Why reaffirming a mortgage is a very, very bad idea.

[laurannm]

Our lawyer put "Debtor will continue to make payments" or something to that effect. Not sure if this is something that is accepted in all districts though

[despritfreya]

Our lawyer put "Debtor will continue to make payments" or something to that effect. Not sure if this is something that is accepted in all districts though

This is very similar to what we state.

Des.

[Snax]

Our petition probably says something like that in it too, along with the check box to reaffirm. The key thing to note here is that an indicated intent to reaffirm doesn't lock you into anything, even if the lender actually offers up an agreement. You have time to think about it and decline.

[overit]

So, to make sure I have this right...

Living in the Southern Indiana District of District 7

Only one mortgage

Loan is about at "break even" status in regards to what I owe vs appraised value in 12/09

Loan is modest in comparison to lots I've read about on here; under $90k. House payment with taxes and insurance is nearly the same as I would have to pay in rent. Want to keep the house for stability for my son.

Loan Terms 5.5% fixed for 30 years.

Don't care in the least about what, if any affect happens on my credit report.

I recently had my 341, and was determined no asset in a Chapter 7. I reaffirmed my car, which is worth more than I owe. I reaffirmed the mortgage, but now believe that rescinding that agreement might be the best option.

so...

if I do that, there is nothing that makes it faster for them to foreclose, should I fall behind, correct? They still have to follow the same Indiana rules for foreclosure that they would have to if I reaffirmed and then lost the house?

and

they can't raise my interest rates or make me do a balloon payment, because technically, the loan no longer exists?

Am I understanding that right?

[blockhead]

I didn't reaffirm, just kept paying mortgage. Interestingly now Wells Fargo is reporting

Status: Discharged through Bankruptcy Chapter 7/Never late.

So that's nice

[newbie2]

Overit, please seriously consider rescinding the reaffirmation. Even if you stop making payments they still have to follow your states foreclosure laws and no, they cannot change the terms of your mortgage / note. They can't personally come after you for the money, their only recourse post bankruptcy is to foreclose. Just keep on making payments and please don't reaffirm.

[Snax]

There are some additional factors to consider here though. Using Oregon as an example, foreclosures can be either judicial or non-judicial. The non-judicial process is usually written into the note, forcing foreclosures into a minimum of 130 days to evict. Once a mortgage is wiped out however, lenders must foreclose judicially, and depending on court backlogs, this can happen much more quickly.

The rub however is in what equity you have and whether you continue to make payments. If you are negative or have very minor equity, it is unlikely they will pursue foreclosure, as doing so cements in a loss. They can still do it, but I can't imagine any good reason why.

Now if you actually do have equity, at some point the bank can pursue judicial foreclosure in an attempt to force payoff or refinancing. So if the intent is to keep the property long term, one should work toward being able to do that.

[blockhead]

If you keep up to date, and you have equity, substantial even, they'd have a hard time foreclosing in most states..

This may be obvious - it wasn't to me -I kept fretting about acceleration of note clause

Desprit set me straight on that as did state law (MA)

[Snax]

I agree blockhead, but my point was that it probably is possible (as difficult or undesirable as it might be) and one should consider that as reasonable motivation to get and keep their financial house in order.

[debee]

There are some additional factors to consider here though. Using Oregon as an example, foreclosures can be either judicial or non-judicial. The non-judicial process is usually written into the note, forcing foreclosures into a minimum of 130 days to evict. Once a mortgage is wiped out however, lenders must foreclose judicially, and depending on court backlogs, this can happen much more quickly.

The rub however is in what equity you have and whether you continue to make payments. If you are negative or have very minor equity, it is unlikely they will pursue foreclosure, as doing so cements in a loss. They can still do it, but I can't imagine any good reason why.

Now if you actually do have equity, at some point the bank can pursue judicial foreclosure in an attempt to force payoff or refinancing. So if the intent is to keep the property long term, one should work toward being able to do that.

This isn't true. Judicial foreclosure takes a lot longer than non-judicial. Also, when a lender forecloses they can only do so IF the borrower is in default according to the mortgage agreement. Bankruptcy doesn't wipe out that agreement. It only wipes out the borrower's liability for the debt. (Therefore, no deficiency)

The lender can't foreclose for any reason except default. That means unpaid taxes, insurance or monthly mortgage payment, and rarely, letting the property fall into a state of gross disrepair.

[Snax]

Perhaps I'm trying to read between the lines too much based on this synopsis -

http://www.loansafe.org/forum/foreclosure-laws/442-oregon-foreclosure-law.html

Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.

[justbroke]

Many lenders have been granted final summery judgment of foreclosure and still don't actually foreclose. Nothing is guaranteed these days. If you're willing to play the game, you just have to understand that the rules seem to not make sense anymore.

[BoxerLover]

I am having my attorney put that we want to keep our home on our statement of intentions. We have an escrow advance of about $12,000, but we are current on our monthly payments. They haven't started billing us for the escrow advance account yet because we were in a chapter 13 and they haven't done as escrow anyalysis. I am pretty confident when they do they'll give us 60 months to pay it (I hope anyways). The CSR says that's what they normally do and that if I'm late on any actual payments they'd most likely want to work with me. Will the lender decide if they want us to reaffirm or not, or will they not even bring it up unless we do? It is with Litton.

[Snax]

A 5-year escrow payback plan is what Citimortgage did with us after we completed our modification, pre-ch7.

[sac42375]

Question??? Our BK7 was discharged Nov 2010 our home was included in BK and we continured to pay. We Have NOT reaffirmed (thank god!!) but have now decided on pursuing a strategic default.. We are more than 200,000 underwater and just don't feel any loan mod outside a principle reduction will be worth our while. Now my question is can BofA pursue us with endless phone calls as they normally due in foreclosure proceedings or does the BK prevent them from pursuing us for past due payments?