Mortgage Company Raises Monthly Payment In Reaffirmation Agreement

[missjean]

Hello All!
I am a relatively new member, but have learned a great deal from reading your postings daily. Thank you so much!

My husband and I filed Ch. 7 on 7/28/10 (pro se) and our 341 meeting is on 9/3/10. When we filed, we indicated that we wanted to reaffirm our mortgage with Chase. In November, 2009 Chase approved a mortgage modification for us that lowered our monthly payment by $500 (for which we were TRULY grateful) and made life much easier. Our interest rate was lowered to 2%, and our monthly payment (including taxes and insurance) was lowered to $1205.

In today's mail, we received their Reaffirmation Agreement, and were shocked to see that the column marked "payment after reaffirmation" listed a 3% interest rate and a new payment of $1290. Can the creditor actually RAISE your payment as a consequence of filing for bankruptcy?

[SMinGA]

Go back and re-read your modification paperwork... It is highly unlikely that the 2% was for the life of the loan. Most of the modifications have a step rate. Such as it would go to 2% for a year, then up to 3%, then up to 4% until it reached a final rate of X%.

Of course, you do not have to reaffirm. You could keep making payments, and not put yourself financially responsible for the house after discharge. Keep making payments, and stay. If things change (lose job, transfer out of area, etc.) you can walk and not owe for the house. If you're upside down, its especially dangerous to reaffirm.

But I'm guessing due to the terms of your mod, your rate & payment amount will go up regardless.

[missjean]

Thank you for the rapid response!

Thanks for replying so quickly to my question! I called Chase this morning and the payment will remain the same. The reaffirmation agreement that was sent to me was handwritten and has several errors in it; my name is even spelled incorrectly! The person that wrote up the agreement put the 2% interest rate in all of the required spaces except one. In this space, they wrote in 3% and the payment amount that our mortgage will go up to in 2015.
(Under the terms of our modification, our rate stays at 2% for years 1-5, increases to 3% in year 6, 4% in year 7, and 5% for the remainder of the loan). We were aware of the changes in the rate after year 5, but the way this agreement is written, it seems that we would be paying the increased amount earlier than expected.

Chase told me to fax the agreement to them; they would make the corrections and file it with the court. Thanks again for your reply! I knew I could count on you guys!

[Phil]

Do not sign it as is and send it back to them...by doing that, you are agreeing to it as it is. Tell them to revise all of the mistakes and send you a revised form which you will sign.

Why are you reaffirming? Is it required in your state/district? If not, you really may want to consider not signing the reaffirmation.

[BCA2009]

As everyone above said, please reconsider re-affirming. The bank is not going to change your mod terms just because you don't re-affirm. They want those monthly payments.

[Anon]

Where can I find the information regarding whether my state requires reaffirming mortgages?

[iv65536]

Where can I find the information regarding whether my state requires reaffirming mortgages?

IIRC, the reaffirmation requirement is only in the 11th Circuit.

[missjean]

Thanks to all for all of your advice!

I called Chase again and advised them that I need a new CORRECTED reaffirmation agreement sent to me. They agreed to send it by overnight mail. We will sign that one and return it to them.
Hubby and I are both disabled (and close to 60 years old!!!!). Our combined fixed income allows us to make the mortgage payments comfortably and we want to stay in the house; can't afford to go anywhere else! If all of our credit cards are discharged in bankruptcy, we will have nothing reported to credit bureau. Without the reaffirmation, Chase will not report either. I don't think that the reaffirmation is mandatory but we don't have a real problem with it.

[keptdigging]

I would really think carefully about reaffirmation. This is your one Chapter 7 shot for 8 years... if something happens you cannot file another Ch 7 and you are on the hook for this. Personally I wonder why people filing are in such a hurry to rebuild their credit... no Chapter 7 escape hatch for 8 years! Living on cash and building up savings is my priority. The banks are in the loan shark business... a credit card is only safe is you have resources to pay it in full when you get ratejacked--in which case it is hardly necessary.

In your case if you're not going anywhere, you don't need a new mortgage. Why risk reaffirmation?

[tcreegan]

reaffirmations voluntary

Hi all,

Reaffirmations are not necessary, they are voluntary for both debtor and lender. Debtors have 60 days after signing one to rescind it.

Usually the terms stay the same, but that is not a requirement. When you get your reaff papers read them carefully, or better yet, get a lawyer to read them carefully.

Do remember that if you sign a reaff., you become legally liable for the debt. Something happens later, you cant pay, they foreclose, sell at auction, and sue you for the difference between auction price (minus costs) and amount on loan.

Staying current on your payments, marking reaffirm on the statement of intentions, but never asking for or signing a reaff agreement, staying current on your payments, and some state laws will hold you cannot be foreclosed upon as long as your payments are current. Check with a lawyer in your state.

This last option was called "retain and pay" and the new BK laws tried to get rid of it. It is also called a "ride through" Some courts therefore required the statement of intentions to have only "surrender" or "reaffirm" as options.

In many districts, the court will not follow up on filers who mark "reaffirm" to see if they actually have a reaffirm. Even if you do ink a reaffirm agreement, you can rescind it with in 60 days.

Running a reaffirm through the BK court is, of course, unnecessary. You can always enter into a contract with a lender after the BK case closed. (or after discharge some say)

Enough blathering, hope some of this helps,

Tom in Colo