Chapter 7 already discharged - mortgage not reaffirmed - foreclosure/credit score question

[cin67]

I'd like to address the issue of benefit, if any, of reaffirming debt.  I had CH7 with DD over 2 years ago. At time of discharge, signed a written Statement of Intention to Make Scheduled Payments form.  For 2 yrs, continued to timely pay each month. Built up equity. Listed house for sale, entered agreement to sell. Applied for new mortgage, was preapproved (by the same lender) for FHA loan. Last Friday at 5:05 pm I got a call that the absence of reaffirmation of debt on my old loan (that I am paying off in full in 3 days) is a "make or break" factor in whether I can obtain a new loan from them. The lender says it "needs additional infomration" and that "if I did not reaffirm my old debt, then my loan (for new house) will not close."  I will spare you the details of the stress this has caused.  I live in CT where a Statement of Intentions is completed for every item of secured property. ['If you choose to keep or "retain" the property, you must then check one of three more boxes. These boxes include "Redeem the property," "Reaffirm the debt," and "Other." Redeeming the property involves paying the creditor the retail value of the property at the time you filed for bankruptcy, even if you owe more on the property than it is worth. Doing this requires you to file a motion with the bankruptcy court. You can also check the "reaffirm" box, which means that you wish to take the debt on again. This means that the debt will survive the bankruptcy.The "Other" box is generally checked if you want to continue paying the creditor pursuant to your original agreement (although there are other options). If you check this box, you need to write a short explanation of what you want to do with the property.'}  I chose "Other" and explained "Continue Making Scheduled Payments."  Now, it appears that my failure to Reaffirm is a "make or break" and will "cause my new loan to not close." Thoughts? 

[grassfeeder]

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@cin67 wrote:

I'd like to address the issue of benefit, if any, of reaffirming debt.  I had CH7 with DD over 2 years ago. At time of discharge, signed a written Statement of Intention to Make Scheduled Payments form.  For 2 yrs, continued to timely pay each month. Built up equity. Listed house for sale, entered agreement to sell. Applied for new mortgage, was preapproved (by the same lender) for FHA loan. Last Friday at 5:05 pm I got a call that the absence of reaffirmation of debt on my old loan (that I am paying off in full in 3 days) is a "make or break" factor in whether I can obtain a new loan from them. The lender says it "needs additional infomration" and that "if I did not reaffirm my old debt, then my loan (for new house) will not close."  I will spare you the details of the stress this has caused.  I live in CT where a Statement of Intentions is completed for every item of secured property. ['If you choose to keep or "retain" the property, you must then check one of three more boxes. These boxes include "Redeem the property," "Reaffirm the debt," and "Other." Redeeming the property involves paying the creditor the retail value of the property at the time you filed for bankruptcy, even if you owe more on the property than it is worth. Doing this requires you to file a motion with the bankruptcy court. You can also check the "reaffirm" box, which means that you wish to take the debt on again. This means that the debt will survive the bankruptcy.The "Other" box is generally checked if you want to continue paying the creditor pursuant to your original agreement (although there are other options). If you check this box, you need to write a short explanation of what you want to do with the property.'}  I chose "Other" and explained "Continue Making Scheduled Payments."  Now, it appears that my failure to Reaffirm is a "make or break" and will "cause my new loan to not close." Thoughts? 

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while I can't say for sure, I don't believe the actual reaffirmation is what is holding it up.  I believe they want to see the current property change hands prior to.  Because you have not reaffirmed and you can technically justs top paying - they don't want your name on the notes of two properties.

[rmkelly33]

This just happened to me too.  Last year, I applied and was approved for a loan no problem. For various reasons I cancelled the Purchase Agreement and am now going to see about my credit now to buy this year.  

Anyways, I too had a BK7 discharge in 6/08.  I was never asked about a foreclosure on my home before and I had been approved by 2  lenders last year.  This year I was asked why the foreclosure.  I said I never had one, it was BK7 discharge.  They said I would need a letter showing when the title was taken out of my name.  I indicated once I filed BKand moved out I received no more communication from the loan company and now that loan company no longer exists, was bought out by someone else and they don't have my records.  Impossible for me to get.  They indicated unless they had a formal letter they would not be able to underwrite.  I said ok, I'll find someone else then as I was told they don't have my records.   Must be a certain lending company that looks at your CR differently.   

Good luck in getting your foreclosure info, hopefully the loan company didn't go out of business like mine  

On a side note, I can go and check zillow and county records to see when the title was transferred to the new person who bought the house so its' not like you can't check records somewhere to show when the house was auctioned.

[BHW]

I filed Chapter 7, did not include the mortgage's . Im told I did not re-affirm the 1st and 2nd mortgage after the bankruptcy???????????. I have been trying  to refi and have been refused-denied because of this.  What doe's this mean. Any help greatly appreciated. Thank you.

[StartingOver10]

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@BHW wrote:

I filed Chapter 7, did not include the mortgage's . Im told I did not re-affirm the 1st and 2nd mortgage after the bankruptcy???????????. I have been trying  to refi and have been refused-denied because of this.  What doe's this mean. Any help greatly appreciated. Thank you.

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If you filed Ch 7, then the mortgage's are included. ALL debt is included. The only way to not include the debt is to reaffirm it.  Reaffirmation is a very specific process through the BK courts. Sounds like you have continued to make payments through out your BK and after your discharge.

Have you been paying your payments on time? If so, and you can show where you have made the payments ontime, then you should be able to refinance your mortgage depending upon how long it has been since you have been discharged (and if you have rebuilt your credit). How long has it been since you were discharged?

[BHW]

Re: Chapter 7 already discharged - mortgage not reaffirmed - Loan Modification DENIED

Thank you for your reply.

I have kept up with mortgage payments on time since the discharge in NOV. of 2007. Credit score is 672. Im hearing from all lenders so far that if loans were not reaffirmed they will not finance???

The Title was cleared of all discharges and should be clear with my ownership name on it. Correct???

Have'nt checked that yet.

Any suggestions??

Thanks

[SoulMaster]

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@BHW wrote:

Re: Chapter 7 already discharged - mortgage not reaffirmed - Loan Modification DENIED

Thank you for your reply.

I have kept up with mortgage payments on time since the discharge in NOV. of 2007. Credit score is 672. Im hearing from all lenders so far that if loans were not reaffirmed they will not finance???

The Title was cleared of all discharges and should be clear with my ownership name on it. Correct???

Have'nt checked that yet.

Any suggestions??

Thanks

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This is going to sound really stupid, but it's how it works:  A Loan Modification will be immediatley denied if you're current.  A refi generally won't happen if you're underwater and didn't reaffirm. (A refi also won't happen if you're underwater and not fannie/freddie).  However, if you're current and have been current forever, you might want to wait until the HARP 3.0 refi rules come out (expected in the next few months, or so).

If you're not underwater, try a different bank for the refi.

As for clear-title: No.  All leins remain in place, you're just not personally liable for the debt anymore (the house is, though).

Good luck,

-SM

[tacokisses]

My bankruptcy was filed and discharged in 2008. When I was filing, they asked me if I wanted to include the house in the bankruptcy. I specifically told them no, and hell no. I wanted to keep my house and plus I was in good standing. All my payments have always been on time and it made most sense. After reading some of the other posts it looks like my house may have been included anyway? Along my lines of thinking, it didn't occur to me that I would have to reaffirm or really do anything in order to keep my house. I just kept making the payments like I always do.  I went through all of my bk paperwork and all the items and no where does it say anything about my house. The issue is now in 2013, almost 7 years later, I am trying to refinance my house and keep getting denied. Basically, all the companies I have been to are telling me my credit sucks and I don't even have any mortgage to refinance.  All because I didn't reaffirm something that should have never been included? How is this possible that my, in the words of Chase Bank, "excellent standing" is all worth nothing? Is there anything I can do? Will re-opening my bk and reaffirming my house get them to do anything about this? On top of it all I need a car and am unable to get approved for anything under 22% interest! Much less a lease, which is what I was hoping for. Please help!

[shols44]

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@tacokisses wrote:

My bankruptcy was filed and discharged in 2008. When I was filing, they asked me if I wanted to include the house in the bankruptcy. I specifically told them no, and hell no. I wanted to keep my house and plus I was in good standing. All my payments have always been on time and it made most sense. After reading some of the other posts it looks like my house may have been included anyway? Along my lines of thinking, it didn't occur to me that I would have to reaffirm or really do anything in order to keep my house. I just kept making the payments like I always do.  I went through all of my bk paperwork and all the items and no where does it say anything about my house. The issue is now in 2013, almost 7 years later, I am trying to refinance my house and keep getting denied. Basically, all the companies I have been to are telling me my credit sucks and I don't even have any mortgage to refinance.  All because I didn't reaffirm something that should have never been included? How is this possible that my, in the words of Chase Bank, "excellent standing" is all worth nothing? Is there anything I can do? Will re-opening my bk and reaffirming my house get them to do anything about this? On top of it all I need a car and am unable to get approved for anything under 22% interest! Much less a lease, which is what I was hoping for. Please help!

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5 years out, you should have Tier 1 autoloan credit. Something is really wrong here. Have you rebuilt your credit after BK? What are you scores? Are there any baddies since BK? Have you looked at your CRs? Perhaps if we understand what is going on credit profile wise, some of this would make sense. 

Regarding your house, it seems you have inadvertently entered into a pay and stay situation. As you now know, you cannot exclude accounts in BK and you needed to re-affirm you mortage. I don't know anything about re-opening discharged cases, SM can help us on that one. As it stands, you are no longer personally liable for the mortgage debt, but your bank won't sneeze as long as you continue to pay.

Why do you want to refi? Is your rate abnormally high? 

[cem13]

@tacokisses:

There is something amiss here.  I filed BK7 in Jan2011.  I did not reaffirm 2 houses, 1 went to foreclosure.  The forclosure did NOT show up on my CR or CheckSystem report.  I have a new car payment for 4.9% (not great but I will take it) and several credit cards.  I pay the CCs off every month and pay an extra 100 on my car note and house payment. 

My scores were 700+ 22 months after discharge date.  My house is current and I cannot refi (6% note) because of the 3 year waiting period after foreclosure.  I heard the 3 year period has been modified so I will call but that is another subject.

My attorney said that reaffirmation is rarely a good idea.  If you are current the theory is that you pay a premium with the higher interest rate but you have the piece of mind to "walk away" if you need to.  So in a vast majority of cases, not reaffirming is the best route.

After 7 years of BK7, you should not have any baddies on your report.  All your pre-BK accounts should have fallen off via DOFD.  The only negative item should be the BK7.  You should qualify for just about any loan provided you have no late payments after BK7.  I suggest you pull your CR again and confirm it is clean.  Rebuilding starts the day BEFORE you file BK7.  Good luck and keep us informed of your progress.