Help on Re-Affirmation on Mortgage with the 1st and 2nd to same lender...

[bkzips]

Hi, I don't post much but lurk, read and try and learn.
From what I have read, most people do not recommend reaffirmation.
This was the direction we were planning to go until we received a reaffirmation from our lender via our atty.

It is only for the 2nd? No reaff offered for the 1st?
Is that normal when you have the same lender for both loans?
So, what does everyone recommend we do?

We are upside down-basically the 2nd is worthless.
We are in Utah.
We want to stay and pay-ride through (Is that even possible)?
Can they default us in Utah and foreclose on us just because we don't re-affirm?
It was on the letter from the atty and he hasn't called us back yet.
We are current in our payments, we did loan modifications before we knew we were even going to file BK.
Help if you have advise, experience or words of wisdom, please.

Thanks, bkzips

[tcreegan]

Hi bkzips,

They can foreclose (in any state) if you are in default, but if you are staying current they have no incentive to foreclose. One of the attorneys on the forum reported no foreclosures for BK clients who didn't reaffirm and stayed current (in the last 10 yrs if I remember right)

The wisdom of the forum is to stay current on the 1st and after discharge settle the 2nd. But how this would work with both loans from the same lender..?? No clue.

Good luck w/ your filing and welcome aboard to the posting level from the lurking level !!

Tom in Colo

[bkzips]

Thank you Tom. I have read and learned much from your posts on this forum. Thank you for your time.
I am about 5 days from the 60 day window post 341 and we just barely received the re-aff (atty rcvd it sept 7),
so I am reeling at atty's comment on enclosed letter -that our lender could consider us NOT signing the re-aff as a default and
start foreclosure proceedings simply on our refusal to sign. It doesn't add up with what I have researched.

At the same time we received a notice from our trustee that he wants our 2010 tax refund do distribute-dependant on its amount so,
I am only further bummed, but crossing my fingers that this is the last of the bad.

I think I have lurked because I feel like shaking the beehive only sends out the bees and I have been hiding under a pillow just gleening what I could from whatever is already posted.
Now, in the 5th hour, I have many a question. ;)

[bkzips]

Just bumping in case someone else has experience, etc. Especially with the 1st and 2nd being with the Same Lender.
Any words, experience or links to peruse would help me in my stressed state.
Thanks.

[bk2009]

Generally, a second lender will not foreclose on the first because they'll have to buy out the firsts interests. That being said, when it is the same lender, this probably takes away a lot of ammunition for negotiating after the BK is discharged. I still don't think the second will foreclose, if you're on time with all payments. Too many lenders have too many houses on the books right now, they don't want any more, especially from someone that is paying every month.

[bkzips]

Generally, a second lender will not foreclose on the first because they'll have to buy out the firsts interests. That being said, when it is the same lender, this probably takes away a lot of ammunition for negotiating after the BK is discharged. I still don't think the second will foreclose, if you're on time with all payments. Too many lenders have too many houses on the books right now, they don't want any more, especially from someone that is paying every month.

I am praying they don't foreclose because we are current and I hope we still have ammunition to do a "offer" once our case is closed and settled (will have to wait for taxes/asset). Thanks for the reply and bump.

[debee]

If you're in default based on missed payments, or other contract terms (like insurance, maintenance, etc) then you're in default and the lender has whatever recourse is available to them via state law and your loan agreement. But if you're not in default, then filing bk will not put you into default so long as your payments remain current.

I couldn't find any case law in your state or anywhere in your circuit indicating that ride-through is NOT an option for real property. There is case law in your circuit indicating that lien-holders can repo "personal" property (like cars) if debtor does not reaffirm or redeem, but nothing that I could find on "real" property.

Also, there is good (current, not overturned) case law in at least three other circuits in which the court separated "real" and "personal" property in their interpretation of the BK code post-BAPCPA, allowing ride-through on real property but not personal property. So imho, continue as planned and don't sign the reaffirmation. Stay and pay. You can try to negotiate the 2nd once the debt is discharged. At that point you'll have more bargaining power because you'll have nothing to lose and the lender will know it. That's what I would do.

Best of luck to you.

[bkzips]

debee,
thank you.
I am not experienced in searching case law via circuit or state, but have been googling like crazy. Mostly, I come up with advertisements for lawyers. Anyways, just reading that you couldn't find anything makes me feel more comfortable. I shall sleep tonight. My gut says don't sign.

I felt like my lender showed me their ace card by only offering me a re-aff on the 2nd but not the 1st (they carry both). Zillow shows our value at ONLY what we owe on the first at this point.