Confused???

[sunydoesitbe]

So my car died 3 weeks before my last date for objections. We have been trying to drive 200 miles a day to get both of us back and forth to work with a toddler in tow. It has been a nightmare. So I decided to bite the bullet and see what the 722redemption people could do for us.

This is where the confusion comes in. In my divorce decree my ex-husband has to make my mortgage payments until it is paid in full. If I sale the house he must send the amount directly to me each month.
On my lawyers advice I did not reaffirm my mortgage. He stated that if I ever needed too it would allow me to walk away from the house and I would not be liable for the mortgage.
However the 722redemption lady is now telling me that I am liable for the mortgage.

Who's right?

[researchnerd]

I am sure this is overly simplified and has exceptions, but in general, this is the way it works as I understand it.

There are two parts to secured debts, such as mortgages and car loans:
#1 - The promise to pay X amount for the property, and
#2 - The agreement that they can take the property back if you don't pay.

Bankruptcy removes #1, but not #2. If you re-affirm your mortgage, you are essentially creating a new #1, and you're back where you started. You'll be responsible for your legal promise to pay from that point forward. If you don't pay as agreed, they will take the property back PLUS tack on attorney fees, inspection or appraisal fees, late fees, and any negative equity.

If you don't re-affirm, all that's left is #2. As long as you continue to pay the mortgage, the property will remain yours. You are still responsible for the mortgage for as long as you want to stay in the home. BUT, if you decide to give up the home and stop paying the mortgage, they can't come after you for money. They can foreclose and take the house back, but you won't be liable for additional charges or negative equity. This is what your attorney means by giving you the chance to walk away.

[SMinGA]

The real question here may be what the person at 722 meant. I'm guessing she is simply using the mortgage payment in your debt to income ratio - trying to determine if you can afford a car payment. I would also guess that what your ex was ordered, and what he pays, would count as spousal support and factor into your income.

[sunydoesitbe]

The real question here may be what the person at 722 meant. I'm guessing she is simply using the mortgage payment in your debt to income ratio - trying to determine if you can afford a car payment. I would also guess that what your ex was ordered, and what he pays, would count as spousal support and factor into your income.

This is what I thought as well. I even provided my divorce documents as proof. The mortgage in 7 years has NEVER been late.
You are correct she is using it for debt to income ratio. My argument is that what he pays should be allowed to count as income. Or at least count for something. It doesn't make sense that it can't be counted but a mortgage I don't pay on and didn't reaffirm is.

Was I an idiot for not reaffirming the mortgage? Not much I could do about it now I guess.

[SMinGA]

Unless the house has tons of equity - and you'd be able to sell it easily if you needed to - then I say not reaffirming was the right move. You still have all the benefits of home ownership, but if things change and you need to walk you can't be held responsible. (Even though your divorce decree says the ex is to pay, you were still liable for the mortgage based on the original note. Discharge takes care of that.)

[sunydoesitbe]

Any equity in the house is also mine, if I put it on the market, but I wouldn't be able to sell it quick.
I guess I was thinking not reaffirming was a win win for me. So thanks SM that makes me feel better.

[SMinGA]

Exactly... Lets say as a worst case scenario your ex stops paying and the market has tanked and you get a job transfer and have to move across the country. You won't owe a thing. (Unless there is an HOA involved - I understand the homeowner of record is responsible for HOA fees despite BK until the title changes ownership.)

You would, of course, be able to pursue the ex in civil/family court but the mortgage would not be an issue.

And equity in the house is yours whether your reaffirm or not. Even without the reaffirmation, you can sell the home at any point as long as the mortgage gets paid off, since that is what it would take to relinquish a clear title.

Any equity in the house is also mine, if I put it on the market, but I wouldn't be able to sell it quick.
I guess I was thinking not reaffirming was a win win for me. So thanks SM that makes me feel better.