Not reaffirming mortgage, but is it really a good idea?

[starr004]

Hello and thank you for any comments and advice in advance.

I am seriously underwater by a great deal. Current on the first and not current on the equity line by a few months. My 341 is coming up shortly. The 1st bal: $200K; 2nd: 25K. Value: $125K. Yes, no equity but I want to stay in the home as long as I can and keep making payments on the 1st. The monthly payment is affordable and I will be unable to move for the next several years. It seems that I won't ever be able to refinance, nor will I receive statements from the 1st, or have any idea if they receive my payments, or access the account on line and I must call them at the end of the year to get the tax statement. It looks as if they will never contact me!! The 2nd would also like a payment arrangement and my attorney seems rather vague on the matter - not saying whether I should pay the 2nd or not. I get that a reaffirmation would not be a good idea, but I am kind of at a loss.

Does anyone know - can the 2nd start calling me again after the discharge? Has anyone ever been in a similar situation with having no contact with their 1st mortgage company? It's a little scary...
Thanks!

[IBroke]

If you don't reaffirm the mortgages, the second mortgage is not allowed to resume collection calls. Same applies to the first.

In our case, we have online-access to the mortgage-account and receive monthly statement with the notation "we honor your BK and this is not an attempt to collect".

Instead of reaffirming (which would be the worst thing to do and rightfully so, wouldn't be approved in the first place by the judge or your attorney), I would suggest your attorney getting in contact with your first mortgage and providing them with a written statement that you would like to have online account-access and monthly statements by mail and that you wouldn't consider this kind of communication a violation of the permanent injunction. Once they have this in writing, they should be able to resume communication with you.

For now, I wouldn't bother dealing with the second. Looking at your current value of your home and the balances involved, I highly doubt the second mortgage is going to do anything (soon). In fact, at a $25K balance and a negative equity on the first of about $75K AND a BK without reaffirmation, chances are they might even write it off completely in the not too distant future without you ever having to pay a dime. What they are doing right now is reaching for the last straw.

[bcohen]

With your house being $75k "underwater", there is absolutely no equity for the second mortgage to go after, and the longer the loan remains unpaid, the more likely the lender will be willing to settle for 25% or less. You have nothing to gain by paying the 2nd mortgage. After the debt is discharged, they can no longer call you or send threatening letters.

Under the circumstances, you may or may not wish to keep the first mortgage current. If you do, then you can definitely stay in the house without having to worry about foreclosure. However, even if you do not keep the first mortgage current, it is possible that you could live in the house payment-free for months or even years--especially if there is a HOA, or if your local real estate market is flooded with foreclosures.

And no, do not reaffirm either mortgage just to keep receiving statements in the mail. That would be insane!

[LadyInTheRed]

I have read nothing but the title of this thread and my answer is: No, it is not a good idea to reaffirm your mortgage!

[LadyInTheRed]

Now that I've read your post I will add that you have some misconceptions about the consequences of not reaffirming. You will be able to refinance as long as there is equity. Reaffirming won't change the fact that there has to be equity to refi. Refing a discharged mortgage may not be such a great idea because you lose your ability to walk away if you decide you can't afford the home.

The mortgage company must send you tax statements. The IRS requires it. They also most likely will send you monthly statments with some notation re your BK like Ibroke mentions.

Use your bank's online bill pay to set up mortgage payments. This will likely result in an electronic payment so you know it is received. You could also send all your payments by certified mail return receipt requested.

None of your reasons for considering reaffirming justify reafirrming a mortgage on a home that is $100K underwater!

[angles]

one thing to consider, after your BK is discharged you can contact the 2nd and negotiate a settlement if you want them clear of the property. otherwise, as some point when your house has equity they may foreclose.

[Drazil65]

Do not reaffirm, just keep paying every month and try to settle on the 2nd (or at least a new payment plan). You never know when you will need that "get out jail card" with regards to leaving the house in the future (ie: job loss, medical issues/bills, new job opportunity elsewhere etc.), you would regret not being able to make your life easier at that point.

[starr004]

I thank you for all of your replies; but, is it possible that a trustee could ask what your intentions are if you have underwater property? If you are not reaffirming and this comes up how would you handle this?

[keepmine]

I thank you for all of your replies; but, is it possible that a trustee could ask what your intentions are if you have underwater property? If you are not reaffirming and this comes up how would you handle this?

Handle it with the truth. You're so far underwater that it's not in your best interest to reaffirm and you'll try and stay current on the ist mortgage.

[MD69107]

Do not reaffirm under no circumstance. Be honest at the 341. Usually, they only ask you what happened to make you file. The whole process takes less than 5 minutes.