Mortgage Company Question

[jelo6875]

We filed chapter 7 on 7/30 but are planning on keeping 1 car and our house. Today we got reaffirmation papers from the mortgage company....what happens if we just ignore them and don't send them back?

[despritfreya]

You will find many posts on this subject. My legal position is you never, ever sign a reaffirmation agreement for a mortgage. Why on earth would one want to reobligate themselves to such a large debt thus running the risk of a law suit down the road if they were unable to make the payments? The reality is just make your payments and you will be fine.

[blockhead]

You will find many posts on this subject. My legal position is you never, ever sign a reaffirmation agreement for a mortgage. Why on earth would one want to reobligate themselves to such a large debt thus running the risk of a law suit down the road if they were unable to make the payments? The reality is just make your payments and you will be fine.

How do you see that playing out down the road if there is a miraculous revaluation upward in real estate prices? Seems impossible now but there will no doubt be further dollar devaluation at some point. With most notes containing bankruptcy default clauses, what's to stop a bank from accelerating the note if they feel like it, apart from state laws?

[despritfreya]

In response to:

"How do you see that playing out down the road if there is a miraculous revaluation upward in real estate prices? Seems impossible now but there will no doubt be further dollar devaluation at some point. With most notes containing bankruptcy default clauses, what's to stop a bank from accelerating the note if they feel like it, apart from state laws?"

1. Last point 1st. The adhesion/ipso facto clause of the contract (especially in the context of a consumer) that claims filing of a bk is a default under the contract is unenforceable (as you have alluded to). The Code does not require one to reaffirm a debt secured by real property.

2. The value of the home is not the issue. The issue is re-obligating oneself to the underlying promissory note. The risk, in my opinion, is way too great. If you are lucky enough to have property with equity over and above the lien value then, I suppose you are going to sell it before a lender can foreclose.

[bigtim6656]

I would agree, I question weather I want to reaffirm or ride through my jeep. Never been late and never will but not having it over my head would be nice. My reasoning for the reaffirm is to get the reporting. When they send me my papers I plan on saying if you report every 6 month (every month would be nice) I will reaffirm if not I will not.

You will find many posts on this subject. My legal position is you never, ever sign a reaffirmation agreement for a mortgage. Why on earth would one want to reobligate themselves to such a large debt thus running the risk of a law suit down the road if they were unable to make the payments? The reality is just make your payments and you will be fine.

[brokejoker]

I thought they will report every month if you reaffirm? You are reassuming the burden of the loan so they should be reporting.

I would agree, I question weather I want to reaffirm or ride through my jeep. Never been late and never will but not having it over my head would be nice. My reasoning for the reaffirm is to get the reporting. When they send me my papers I plan on saying if you report every 6 month (every month would be nice) I will reaffirm if not I will not.

[blockhead]

Oh just to make clear, I'm not suggesting to anyone they reaffirm. I don't think WF and some others are even doing reaffirmations these days. I was more interested in what statute stops the lender from theoretically claiming a default under the terms of the note, and from accelerating it accordingly or what other hurdle prevents such an action, and there may be as many answers as there are different state laws on the matter, assuming it is state law that prevents enforcement.

[despritfreya]

In response to:

"I was more interested in what statute stops the lender from theoretically claiming a default under the terms of the note"

See 11 USC 365(e)(1): an executory contract cannot be terminated or modified solely because of a provision conditioned on commencing a bankruptcy case.

[tcreegan]

reaffirm credit reporting

Hi all,

FYI, most companies do not do credit reporting when you reaffirm unless you ask them to. They shut down reporting when the BK comes along and seem to forget to start back up again when you reaffirm (or ride through)

Remember that credit reporting is strictly voluntary for companies. They do not have to report......but they often will if you request it (with a letter). They can start reporting reaffirmed loans or even ride-throughs once the BK case closes.

Tom in Colo