Not Reaffirming - Long Term Effects

[DustinLH00]

I completely agree with you on this one. I worked too hard to buy a home by the time I was 22. I am not going to let anything chance losing it. I believe the others that say if you pay and have proof of payment then you are ok, but I still want to sleep soundly and know that the house is mine. Plus, I really like the thought of having 2 mortgages and a car loan still reporting positive to my credit reports day 1 after BK.

I know this might sound weird but I want to reaffirm my mortgage. Since I have not paid anything on my cc in 8 months I will need this to rebuild my credit and I need the security. I need to know that the bank cant mess with me at some future date, I just don't trust them to do anything other than look out for themselves. I am afraid that 15 20 years down the road if they would somehow benefit from calling in my mortgage,they would not hesitate to do it. Just the thought of having to defend myself while I'm an old lady makes me nervous. Right now my mortgage is less than 31% of our income so I feel secure in our ability to pay, I love my house, and my house is worth slightly more than I owe so if the housing market has already hit bottom there is no place to go but up right? So I think we will reaffirm either way.

[momof3b1g]

The thing about not reaffirming is you mat be able to pay for it this month. But what about next month? Or next year. With the economy nobody is safe and guaranteed a job.

[eddiep]

I have been working on a loan modifications on the three mortgages I have on my home since January. I have spoken to them at least once a week since this Jan and I can tell you from experience they are unforgiving and ruthless. Although I have noticed over the past month or so their attitude has changed a little, they seem more willing to help, not sure why.

Does anybody know what happens if you do not reaffirm and miss a payment, is the foreclosure process the same if you have reaffirmed or is there a different timeline?

[DustinLH00]

I would think that if you file BK and do not reaffirm, they will jump on you much quicker than someone who is just behind on their payments...but I don't have experience with this.

[LuciluS]

I KNOW that many have stated on their Original Bankruptcy Papers they intend to 'Reaffirm' a Mortgage or a Vehicle Loan knowing full well, they are Not going to Reaffirm such. In some States it's even legal to be behind in the payments. I thought you could only file Chapter 7 If you were current on your Mortgage. That's what our BK Attorney told us.

It's hard for me to fathom how one can change their mind up until Discharge (I think?). I know it's a long time before the Reaffirmation Papers are sent by the Servicing (mortgage/vehicle loan) Agency, signed by the Debtor, his/her Attorney (if using one) & some states require the Judge to sign it also. To me, it's just like allowing the payment on your Means Test & putting it on Schedule J, YET you haven't made the payments in a month or 2-3 months.

Our house payment is $900 and some change each month. It has 1430 sq. feet, built in 1998, bricked with 1/4 of the front having siding, double car garage, privacy fence with 2 gates (1 is a 4 ft. single gate & other is an 8 ft. wide double gate) & just a tad bit over 1/2 acre of land. There are two vacant lots directly across the street from ours that cannot be sold as their is a main gas line running diagonally through them & the back of them are in a flood plan zone. Houses in our subdivision are spaced largely apart from each house on the opposite sides. It feels like living in the country, but actually living in the city.

You Cannot predict the Future! If there is anyone who fully understands such, it is DH and myself. From 2005 through 2008 were very tough years for both of us healthwise. We just knew the year 2009 was going to be a good year - Wrong! Both of us have had Major Medical Issues and the year is not even 6 months into it.

We know we have to budget for our $500 a month in prescriptions, know we will pay $3,000 on DH's insurance every year which doesn't include Co-pays to doctors. I have Medicare & a supplemental policy, but Medicare is Selective on prescriptions they will cover. I have to take Valium 3 X a day (just 1 of many prescriptions) for my Severe Degenerative Disk & Joint Disease with dozens of Bone Spurs down my spine. They will not pay for it. Must admit they pay better than DH's insurance, BUT again, you may only see doctors who take Medicare patients & they are becoming few and far away.

We are in our middle 50's. This is the last home we intend to own. It has everything we need. Might have to place ramps into the front door & inside the garage as their is a small width step, but my Scooter will not go over the steps.

The Housing Market in AR has picked up especially in our Area. I want that 'Comfort Zone' by Reaffirming our Mortgage. It's been tough enough gathering info for BK & we are not filing until 9/09. I don't want to hassle with the Credit Bureaus as I've ready plenty posts about them not reporting your Mortgage each month if you choose to 'Ride Through'.

And Yes, I feel in less than 2 years we will have Equity in our home. I don't want to live the rest of my life worrying if Servicing Agency forecloses on my home, even though I'm current on the payment. There are just too many scenarios concerning Reaffirmations. We are ReAffirming our Mortgage and that's Our Story and We Are Sticking To It

Luci

PS Wrote a Novel. One of those nights where I can't sleep and I take Ambien, a sleeping pill.

[Kansas1960]

Kansas is like Arkansas and we didn't see any significant decline in price. I would guess prices are flat to 5% down in my area. My house is worth 175,000 or so and I owe 120,000. I have lived here for 10 years and plan on staying for several more years. My attorney says not to reaffirm anything. I am going to trust his advice but do see there are some advantages to reaffirming.

[downsized]

I'd think this is very case by case. My atty also didn't recommend reaffirming. We went in with a plan of not surrenduring our home because our house payment is affordable and less than any rent we were able to find for a home for 5 people. He didn't recommend reaffirming it though because we're about $40,000 upside down. None of us are that confident in the housing market to think we'll be able to recoup that in the next few years, so it just doesn't make any sense for us to reaffirm. Of course, we'll not reaffirm knowing full well that our house can be taken from us at any moment for not having reaffirmed. It's a risk we're willing to take for the circumstance we're in.

[jojo]

I'd think this is very case by case. My atty also didn't recommend reaffirming. We went in with a plan of not surrenduring our home because our house payment is affordable and less than any rent we were able to find for a home for 5 people. He didn't recommend reaffirming it though because we're about $40,000 upside down. None of us are that confident in the housing market to think we'll be able to recoup that in the next few years, so it just doesn't make any sense for us to reaffirm. Of course, we'll not reaffirm knowing full well that our house can be taken from us at any moment for not having reaffirmed. It's a risk we're willing to take for the circumstance we're in.

Why could the house be taken at any moment??? If you are making the payments, it is your house, isn't it???

[Billssuck]

Our attorney said he would not recommend reaffirming our mortgages. If me or my husband loose one or both of our jobs, we could in no way make our mortgage payments. If I understand correctly, if we reaffirm and they have to auction off the house, we are liable to pay what is due after the auction proceeds are taken from the mortgage amount. Then...we'd be paying something for absolutely nothing. And...in my perspective...a house is just a thing, nothing more. What's important is to be able to take care of family and we can do that in an apartment or living with relatives, if necessary. If we don't reaffirm and loose the job or jobs, we can just walk away from the house without the mortgage lingering over our heads. Just my two cents....

[chad9162]

Okay, there seems to be a lot of confusion here. In California and probably in most other states real property (real estate) is treated much different. In order for a lender to "foreclose" you have to be in default (The law). A lender is not going to "foreclose" on a "CURRENT" loan. If you are paying why would they. It cost money to foreclose and sell your house. In these times it'd probably be at a loss.

As for reaffirming.....the code leaves out real property....

"Although the Bankruptcy Abuse Protection Act of 2005 (“BAPCPA”) largely eliminated the so-called “ride through” option for security interests in personal property, the Connecticut Bankruptcy Court in In re Caraballo[1] held that the option remains available for liens secured by real estate. Under the ride through, a debtor whose real estate mortgage is not in default does not have to reaffirm the debt or surrender the real estate, but can retain the real estate by continuing to make the scheduled mortgage payments."[2]

Thus, since the debtor in Caraballo was not in default, the Court disapproved the debtor’s mortgage reaffirmation agreement as not being in her best interests “because she could retain the subject real property without reaffirming the [d]ebt.”[3]

Read more here...

http://stjohns.abiworld.org/node/28

My attorney confirmed both these points....

To answer the OP's question, you need to reestablish credit with credit cards and loans. Most loan programs want a score of 620 or better. Remember payment history is everything. Debt to income ration is huge. Just get a few cards to re-establish you credit.