Should we reaffirm mortgage IF we can renegotiate terms?

[baker21]

I know, I know, never reaffirm a mortgage during a Chapter 7. But my question is this... we modified our mortgage about a year ago with a 3.875 rate for 4 years. After the 4 years, it goes back to the original rate of 5.5 (or 5.75, I can't remember without looking at the paperwork). Either way, the payment right now is $1060 and would increase back to the original $1295 in 3 more years. If we could renegotiate the terms to keep the 3.875 for the life of the loan, should we???

W have Fifth Third Bank and, honestly, they were really good during the mod. I'm hoping they'd say yes, but then we'd have to make the decision to reaffirm or not. We have no plans on moving. Looking for opinions!

[OHBOY]

I would, but one would have to hurry as rates are going up, up and away.........(I think however that it would be ideal if you could do a refi or modification prior to bk and than don't reaffirm)

[IBroke]

I'm hoping they'd say yes, but then we'd have to make the decision to reaffirm or not.

Many people get modifications after BK without a reaffirmation. It also leaves the question if the court and/or your attorney would approve a reaffirmation in the first place.

I see you are in Florida. Based on the circumstances (like having a higher mortgage balance than home value), you might be in a great position if you DON'T reaffirm. You can still negotiate in order to get what you want in 3 years. At that point, you could even try a strategic default and put the money you would pay for your mortgage on a savings account and put the lender under pressure. Remember: In Florida, you have a "right to cure" which means you can basically get your mortgage current prior to foreclosure. In addition, you don't damage your credit either because on a non-reaffirmed mortgage, no account activity is reported - neither good nor bad. And considering the fact that Florida is a recourse State, reaffirming might not be a smart move in the first place.

[justbroke]

I agree that you should pursue a permanent modification without reaffirmation. I did so with BofA before my Chapter 7 case was even discharged! It can be done.

[baker21]

That is great advice, thank you! I'm meeting with our attorney again today and will discuss this. During the first meeting with him, he assumed we would be reaffirming. Why are some attorneys pro reaffirming? I'm so glad I found this forum and now see reaffirming is not the norm!

[IHateToBeEmo]

Why are some attorneys pro reaffirming? I'm so glad I found this forum and now see reaffirming is not the norm!

After we left the meeting with the trustee and were finished with our Chapter 7, our attorney still handed us re-affirmations to sign while we were in the hallway. I just said "I don't think it's in my best interests to do that" and declined. Not sure why he kept pushing to re-affirm.

[TXskyblue]

IHateToBeEmo, my atty did the same thing - kept pushing to reaffirm. I'm not going to reaffirm my house or car, but I'm continuing to keep them current. Discharge is next month so we'll see if the issue comes up again, but I doubt it.