01-14-2012 09:25 AM
I filed a Chapter 7 and received a discharge. I then modified my mortgage. My credit report states that the mortgage was included in bankruptcy and that the loan was modified.
My question is does anyone know if the mortgage company should report that I am current and paying pursuant to the terms of the modified loan? I think this will help raise my score if the loan is reported as current.
I did not reaffirm the mortgage.
01-14-2012 11:01 AM
I see this all the time @ work, so I'll throw a comment in, but see my sig for the disclaimer.
Did you get a Trial modification or a permanent one? Trial mods mean squat. BUT, if you got a permanent mod after your BK, you may have inadvertantly reaffirmed the debt anyway. (Basically, if you signed new mortgage docs w/ new terms, its a new loan). I hear this varys from state to state, but you'll want to check. Our firm does it's best to get the loan mods done at least a few months before the BK, so the loan isn't reaffirmed when the mod docs are signed.
The best way to look at this is to think of a Loan Mod as a refinance, but you keep the same loan # and lender. If you do a traditional refinance after the BK, invariably the new loan was completed after the BK petition.
If your modification was fairly recent, you might want to wait a tick and see if it corrects itself. Otherwise you can dispute with the CRA's, telling them it wasn't IIB (only do this if your mod reaffirmed you).
A lot of this varies from state-to-state, so you might want to check w/ a good attorney in yours. Here in NV, if you include a 1st mortgage in BK, but keep paying it, the bank can't take the property back regardless of reaffirmation. (They need to foreclose to clear the title.)
If you have any more questions, let me know, I'll do my best to answer them, but again, see my disclaimer, below. (Our firm handles Loan Mods, Short Sales, Debt Settlement and BK, so I really have seen this alot, but I still can't give legal advice on a forum, everything above is simply my opinion).
01-14-2012 12:11 PM
Thank you so much!
I live in NJ and the agreement I signed was called a "Chapter 7 Installment Loan Modification Agreement." This may sound a little odd but my mortgage was part of a home equity program with Wells Fargo yet it is a 1st lien. I have no second lien. I looked at the Agreement and it does not say I reaffirmed. What do you think would be my next step? Should I contact the credit reporting agencies and dispute the way Wells Fargo is reporting the loan? I understand that you are not providing a legal advice but I sure would appreciate your input. Thanks again.
01-14-2012 01:18 PM
Well, I haven't seen that before.
What I can tell you is that perm mods here in NV don't say you're reaffirming, but you are by agreeing to new terms.
If I were in in your shoes, I'd have the docs reviewed by your BK attorney. If you didn't use one (did it yourself, used a paralegal, etc...), it might be a good idea to get a consultation with one (even if it costs you a couple hundred bucks) so they can review and see if you inadvertently reaffirmed.
As for the CRAs, like I said, I'd give it a bit of time to see what happens. If it was included in bk, then IIB would be the right report, if you keep paying it (modded or no) the payment history should continue to report. The IIB essentially would mean you're not liable for it should you need to stop paying... it protects you.
The parallel I can make is with an auto loan. Autos included in BK are reported as IIB, but if the debtor can keep paying, they're welcome to and it should report as such (up to the creditor). If the loan is paid off, it gets switched to Paid, but if the creditor ever can't afford it, they can return the car to the dealer w/no liability. Essentially, the CRA is reporting that you're not responsible for the debt (for one reason or another). If your home wasn't reaffirmed (in BK or w/ new terms), I would assume that's how they'd report it, because at any time, you can choose to give it back to the bank. (If, god forbid this happens, I'd want it reported like that anyway).
Remember, there is no rule that creditors have to report, the rule states that any negatives that ARE reported must be accurate and verifiable. In this case, your mortgage was IIB, so I would think that reporting it as IIB is accurate. Also, from what I can tell, IIB on a single account isn't going to hurt you much if you have several others, but that's conjecture. So the question becomes, does it really matter? Even if it's IIB, if you're paying it should report current payment history, which should help you.
01-14-2012 08:55 PM
Seriously, you might want to ask an attorney in your state first. If it's IIB, and the mod didn't re-up it, it probably benefits you to have it stay IIB, regardless of whether or not it posts your new payments.
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