Thank GOD we didn't reaffirm mortgage, ? re; homeowners insurance

[murphsmom]

We filed BK7 and it were discharged in Sept. In May, we applied and were granted the HAMP program for our mortgage. We never signed the reaffirmation on the mortgage (the bank never sent it, I think it got lost in the shuffle, and we didn't bring it to their attention). We could make the new lower mortgage payment, and just decided to "pay and stay".

My husband very unexpectedly lost his job on Friday. This is his 2nd job loss in 2 years, it was the first job loss that sent us into BK to begin with. We really thought we were getting back on our feet after the discharge. Well, SURPRISE, this hit us out of left field and we had NO idea it was coming.

THANK GOD we didn't reaffirm our mortgage, because there is no way we can pay it now. We need every penny I make to put food on the table and gas in the car so that I can continue to work. Even with unemployment benefits, there is no way we can make this mortgage payment.

We are looking at starting the foreclosure process. We haven't heard from the bank as the mortgage was due a week ago, and I'm not sure they can even contact us since it was discharged. But, eventually, they are going to catch up with us. We know that we probably have a year, and it will take us that long to figure out a plan.

My specific question is this, our taxes, and more importantly, our Homeowners Insurance is escrowed with our mortgage payment. This was a requirement of the HAMP program. If we do NOT pay the mortgage, will our insurance be canceled? Should we contact the insurance company now, or wait until the foreclosure process begins?

I do NOT want to be without homeowners insurance.

Help. Thanks

[ValleYum]

I am SO glad you didn't reaffirm too!!!!

I am so sorry about your hubby's job loss. Ugh.

We haven't made mortgage payments in a while - our taxes and insurance were also escrowed. The mortgage company paid our taxes as normal in April and October and our homeowners insurance was paid in full for the year as normal in September. I double-checked with our insurance company because I was willing to pay for insurance myself if necessary but I didn't have to. Look at the date your homeowner's insurance is due - it is typically paid for a year so you should be good for a while at least (I hope!)

Good luck with everything!!

[AngelinaCatHub]

Of all things your insurance is the right thought. The taxes will go with the land, but if someone gets hurt on that property while in your possession, you would be libel. You can always take out a policy with another insurance company after checking with the first as to paying it outside of escrow. 'Hub

[tobee43]

your insurance is covered by the bank under their umbrella policy. ours was also escrowed and actually what happened when our insurance company heard from us we were leaving, in nj anyway, they will not cover a home you are not residing in, i'm not certain about ny. (it was njm) , we were paid in full for the year , however they sent us a REFUND!!! since they said now the bank has to cover it and the bank had just paid them again for the upcoming year. so we rec'd back almost $600 from them.


hub i must mentioned we tried to obtain a policy and it was not possible in nj once you vacate. however, we didn't try while we were in since the insurance was paid up for that year in full. when we left we had a "credit" balance as far as the insurance company was concerned. (they also covered our auto).

however, this was AFTER we left, and during the time we "stayed and paid" we never made a payment to either the town for taxes nor the insurance company for the house. if you are still in the house there may be some concern about liability, but if you are out of the house it's the bank's problem.

also, do yourself an IMMEDIATE favor. go to walmart and buy a bunch of NO TRESPASSING signs and put them up. that will cover you're liablity if someone slips and falls when signs are within visual position for anyone to see.

once again, after you leave and the banks change the locks and take over the property you are fine. until then, i would safeguide as best you can.

sorry to hear about your husbands job loss!! things will get better!

[davetedge]

I'm sorry for your husband's job loss. It's definitely still very hard out there.

I'm in NY and haven't paid the mortgage in a while. My foreclosure process was started but has stalled out after the NY courts put the kibosh on faulty paperwork by the banks. My understanding is that you could have years in the home before the foreclosure goes through.

In my situation (didn't qualify for HAMP), the bank servicer is still paying the property taxes, even though I haven't been paying the mortgage. I don't have homeowners insurance (condo).

I'm in NYC so I can check online to see if the property taxes are being paid (NYC will put a lien on the property if the taxes remain unpaid for a year, and then foreclose after the lien is perfected). As of now it's current. I suspect the servicer would be paying the insurance too if that had been escrowed.

As for your insurance, I think you should contact your insurance company now to find out how to stay on top of payment status (they can cancel the policy quickly so its good to be in the loop if you have to step in quickly to pay it). I'd also want to see how the any kind of loss is handled for repairs or payouts. The bank may be the only loss payee and lack the will to do the repairs regardless of their obligation to the property.

[Gonzo]

If you are still living in the home, when taxes and insurance are escrowed, the bank must pay them (it's part of the terms of your mortgage agreement). The bank winds up using their money to pay your taxes and insurance. And you would then be running up a negative escrow balance.

Generally, when you default and a foreclosure is filed, your lender will notify your insurance company. Your insurer may even contact you to be certain you are still in the home. And at your renewal, your insurance premium will probably increase. Insurers believe that people in foreclosure are high risk.

[keepsmiling]

Sorry to hear. It sucks out there.
Hoping for better news for you soon.

[mountanddo]

Insurers believe that people in foreclosure are high risk.

Shame on them!