Reaffirmation laws and walking away

[SMinGA]

If you refinance, you take out a new loan which pays off the old balance. New lender replaces old in terms of position on the title. Since it is a new loan, post-BK, you are responsible for it. If you walk, you owe.

[Sweetpea3829]

Ok....just an update for anybody that might be wondering.

I spoke with our attorney today. The reaffirmation has NOT gone through yet. He told me to wait a week and see how we feel about nixing the whole thing.

In light of the information I've learned here (thanks!) regarding the timeframe the derogatory mark would stay on our credit file as well as our ability to refinance, we've decided to not reaffirm.

The ball is in Citi's court. In two months, when the note is officially in default, we'll see how badly they want to modify at that point. Seeing as how the house is 100K underwater, I can't imagine them being too eager to foreclose on it. I'm wondering if I might even be able to talk them into a substantial principal reduction.

In the meantime, we're going to ride out the foreclosure proceedings as long as we can. Should they choose to modify to terms that are agreeable to us, then great. Otherwise...buhbye.

When I spoke with one of the Loss Mitigation supervisors regarding the reasons our modify was declined, she rudely told me perhaps I should consider selling the property.

Hey guess what Citi...how about YOU sell the property. And when it sells for 100K instead of the 250K we owe...we'll be right there to buy it back (can we do that?).

Because the loan was discharged in 2007, I don't even think we have to wait before getting another loan. Does anybody know for sure?

[researchnerd]

Our home was ~$80k underwater and it did not stop (or even slow down) our Citimortgage foreclosure. They don't really care, they just add it to their list of loss write-offs and move on. We were unable to talk them into any kind of modification or refinance, much less any principal or interest rate reduction. They just would not budge.

I'm not saying this to be negative, and every situation is different, but I wouldn't count on Citi doing anything other than foreclosing as soon as they are legally allowed to do so. Their backlog didn't seem to slow them down at all. In my case it took only 5 months from our first missed payment to foreclosure date, but GA offers very little in terms of homeowner protection.

I'm not sure why you think it will take 1-2 years -- in RI, it looks like you could be out after your 20-day notice + 21 days of newspaper publication. You might buy a little more time by making them evict you, but that could also happen concurrently. Do you know whether your closing docs specify that a judicial foreclosure is required, or can they do non-judicial?

[Sweetpea3829]

I honestly have no idea the difference between judicial vs. non judicial. And all of the mortgage and closing documents are tucked away.

I'm basing my time frame on what the attorney told me.

Moreover...when we let the first house go...we contested absolutely nothing. We stopped paying in June of 2006 and put it on the market with the intent to not sink another red cent into the property.

By September, we realized the house was not going to sell for what we needed it to sell for and we started looking into other options. In October we met with a BK attorney. We started the process immediately. As far as I can remember, the property officially foreclosed at the end of February of 2007 (I might be mistaken on that though...I vaguely remember there being an auction scheduled for around then). We stopped collecting rents from tenants the previous month and told them to start looking around.

Our 341 meeting was in April and everything was discharged shortly after.

From what I understand...foreclosure can be delayed if the homeowner's contest and appeal. This is our intention. The longer we can delay, the better, even if it means paying Citi a little here and there.

Honestly...I think in two months time they'll want to reconsider a modification. If not...then I have absolutely zero problem with walking away.

I appreciate hearing from another Citi customer...it gives me a heads up on what I might be dealing with. :-)