Need Clarification, foreclosure, non reaffirmed mortgage

[murphsmom]

HAMP mod took full effect May 2011. Filed Ch 7 in July, fully discharged in Sept, did not reaffirm the mortgage. Bank never sent reaffirmation paperwork, we wouldn't have signed anyway. We paid and stayed until December 2011 until we no longer could pay due to husbands job loss. We've missed 3 payments, bank sent out letter last week stating we had to pay in full, sent another letter today saying we had until March 1 to pay $5000 (total currently owed), or they will start foreclosure proceedings.

We reside in NY State. We are seriously considering just letting the house foreclose, not making any more payments, and saving that money toward a much smaller, more affordable home that will be solely in my name ( I didn't file BK, credit is clean, will qualify for small home).

Because the mortgage was discharged (although honestly, I do not think the collection dept at my bank is even aware of this), and not reaffirmed (again, I think they aren't aware of this now), will the normal foreclosure process in NY State be sped up? In other words, can they skip some of the steps that they have to do because the mortgage was discharged? Or, can we reasonably expect that the timeline for them to foreclose on this home would be similar to any other non discharged mortgage?

Wondering how much time we have, if we should or shouldn't bring to the collections dept attention that it's been discharged (will this buy more time), or should we tell them, and have them start the process quicker? Our taxes are escrowed through the bank, can the county force a tax sale? We plan on staying in the house and maintaining the grounds until they throw us out.

This is no longer a "what if" scenario, we're at a crossroads, need to decide pretty quickly which way we are going with this. We could maybe get caught up with a couple of payments over the next few months, but this won't be enough to satisfy the bank, and I don't want to keep getting further and further behind. I'm sick of paying so much for this house, but not sure that the alternative (smaller house, but have to come up with closing costs, etc... is a better option).

Thanks, I know this is long and I'm sorry. I'm just looking for opinions and advice. What would YOU do?

[Nufsayd]

Wow...I don't have the answers to all your questions, but you don't have to notify them, they will be notified via electronic or snail mail means. Given your situation I would not offer any information and just wait for them to be notified.

In the meantime, do you know the timeline for NY foreclosures or have your researched it?

[Drazil65]

Your obligation to pay that debt was discharged, you owe nothing more. If you know that you want to move eventually anyway then go ahead and just start saving what you can for the move at some point. Do not offer any info, do not offer to "sell" it for them (they will try to guilt you into a short sale or putting it on the market), stay until you HAVE to move out. They have not even started the foreclosure process yet so even if they could push it through you still would have a few months ahead of you. NY is probably like most places and will take much longer than you think.

Come up with a plan and a timeline (do some research and try to find out how long foreclosures are taking in NY these days), plan out your move and how much you need to save in the meantime. You have some time so now is when you should start planning. Good luck and search here as well for people that have done this.

[murphsmom]

It appears through all my research that New York is the state that is taking the longest from foreclosure to filing to the day you have to get out, the estimates I'm seeing are 900 days or more! New York, New Jersey and FL seem to have the longest times. However, I think we'd be prepared to move on in about 12 months. Any additional time after that would help to save more money, etc...

Does it matter if my bank is a smaller local credit untion, not a huge mammoth national bank? I'm wondering if the length of the whole process depends solely on the bank, or also on how busy the courts are?

[shark66]

Does it matter if my bank is a smaller local credit untion, not a huge mammoth national bank? I'm wondering if the length of the whole process depends solely on the bank, or also on how busy the courts are?

A smaller bank/CU will move much faster than the large TBTF one in my experience.

Having said that, nothing gets done fast in NY, apart from an assassination here and there......only because there's no bureaucracy involved in those...

Good luck to us all.

[sh9730]

Agree with most if you have made decision to go. You are safe because of the discharge. NOW, you say you dont think the collections department is aware of the discharge? THEY BETTER BE!! Against the law for them to try and "collect" this debt in any way. Now, they can notifiy you that they plan to start foreclosure proceedings on their security interest, but they shouldnt be calling you or anything like that.

[btbeme]

NY requires judicial process to foreclose, and that will take a while. I'd expect to be able to stay a year or more. Quite frankly, if you were able to bank the money instead of paying a mortgage for 12-18 months but were booted out with little or no notice after that, you could easily afford a month-long stay at a Residence Inn while you found a rental. In the meantime, let the bank do its own homework. Should you later get served with a 1099 or a lawsuit, you can clear it up with a copy of your discharge order.

In a non-judicial state (mostly in the western US) foreclosure can be done in as little as 3 months, with 6-9 being more typical. In those cases I urge folks to stretch the timeline by applying for a loan mod, and then maybe a short sale. In a judicial state, however, since the timeline seems so much longer anyway, I'd say just stay until they give you a notice to leave...and even then I'd ask the realtor or the new owner for a "cash for keys" type agreement to leave quietly.

A side note - are you attached to living in NY? With a Ch 7 discharge, absence of a mortgage, and loss of a job, that would seem a great time to leave an incredibly expensive state for a different (cheaper? warmer?) venue, unless of course there are other factors. Just asking, nothing against NY...

[SMinGA2]

Question - you indicate you didn't file. (So your spouse did, I assume?) Is your name on the home loan?

[murphsmom]

My name is not on the home loan, deed, title, anything. He's the only that filed.

The bank has called us DAILY for two weeks about paying this mortgage. The first letter we received last week said if we don't pay in full in 90 days from the date of the letter, they would begin proceedings. Got a letter today stating that if we don't pay in full by March 1st, they would start proceedings. Already they are contradicting themselves.

I know they aren't supposed to call, and honestly, I do not believe they are even aware that it's been discharged. They never even sent reaffirmation paperwork to the court when we filed, and haven't mentioned a single thing about the BK, or asked us to reaffirm now. I'm thinking this may work in our favor somehow. I'm not going to mention it, I'm going to keep their voicemails and contradicting letters and ride this out.

We decided today that it's fruitless to try and get caught up at this point. Husband got another job but can't start for one month. We're going to pay down some of my debts to put us in an ever better position for me to qualify for a mortgage next year, or whenever they throw us out.

I guess there is just no knowing how long that will take.... my biggest concern is having any amount of time to get out once we get notice. They need to notifiy us of the Sherrifs sale, correct? And usually how long from the time you receive that letter until the sale takes place?

Thanks for all the input. This will be stressful, but not as stressful of paying a mortgage we can no longer afford and living on Ramen for the next year.

[sh9730]

Murph,

Ok, just a couple of other points. I cannot imagine the bank was not notified of the BK filing - unless you didnt include them on your original filing - which I doubt happened. SO, they ARE in violation of the discharge. HOWEVER, if you push this point in your situation, it leaves the bank the only option to start official foreclosure process immediately since they cannot contact you with "normal" (phone calls etc..) collection activities. If you just let it go...you may buy yourself some more time, BUT it will be more stressful since the calls etc will continue.

SO, you could push them on the violations (and if they continued after that you could get some money out of them), but that might get you foreclosed faster.....

[murphsmom]

Just got a NOTICE letter, says we need to pay amount in full by March 9th or they will acquire our property by means of foreclosure. #8 on the long list of what our rights are says "If you have received a bankruptcy discharge this letter is not an attempt to collect the debt, but you will need to pay the total sum due to avoid foreclosure".

[SMinGA2]

Sounds like a standard notice there. They have to go thru certain steps in the foreclosure process. But it also sounds like this is just the beginning.

[tobee43]

even though the mortgage amount was discharged in your bk, did you mark surrender, retain, reaffirm, other?

by marking retain, the bank expects you to keep up the payments like a pay and stay even if the mortgage was listed.
if you marked surrender...then they can move to foreclose and have you forced out at some point, however as one of the other posters pointed our NY is in fact a judicial state and it will take some time for the lender to go through the process.
if you marked reaffim most likely someone had you sign a document obligating you to the debt. (i'm sure you didn't do that one).
other could be a number of things...i.e. still processing a loan mod etc.

the point here is the lender since the bk is now discharge has a right to pursue the property if it theirs, so you will continue to receive those notices until the final days of you having to leave.

[murphsmom]

He may have marked the intention to reaffirm during filing, but by no means signed an actual reaffirmation agreement before discharge/closing. I'm fine with receiving the notices, and understand that it's procedure. He absolutely didn't mark "surrender" because it we did intend to stay and pay. The mortgage shows "discharged" on his credit report, and I'm certain he didn't reaffirm. Also can't find anything in the HAMP mod that states anything about a future bankruptcy, applied reaffirmation, etc... The HAMP was a done deal, no more processing of the mod, as of May. He didn't even file til July. Never got any notice from the bank until early Feb, after we had missed a couple of payments.

Now, I just wish I knew how long this would take... That's the stressful part. Yes, they are a smaller credit union that will move faster (most likely), but since it's a judicial state, they still have to go through the process. The range of how long is what's questionable, 5 months? 2 years? Who knows??

If we had 2 months between the notice of the fire sale date, and the actual sale, we'd probably be OK with whatever. I just don't want to get a notice 4 months from now that states we have a week to get out, but I guess that's the chance we take.

[murphsmom]

Sorry one more important question - Since we did the HAMP Modification, aren't Freddie Mac/Fannie in "charge" of our loan? It says their names on our Mod paperwork, along with the banks name of course. I'm thinking that this may slow down the process a bit, especially with everything that's happening with the Obama admin this week specifically regarding these loan modifications. Any thoughts on that?