Mandatory Florida mortgage reaffirmation. Yikes!

[shoopy]

This does not directly affect me, as I don't live in Florida, but I thought it was interesting, and thought I'd toss it out there for general info, or thoughts and comments.

While doing some research on mortgage reaffirmation, I came across a couple of Florida BK court rulings apparently based on a Eleventh Circuit opinion being interpreted as requiring a mortgage to be reaffirmed or the property be surrendered.

Apparently I don't have enough posts to post links, so please replace the xxx with www in the following non links to view the source.

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

xxx.bankruptcyorlando.com/2011/09/another-court-says-reaffirm-personal-liability-on-mortgage-or-face-foreclosure.html

I don't live in Florida, so hopefully it won't affect me--yet. Is this a omen of a more wide spread requirement of mortgage reaffirmation?

[DebtEnder]

I would tend to think most banks, assuming you are paying, would rather have cash on hand, then another house on their books. Same way with most car lenders. Only a few do it, and it is to make a point.

[justbroke]

This is nothing new. This is based on the 11th Circuit's ruling in a landmark case known as Taylor. In the 11th Circuit (Florida, Alabama and Georgia) you technically only have the option to redeem, reaffirm or surrender personal OR real property. However, it is up to the creditor to seek a remedy (decision) with the Bankruptcy court on this matter.

This is not widespread and, other than the 11th, I don't any other circuit even really cares. For what it's worth, the Taylor decision was made in 1993 and has been reaffirmed (through the District courts) as having been ratified (codified) by the 2005 amendments to the Bankruptcy Code (BAPCPA). Maybe SCOTUS (Supreme Court) will take this up someday. Unless another District sides with the 11th, I don't see SCOTUS taking this case right now. All of the other Districts seem to believe that the BAPCPA amendments don't specify "real" property at all when mentioning redemption, surrender, or reaffirmation as the only choices in Chapter 7 bankruptcy cases.

Even in Florida, many debtors enjoy the walkthrough on their discharged real property claims! In a few isolated cases, local banks and credit unions have sought to enforce the BAPCPA and 11th Circuit ruling in Taylor and have won their argument. I would not worry outside the 11th Circuit since Taylor is old.

[shoopy]

Thanks, that was very informative. I did a quick search on the board, but didn't see a reference. Good to know that it is being worked around.

[justbroke]

I have actually posted on this exact topic several times on the board. Even today, I was posting about this topic when it came to "forced" reaffirmations.

[Bell30656]

I live in Georgia. In my neighborhood there is a house that was owned by a young lady who filed Chapter 7. She had attempted to do a "ride through" on her house. Apparently the bank wanted the house back pretty badly. The mortgage was held by a small relatively local bank. The bank told her, through her attorney that if she didn't sign a reaffirmation the bank would foreclose. She didn't and they did. Funny thing is the bank may have been in a real hurry to foreclose but the house is still vacant just over a year later.