Reafirm Mortgage?

[325Falcon]

I have read in a few post that Countrywide will not reafirm a morgage after a chapter 7.

Is this a Countrywide policy or do the decide on a case by case basis?

If a mortgage company does not reafirm a mortgage what does this mean?

I assume that if I stay current on the loan I can stay in the home and if I choose I can walk away, since the debt is technicaly discharged I would not be acountable for said debt. Is this a correct assumption?

If this is the case why would Countrywide not reafirm?

If they dont reafirm can they take possesion of the home and/or demand a certain amount of money if by chance the housing market skyrockets? How would this lack of reafirmation effect the selling of the home and any equity in the home?

[Minnymouth]

Countrywide has a reputation for not "reaffirming" their mortgages in bankruptcy. Thus the minute you "default" with a late payment, etc..... they can seize the home and resell it. They can foreclose on you at any given time in the future.

As long a you make ontime payments (forever)...... or until you can refinance thru someone else....... the debt is discharged on the home with Countrywide thru bankruptcy. If you want to walk away from the home in the future you are free to do so...... and owe no future balance or penalties.

Countrywide does not reaffirm because they are "banking" on you defaulting, them foreclosing, and they resell and get their money. They make money off resells plus what you have already paid to them in interest, penalties, etc.

[325Falcon]

So if the mortgage company does not reafirm that makes the home "owner" in effect a home renter.

If the realestate market booms and the value of our home sky rockets the mortgage company owns any and all equity therfore can demand that we move out or pay them the new market value?

Am I missing somthing here????

[HHM]

So if the mortgage company does not reaffirms that makes the home "owner" in effect a home renter.

If the real estate market booms and the value of our home sky rockets the mortgage company owns any and all equity therefore can demand that we move out or pay them the new market value?

Am I missing something here????

Yes, you are missing something.

If you do not reaffirm, the bank DOES not own the equity. All a reaffirmation does is reinstate your personal liability for the loan amount. The bank always has a lien on the property regardless of the BK. But the lien can ONLY BE for the amount owed.

A mortgage (or any secured debt) creates two types of liability.

1. The item of property that acts as collateral is liable for the debt. (this is why it is called a secured loan).
2. Personal liability of the individual who took out the loan.

Thus, under normal circumstances, if the individual stops making payments, the lender can seek recourse against the collateral, (i.e. take the collateral and sell it to make the lender whole). A BK only discharges "personal liability". Regardless of who or what is liable, the bank generally only entitled to receive up to the amount owed on the property (except in the foreclosure scenario).

Thus, if the real estate market booms, and YOU sell your house, you get to keep any equity. But if the house goes to foreclosure, you lose that equity (which you would regardless of a reaffirmation).

[325Falcon]

shrew!! Thanks for the clarifacation.

[JasonK94Z]

At the same time, if the market falls flat on its face and you can't sell your home, you are free to just walk away. They won't be able to sue you for any loses.

[325Falcon]

So it seems that in the long run a non reafirm is a good thing with regards to a home mortgage.

[Minnymouth]

YEP, as long as the payment gets there on time each month (and hope it doesn't get lost in the mail)...................

[drummer1]

Ok, so you dont re-affirm, does that mean they will start forecloser with only one late payment? and do the original terms of the loan still apply? or can the mort. company start to play games with you? This is serious stuff....I am with wells fargo..Anyway, is it just safer to reaffirm? I want to keep a roof over my kids head with no possibility of it being taken away...Also do they still report to the credit burues as paid on time?

[HHM]

If you do not reaffirm, then, strictly speaking, the mortgage company could conceivably start foreclosure after 1 missed payment. As for whether the original terms apply, that is a more difficult question to answer because the answer depends on the term in question. Is there a particular term you have a question about?

As a practical reality, mortgage companies do not treat reaffirmed and non-reaffirmed mortgages differently in a meaningful way.

Regarding credit reporting, there is much dispute about how a reaffirmed mortgage should be reported...but as of right now...members are indicating that even with reaffirmed mortgages, the banks are NOT reporting positive payment history...they are simply reporting IIB. So from a credit reporting stand point, there is no benefit to reaffirming the mortgage.

[BKTango]

Ok, so you dont re-affirm, does that mean they will start forecloser with only one late payment? and do the original terms of the loan still apply? or can the mort. company start to play games with you? This is serious stuff....I am with wells fargo..Anyway, is it just safer to reaffirm? I want to keep a roof over my kids head with no possibility of it being taken away...Also do they still report to the credit burues as paid on time?

Each case, each person, each branch...etc. they are all very different so I can't say my experience will be yours. but on that note....

My mortgage is with Wells Fargo as well. It was not reaffirmed due to the lawyers for the mortgage company not getting the paperwork filed on time. I was scared to death! But it's been now almost 10 months since discharge and I have had no problems. The original terms still apply. It will not be reported on your credit reports if it is not reaffirmed, however several people who had reaffirmed theirs were still having problems getting their payments reported. They still take my escrow and pay my taxes and insurance with it.

I asked about the possibility of every being late if they would automatically foreclose (if that was the case I was determined to reopen my case if possible) but I have several of their people on tape saying no, they would still work with you to make up the missed or late payment and only start foreclosure proceedings if you were 90 days behind. (Take that with a grain of salt though)

I would make sure you keep track of your payments, pay on time, and keep copies of the payments and send them return receipt requested. You can also pay by direct debit from your account after you are discharged, and if you are like me and have a branch in your town you can pay in person and get a receipt for the payment immediately. Always have a paper trail of your payments. This has been my experience so far, it may be the same for you, it may not be. I pay mine in person, no later than 2 weeks before the 1st of every month and have a receipt and the payment posted immediatly at that time. So far they seem pretty decent in working with you and not against you.

[drummer1]

I would imagine, that the last thing they want is to foreclose...especially in this market..My wife and I have never been late ever on our mortgadge, our problems are due to credit card debt and my ability to control myself with spending but, thats for another thread...Anyway, I just want to be sure everything stays status quo....Should I contact them or just let it stay as it is?

Its interesting because my truck loan is with a local bank, and they basically told me they could care less as long as I keep paying every month, they dont bother with any re affirmations....It struck me because basically that means once I am discharged I can walk away from the vehicle when ever I feel like it and not owe a thing...Just strange how differnt companys aproach the whole bankrupcty thing.

[Lindsay]

What will happen if the mortgage loan is in both spouse's names and only one spouse actually files for bankruptcy and the loan isn't reaffirmed?

[Joe Farmer]

So if you fail to make a payment post BK-

The lender can bypass state forclosure law/timelines and take the house right away??

[RickInMich]

The lender can bypass state forclosure law/timelines and take the house right away??

No, I don't believe that's the case. What they could conceivably do is start the process "right away" after a missed payment. You would still have your rights under foreclosure, i.e, notice of sale, time for redemption (in some states), etc.