Reaffirming our mortgage in a Chapter 7?

[BrokeTwinkie]

We have positive equity in our house (purchased for $105K just less than 2 years ago, now valued at $140-150K). We intend to stay and make regular payments. We also intend to try to do an FHA streamline refinance in the future. Based on the fact we have positive equity, and based on the fact that I'm hearing that refi's can be more difficult without reaffirmation agreements, what do you think of reaffirming in our circumstances?

Also, if our lender doesn't send us a reaffirmation agreement, then how do we get one?

Finally, if we do not reaffirm but simply do a ride through, then what's to stop the lender from taking back the house? Even if we are current, don't they have a lien on the property that they could execute if we no longer "technically" have a valid loan?

Cheers.

[AngelinaCat]

Welcome to the Forum!

What are your exemptions for your home in Nevada? Much will depend on the answer to that question.

I should add, what are your other exemptions? I just answered my own question. No, you do not have the availability of using the Federal exemptions.

However, it looks like you have fairly generous exemptions. Here are some links of interest:

http://www.nevadabankruptcy.com/exemptions.html

http://www.nolo.com/legal-encyclopedia/nevada-bankruptcy-exemptions.html

http://www.nolo.com/legal-encyclopedia/nevada-bankruptcy-homestead-exemption.html

The general consensus and advice given on this site, is to never reaffirm a mortgage. There may be specific reasons why you may wish to, or need to.

Below is a link to a very good post by Despritfreya, who is an attorney, and this the recommendation and why:

http://www.bkforum.com/showthread.php?62833-Why-reaffirming-a-mortgage-is-a-very-very-bad-idea&highlight=never+reaffirm+mortgage

You may have to copy and paste that into your browser.

Good wishes to you!

[BrokeTwinkie]

Our Chapter 7 is already in progress, and we are well within the allowed exemptions for our home. I was not going to reaffirm, but we bought at the bottom of our market. A comp two houses away from us with the same floor plan just sold for $175K.

I've been reading some horror stories in the process of researching whether or not to reaffirm where some lenders will not refinance a non-reaffirmed mortgage, due to the fact that there is technically no existing mortgage to refinance. I've also read that not reaffirming leaves you vulnerable to foreclosure, as the Chapter 7 itself can be considered a default.

Since our home is unlikely at this point to go underwater, I was thinking that reaffirmation might make our lives easier down the road when it comes to refinancing and/or selling.

[professorkev]

I reaffirmed mine, live in NY and have $70K in equity (true equity as our housing market was barely affected by the crash)

My Attorney was fine with that and here in NY I think they recommend doing it if there is no undue hardship and because my perfect credit wife, solid paying job and such he saw no reason not to. So I signed it.

[IBroke]

I've been reading some horror stories in the process of researching whether or not to reaffirm where some lenders will not refinance a non-reaffirmed mortgage, due to the fact that there is technically no existing mortgage to refinance.

IMO, a bankruptcy doesn't "delete" a mortgage. In fact, bankruptcy doesn't even delete unsecured debt. Bankruptcy only removes the creditor's "right to collect". In that regards, I don't see any reason why a non-reaffirmed mortgage should be harder to refinance than a reaffirmed one.