please help with reaffirm question

[chrissy92972]

Today we met with our lawyer for the last time before our 342 later this month. We are in the 3rd circuit middle district pa. I know I asked this before but he said the 3rd district is different and I am feeling pressured into signing to reaffirm our house. We filed ch 7 and we are keeping our house. We have two mortgages we owe over $87000 on the first and close to $50000 on the 2nd. The house was appraised at $130000. I still do not understand why we need to sign? I thought we could keep paying on time and keep the house. We are up to date on payments. Our lawyer said that even if we pay on time that they can come and take our house anyway if we do not sign. Is that true?

thank you!
Chrissy

[shark66]

I'd go over your original mortgage paperwork with a fine tooth comb, and look for anything specifically related to BK proceedings.

Several friends of ours in that very same district have managed to "stay and pay" after Ch. 7 without re-affirming the debt.

If it were me - I wouldn't do it. At today's market, almost any bank will think seven times before they start a foreclosure process where the customer is still paying...

My $0.02 only...

Good luck.

[Chowder]

Our lawyer said that even if we pay on time that they can come and take our house anyway if we do not sign. Is that true?

Why would you doubt this?

Who handles your mortgage?

[debee]

Chrissy, open the phonebook and start calling other bankruptcy lawyers in your town, or in the next town. When someone at the law office answers the phone, ask if you can speak to the attorney. You can say you are thinking of filing chapter 7 bankruptcy, but you have a preliminary question. Tell them you are wondering if you will have to sign a reaffirmation agreement to stay in your house. Telll them you're current and you want to stay and keep paying, but you want to know if you can do that without signing.

There are a lot of people on this forum who were given bad legal advice. You need to find out if your attorney is giving you bad advice. You might have a sharp one doing a great job keeping up to date on the latest court decisions, or you might have hired the class dummy from some backwoods evening law school run by other class dummies from even more backwoods evening law schools.

Make some calls and see if the other attorneys back up what your guy says.

[SunshineGal]

Our district has ruled that you must reaffirm or surrender, however, it's still up to the 2nd lender to initiate foreclosure proceedings. We elected to take our chances, worst case, we may be forced to reaffirm or surrender at a later date.

[tcreegan]

Hi Chrissy,

Getting a reaffirmation approved depends on the BK judge, but district/court/trustee/judge are all irrelevant for a 'stay and pay' ...it depends 100% on the lender

Unless you had a miscommunication about reaffirm/stay and pay w/ your attorney, I agree w/ debee...it might be time for a 2nd opinion.

Tom in Colo

[chrissy92972]

thank you everyone and I meant to say 341 not 342, totally losing my mind at this point LOL. Chase has our first and Bank of America our 2nd. So far BAnk of America has done nothing and Chase sent a letter asking our intentions which we ignored for a few weeks and kept paying and then today our attorney said he would send them a letter asking their intent.

[debee]

So far ... Chase sent a letter asking our intentions which we ignored for a few weeks and kept paying and then today our attorney said he would send them a letter asking their intent.

Based on this description, it sounds like the lender just wants to know whether you intend to keep the property or walk away. You should tell them what you want to do. Saying you "intend" to reaffirm (on form B8 - Statement of Intentions) is not the same as a "reaffirmation agreement". I would make sure the lenders understand you intend to stay in the property. Your SOI should indicate "reaffirm".

[Pandora]

... We have two mortgages we owe over $87000 on the first and close to $50000 on the 2nd. The house was appraised at $130000.
thank you!
Chrissy

Ask your lawyer if its because you have roughly $43K in equity based on your appraisal - so basically the 2nd can foreclose, pay off the 1st - and still get close to what they are owed. If you dont continue to pay both the 1st & 2nd - then the reality is you actually may lose the house if you pay one over the other. Either one has the opportunity to collect close to 100% on their respective loans.

[tcreegan]

Hi Pandora, did I miss something..... 87,000 + 50,000 = 137,000 owed, value = 130,000 ?

Hi Sunshine, all districts require you mark either redeem, reaffirm, or surrender on the Statement of Intentions, thats in the new BK law. But it's not legally binding, you can mark 'surrender' and stay n pay....if the lender is OK w/ that. You can mark reaffirm, but the paperwork doesn't get done before the discharge, the paperwork does get done and the judge doesn't approve it, the reaffirmation gets done and you rescind it 60 days later, and stay n pay....if the lender is OK w/ that.

What it all boils down to is 'what will your lender do?'

Hopefully the lender doesn't boil over and simmers down....

Tom in Colo

[debee]

Our attorney told us we have to reaffirm when we first met with him because we did not have a rental agreement and then we would have no expenses if we had no house.

This quote is from the OP's other thread. I got the impression there (perhaps wrongly) that this issue was about the Statement of Intentions. Her attorney comments suggest that the trustee would question her housing expense on schedule J if she had no rental agreement and did not indicate an intention to reaffirm.

[SunshineGal]

Hi Pandora, did I miss something..... 87,000 + 50,000 = 137,000 owed, value = 130,000 ?

Hi Sunshine, all districts require you mark either redeem, reaffirm, or surrender on the Statement of Intentions, thats in the new BK law. But it's not legally binding, you can mark 'surrender' and stay n pay....if the lender is OK w/ that. You can mark reaffirm, but the paperwork doesn't get done before the discharge, the paperwork does get done and the judge doesn't approve it, the reaffirmation gets done and you rescind it 60 days later, and stay n pay....if the lender is OK w/ that.

What it all boils down to is 'what will your lender do?'

Hopefully the lender doesn't boil over and simmers down....

Tom in Colo

I agree that it all boils down to the lender. However, the 11th circuit has ruled that real property is treated the same as personal property, and you must reaffirm, redeem, or surrender. So far, I believe there is only one case where the lender actually followed through and it was a small local bank.

http://www.bankruptcyorlando.com/2009/11/bankruptcy-court-requires-reaffirmation-agreement-for-homestead-mortgage.html

http://pacer.flmb.uscourts.gov/pdf-new/50429640.pdf

SG

[chrissy92972]

thanks everyone, bottom line is we need to keep the house and keep paying both mortgages, however my fear is down the road what if something drastic happens and my husband loses his job and we can't pay? that is why I thought we would not sign to reaffirm but just keep paying on time. I am so confused. I guess I will wait and see what Chase has to say.

[keepsmiling]

We have Chase as well for first and second, and some equity too, so I will be paying very close attention to your response.

[Pandora]

Hi Pandora, did I miss something..... 87,000 + 50,000 = 137,000 owed, value = 130,000 ?

Tom in Colo

Hi Tom,

Uhm... I dont know.. did I miss it? LOL

I took it as $130K was the value - subtract the 1st of $87K = $43K that could go to the 2nd mortgage which is $50K.

So for foreclosure purposes - no matter who forecloses (1st or 2nd) the 1st would get paid 100% and the 2nd would get paid approx. 85% of their amount. Is that not correct? Thats how it should be done anyway.... the 2nd is junior to the 1st - so the 1st would get paid 100% of their loan amount, with the 2nd getting whatever is left.

The problem I believe, is that unless both mortgages are paid each month, regardless of reaffirmation or not - foreclosure in this case is pretty high given the appraised value of the home. Even if the 2nd foreclosed and had to pay off the 1st in full - the 2nd would still get 85% of their loan paid out.