stay in the house as long as you pay for it. The terms of the loan will remain in place. You can later sell the house and keep any profits after the loan is satisfied.

If you do not reaffirm and are later not able to make the payments, you can walk away from the house without being liable for any deficiency balance.

Bottom line, there is no reason to reaffirm. Some people reaffirm thinking that this will help their credit post bankruptcy. I don't know one way or the other but I would not obligate myself to thousands of dollars of debt just to get a better credit score.

[Fallonedward]

Reaffirming your mortgage does nothing for you, but it does recommit you to the loan. You don't get a reduction in the payment, the rate, the amount owed, anything. If you later can't pay for the house the bank can still pursue you for any deficiency balance.

On the other hand, if you simply retain and pay you can stay in the house as long as you pay for it. The terms of the loan will remain in place. You can later sell the house and keep any profits after the loan is satisfied.

If you do not reaffirm and are later not able to make the payments, you can walk away from the house without being liable for any deficiency balance.

Bottom line, there is no reason to reaffirm. Some people reaffirm thinking that this will help their credit post bankruptcy. I don't know one way or the other but I would not obligate myself to thousands of dollars of debt just to get a better credit score.

Thank you for explaining this to me...So if I pay it off I then can keep the proceeds 10 or 20 years down the road...great advice, thanks

[kw1025]

There are reasons to re-affirm, depending on your needs. Reaffirming can help you with better rates, terms, report to credit, etc. If you want to continue to not be responsible for anything again, than dont reaffirm. But re-affirm is not horrible either. Again, depends on your needs

[huberm]

but say youre a few weeks late on your mortgage payment down the road, and you did not reaffirm - will they foreclose?

[gmk]

I don't have a dog in this hunt as I'm surrendering but huberm's question is intriguing. If the equity builds up either through payments or an increase in property values what is there to prevent the lender from taking the house?

[keepmine]

I don't have a dog in this hunt as I'm surrendering but huberm's question is intriguing. If the equity builds up either through payments or an increase in property values what is there to prevent the lender from taking the house?

As long as you are not in default, there is just nothing they can do. In many states, the act of filing bk does not trigger a default. You actually have to miss payments.
From a pratical prospective-why would they foreclose on a preforming loan? All they'd get would be the mortgage balance-they'd have to pay you any excess equity.
The name of the game is preforming loan-nobody will cutoff that income stream just for payback on an old bk that didn't cost them any money.

[blockhead]

Yes it is all a matter of what the state allows, which trumps the fine print in the note.
It's worth getting straight what the bank can or cannot do if you keep up payments while not reaffirming. What is needed for peace of mind is that they cannot accelerate the note (i.e demand full payment) or change the terms, if there is no non-monetary default.

Just because the bank is unlikely to press their rights now, with the collapse of the real estae market, doesn't mean they might not view it differently if and when the market rebounds or prices increase due to inflation.