Reaffirmation 2nd mortgage

[tcg550]

I filed last December and was discharged February 1st.

Our lawyer told us in order to keep the house we needed to do a reaffirmation on both our first and second mortgage.

We filed out the paper work the lawyer was supposed to file it.

The local bank that held both mortgages was taken or sold or whatever the term is by the FDIC. The new bank kept the 2nd mortgage and sold the 1st.

We were notified by the new mortgage company, Nationstar, and everything has been going well. We get statements and I mail our payment. We have never been late or behind even up to and during the bankruptcy.

Here is the problem;

I did not receive my usual statement for the 2nd mortgage, an equity interest only loan. I went to my local branch to make the payment and ask about the statement and I was told because it was included in a bankruptcy they can no longer send statements or solicit me for money.

I made the payment and then called the main office. They said they never received the final paperwork but are willing to have me resubmit the agreement.

I checked PACER and the intent forms are there but no final paper work. I don't know what that means.

2 of the 3 reporting agencies are showing both loans included in the bankruptcy and are not reporting the payments. The other agency is showing both loans in goods standing never late.

Here is the question;

The 2nd interest only equity loan is due for renewal in December. I was told they will not discuss options until they get the reaffirmation agreement. They did tell me that each loan was a case by case situation and it could be renewed as an interest only loan or an installment loan with a possibility they could call in the loan.

I don't know what my options are at this point. My original lawyer has not called me back.

The 1st mortgage is for 122,000. The second is for 25,000. The house is worth maybe 100,000 right now. When I took out the equity loan it was worth 200,000.

Is it possible the 2nd mortgage will foreclose for the 25,000? If not could they do it in the future when the value goes back up?

Is there any thing else I should be considering or questions to ask my lawyer?

Walking away is not an option.

Thanks for any help.

[SMinGA]

Sounds like it is in your best interest that the loan was not reaffirmed.

The 2nd could foreclose - but they would have to pay off the first. So for a house worth perhaps $100,000, they would have to pay off the $122,000 1st mortgage & pay legal fees for the foreclosure process. Can't go after you for the $, the obligation was discharged. Even so, the security interest remains.

You cannot reaffirm the loan now, your bankruptcy has discharged & closed. You could try contacting the 2nd about settling for 5-10% for them to release their lien.

[tcg550]

Sounds like it is in your best interest that the loan was not reaffirmed.

The 2nd could foreclose - but they would have to pay off the first. So for a house worth perhaps $100,000, they would have to pay off the $122,000 1st mortgage & pay legal fees for the foreclosure process. Can't go after you for the $, the obligation was discharged. Even so, the security interest remains.

You cannot reaffirm the loan now, your bankruptcy has discharged & closed. You could try contacting the 2nd about settling for 5-10% for them to release their lien.

I had thought about settling the 2nd one but I was hoping my lawyer would help out with that.

The other question is without the reaffirmation can the 1st mortgage foreclose if the property values rise and they can turn a profit? Or as long as I stay current I am good.

[SMinGA]

Foreclosure laws are state specific. I do not know of any that allow a mortgage to foreclose when you are paying according to the terms of your note, but I don't profess to know all state laws on the matter either. In general, it should not be a concern.

[tcreegan]

Hi tcg550,

2 of the 3 reporting agencies are showing both loans included in the bankruptcy and are not reporting the payments. The other agency is showing both loans in goods standing never late.

The third agency is clueless but let sleeping dogs lie

Make sure that all accts in the BK are listed as "IIB" or "included in BK" and that they have a zero balance. Watch for charged off, closed, other neg. notations.

ask about the statement and I was told because it was included in a bankruptcy they can no longer send statements or solicit me for money.

Due to the BK, lenders usually won't send statement or report to credit bureaus b/c it might be construed as an attempt to collect a debt. If you want statements, ask for them in writing. Same with credit reporting, if you want it to resume, ask in writing.

As for the 2nd, SMinGA has great knowledge and advice. They could foreclose but they would lose their shirts. Most folks on the forum settle for pennies on the dollar.

Good luck with everything,

Tom in Colo

[tcg550]

I thought I understood what reaffirmation was. Apparently I did not understand or my lawyer explained it wrong. Or a little of both.

Without the reaffirmation is my 1st mortgage still a binding contract or once it was included in the bankruptcy it is no longer a valid contract?

Do I want the 1st mortgage company reporting to the credit agencies? If so how do I go about getting that done? If the 1st was included in the bankruptcy why would they report my payments to the credit agencies?

I'm still waiting for my lawyer to return my calls.

Thanks for the help.

[tcreegan]

Hi tcg550,

Without the reaffirmation is my 1st mortgage still a binding contract or once it was included in the bankruptcy it is no longer a valid contract? Yes, no longer binding

Do I want the 1st mortgage company reporting to the credit agencies? always on time? want to rebuild your credit?

If so how do I go about getting that done? Request it in writing.

If the 1st was included in the bankruptcy why would they report my payments to the credit agencies? Because you pestered them until they did

Also pull your credit report post-BK and if you are current and paying on time, pester the credit bureau (again, in writing) to change the notation to "paying as agreed"

Good luck with everything!

Tom in Colo

[tcg550]

Thanks.

One other question.

My 1st mortgage was sold to Nationstar a few months after the discharge.

Why would they buy a discharged mortgage? Our local bank that had the mortgage was taken by FDIC and sold to another bank.

I've done lots of reading on these forums so this next bit stumps me because I did not reaffirm. I tried to but it never got filed.

I have been receiving statements with payment coupons all along. The statement actually says "This is an attempt to collect a debt and any information obtained will be used for that purpose." The statement also has the principle balance and a due date and amount due if paid late.

When I called Nationstar to ask a question about payment due dates they start every call with Nationstar also acts as a collection agency and all information you give may be used to collect a debt.

Does any or all of this sound unusual?

Am I losing sleep over nothing?

I am still waiting for my attorney to call. Monday I start looking for a new one.

Thanks for the help.

[tcreegan]

clueless

Hi tcg550,

Since the mortgage was sold after the discharge, I would bet NationStar is clueless about the BK. They would not have been on the creditors matrix and thus not gotten the BK notice.

I wonder if they got hoodwinked into buying a discharged debt......

This is a case where my brother Eds law works: Never attribute to malice things adequately explained by ignorance.

My gut feeling would be to let sleeping dogs lie, but if they do get wind of the BK, remember that it puts restrictions on what they can communicate to you. It is best that you communicate with them in that case.

Good luck with this,

Tom in Colo