Hi guys, i had to stop by my lawyers office yesterday and he had me sign some documents for my reaffirmation of my mortgage. Basically i owe what my house is worth with no real equity in it. He also mentioned i would have to go before the judge for this, but the judge will be on a tv screen and not in person. Im curious if anyone can tell me what happens in this kind of scenario. Is this just so the judge can make a ruling on my actually reaffirming the mortgage?
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Basically the procedure is for the judge to determine whether reaffirming can be done without undue hardship to you. I seem to recall that if you have an attorney he can sign off on it. Apparently he doesn't want to or can't affirm that it won't be a hardship, thus the trip to the judge. You'll need to demonstrate the ability to make the payments within your schedules.
My question is, why on earth would you want to reaffirm? It offers no protection for you, and unless your mortgage holder is offering some really great term modifications I'd run away from reaffirming. You can stay and pay without a reaffirmation so why put yourself on the hook again?Case Closed > 2/08/2010 -
So what would happen if i didnt reaffirm it? I could stay but it would just show the debt as discharged? Does the mortgage company stop reporting your on time payments?Comment
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What would happen if the judge said "no, this mortgage is too much for you" would i get booted out of my house?Comment
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In our case we did a stay and pay. We were not in arrears when we filed. The bank is happy to get the payments. The advantage is that we can walk away without any further ramifications beyond the hit to the credit report. Currently the banks show the mortgage as IIB. No further reporting.Lawyer - $3000
Filing fee - $299
Fresh Start - PricelessComment
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Before you decide, be sure to read:http://www.bkforum.com/showthread.ph...g+mortgage+bad
Keep On Smilin'Comment
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Thanks for the replys you guys and i am doing my research on this. Let me see if i got this right. Lets say i owe $200,000 on a house, if i sign a reaffirmation agreement and i end up losing the house down the road and all they can sell the house for is $150,000 then they can come after me for the $50,000 difference? Am i correct here and is this why its a bad idea?Comment
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correct...you absolutely do NOT want to reaffirm your mortgage. That is probably why the judge wanted a hearing, to talk you out of it. So long as you stay current on the mortgage, the bank cannot foreclose.Originally posted by CUbuffs90 View PostComment
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Yes, that is exactly the reason it is a bad idea to reaffirm. If you do not reaffirm, but keep making payments, the only downside is that your timely payments do not get reported on your credit score. You still own the home, cannot get foreclosed on if you are on time.... but if you need to walk away at a later date after bk, you can leave the keys on the counter and walk away free and clear from any repurcussions or additional debt.Comment
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Thanks again guys, you changed my mind! One other question though, if one was to reaffirm their mortgage, would they still be able to sell it or do they have to pay the house off before selling it?Comment
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To actually "sell" it, (and not be a short sale), you have to pay it off either way, whether or not you reaffirm.
The difference between reaffirming and not reaffirming is that if you go to sell the house, and it is worth less than you owe and you do a short sale (the bank still needs to agree to the sale, both the 1st and the 2nd), the bank cannot hold you responsible for the difference. But also, if the home appreciates in value, and eventually you would make money on a sale, you get to keep that money even if you don't reaffirm.
In essence, your ownership of the home does NOT change if you don't reaffirm. As such, there is NEVER any reason to reaffirm a mortgage.Last edited by HHM; 05-06-2012, 06:30 AM.Comment
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As long as you pay the mortgage payment, the bank will not pursue foreclosure. If it is discharged in a BK, then it gets reported as discharged in a BK, the on-time payments are not reported.Originally posted by CUbuffs90 View Post
Personally, I wouldn't reaffirm. I know someone who did reaffirm her mortgage because at the time she could afford it. Fast forward a couple of years and her circumstances have changed and she is now she is stuck with a mortgage payment that she can no longer afford and wants to do a short sale but can't because the bank may still come after her for the difference and if they didn't, she would have to pay tax on what the bank forgave. Keep your options open and don't reaffirm.Comment
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CU-About selling your home..... I think your question was, would you have to satisfy the debt to even start putting your home on the market. And that is no. You would proceed with the sale of the property as normal, and the title company would automatically pay off the bank's lien before they gave any money to you.Comment
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Correct, AND, if it is a short sale, the banks would have to agree to the amounts.Originally posted by avery89 View PostComment
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I agree with everyone else...DO NOT REAFFIRM! If you look at my posting history, you'll see that at one point, I was furious that our house had been discharged (long story, but we were never late on this particular house and fully intended to keep it). I set out to reaffirm, as it was unacceptable to me that the loan would report as discharged in BK7 for the life of the loan (effectively hampering our credit forever).
At the midnight hour, just before we were to sign for the reaffirmation, everything changed. Ultimately, we walked away from the house, moved out of state and bought a home. We were able to do that because we did not reaffirm the mortgage. But in the four years since our bankruptcy was discharged and when we bought our new home, we stayed in the house with the discharged mortgage, continuing to make timely mortgage payments until it was time to walk away.
Again, I can see no good reason to reaffirm. None. Don't do it....just pay and stay.Comment
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