Question about mortgage, foreclosure and not reaffirming

[Ann]

Hi everyone,

It has been a while since I posted. Hope all is well with everyone. My question is if we did not reaffirm our first and second mortgage from our chapter 7 last year and we decide to walk away will a foreclosure be on our credit report also??? I'm confused on this. We are not late on our first but have not paid our second (PNC Bank) in a year. We have tried (with no success) to settle with PNC but they are so damn difficult to deal with. I'm thinking in roughly a year we could walk away but honestly I do not want to go that route. I just need to know that if we do decide to walk will there be a foreclosure on our credit report even if we did not reaffirm...thank you for your input!

[tobee43]

hi ann, nice to see you.

i actually have "heard" both. some say when the bank finally foreclosed it showed up and then had to send a the credit bu. the information that is was listed on the bk. i have also heard it never showed up after the mortgage was listed on the bk petition and the bk was discharged.

i would just take it one step at a time. frankly, when one thinks about it, a foreclosure stays on your credit report for 7 years while a chapter 7 stays on for 10, so one would really wonder what actual effect it would have since most likely the next 10 years are a bit tarnished anyway.

my general understanding is that if you listed it and you did not reaffirm, it's not suppose to be listed on your credit report. it sounds as though you have been paying and staying?

i'm certain others will chime in to see if it actually happened to them. we left our property well over 3 years ago and they bank has yet to foreclose, if they do, and put it on our credit report i will just try and get if off by showing them a copy of the petition which indicated the house was not reaffirmed but surrendered in the proceedings. honestly, i don't know if that will work either!

[despritfreya]

While I have not personally seen this case, a poster on another forum came up with the following:

Vlasic v. Equifax Credit Information Services out of N.D. Ill (2004)

"Vlasic first contends that he intended to voluntarily surrender the property when he filed the bankruptcy petition and thus he cannot be held accountable for the foreclosure since he had already surrendered the property in bankruptcy. Vlasic represented under oath in the bankruptcy petition an intention to voluntarily surrender the property. However, Defendants correctly point out that Vlasic's intention to surrender the property did not transfer title in the property. The holder of the note could not have sold the property prior to the foreclosure and Vlasic was the legal owner of the property at the time of the foreclosure.

Vlasic also argues that he was not a party in the foreclosure action. Yet, Vlasic was personally named in the foreclosure action as the owner of the property. Vlasic next argues that the foreclosure is an in rem proceeding rather than an in personam proceeding and thus the foreclosure cannot be reported on his personal report....

Defendants correctly point out that if foreclosures were never allowed to be reported on a person's credit report because a foreclosure action is an in rem proceeding, no foreclosure could ever be reported on a credit report because a piece of real estate does not have a "credit report." Vlasic has not cited any legal authority that indicates that a foreclosure cannot be reported on a credit report and Defendants have provided legal support for the contrary assertion. See Sepulvado v. CSC Credit Servs., Inc., 158 F.3d 890, 892 (5th Cir. 1998)(indicating that under the FCRA a foreclosure could be reported on a credit report for seven years). See e.g. Zahran v. Transunion Corp., 2003 WL 1733561, at *1 (N.D. Ill. 2003); Grant v. World Class Mortg. Corp., 1990 WL 19466, at *1 (N.D. Ill. 1990). There is nothing confusing about reporting the foreclosure on Vlasic's credit report because of his direct connection to the foreclosure. For instance, the judgment of foreclosure names Vlasic as a party and forecloses the mortgage created in conjunction with his mortgage loan account. Defendants also correctly point out that not every person that files a bankruptcy also is a party in foreclosure and thus it is appropriate to report both a bankruptcy and a foreclosure when applicable. "

Personally, since the reporting of a foreclosure (your name is still on title) is correct I see nothing wrong with it and agree with the above reasoning.

Des.

[tobee43]

des, for the sake of the cited case...i just had a few questions?

However, Defendants correctly point out that Vlasic's intention to surrender the property did not transfer title in the property. The holder of the note could not have sold the property prior to the foreclosure and Vlasic was the legal owner of the property at the time of the foreclosure.

a legal owner that had no rights once the property was in the hands of the lender to get that title changed unless there is cooperation from the lender? the only way one is able to transfer the title was the bank AFTER the foreclosure or a deed in lieu has been issued, right????? how can Vlasic be responsible for the actions or inactions on the part of the bank/lender, if they, the lender/bank held up the process for the title to be transfered, for an indefinite amount of time.

and if this is correct, then did Vlasic have the right to sell the property after it's surrendering, to enable Vlasic to remove his name ?? (i know that can't happen since the bank holds the note) could Vlasic take possession once again until the actual sale of the property and the deed transfers only at that time. i wonder did Vlasic ask the lender to do a deed in lieu of foreclosure and they refused, thus tying Vlasic's hands altogether?

also, if some states have a statue of limitation of 20 years the lender or bank can wait 19 years 11.9 months and then foreclose; finally releasing one's name off a title. time passes it's 20 years later and now one would have a foreclosure on their credit report...crazy stuff!!!

[phsunny]

We filed for Chapter 7 in Dec. 2009, and were discharged in April 2010. We did not reaffirm with either of the 2 mortgages and lived in the home rent free until June 2011 when we finally walked away from it. When our new landlord ran our credit both mortgage names were listed with a "zero" balance for both......it was excellent! Our credit score by the way came back as 645! We were so relieved!! Best of luck to you!

[despritfreya]

TB,

I have no clue what you are asking. My guess is that I am way too tired to comprehend. I will try sometime this weekend after I have had a good rest - if that is even possible.

Des.

[tobee43]

TB,

I have no clue what you are asking. My guess is that I am way too tired to comprehend. I will try sometime this weekend after I have had a good rest - if that is even possible.

Des.

LOL!!! des, rest well, i understood and understand this is a court decision, i just had some questions as to the actual findings and how they got there. however, understanding this case was decided back in may of 2004, well, we all know times have changed a bit since then.


"Vlasic has not cited any legal authority that indicates that a foreclosure cannot be reported on a credit report and Defendants have provided legal support for the contrary assertion. See Sepulvado v. CSC Credit Servs., Inc., 158 F.3d 890, 892 (5th Cir. 1998)(indicating that under the FCRA a foreclosure could be reported on a credit report for seven years)."

" Vlasic refers to cases in his legal standard and relating tangential issues, but the majority of the few cases cited by Vlasic even on those tangential issues are not controlling precedent."


i just really think Vlastic didn't argue the right points in the case...it's about time the precedent gets changed, is all my point is, especially if the lenders are holding the properties for an indefinite time period. i just believe if this case were heard today, Judge Der- Yeghiyan may have viewed it differently. ( i hope?)

the reading of the case did not define accurate time lines to fit today's situations of when the banks are actually foreclosing.