Reaffirming Mortgage

[Anonymous]

I had bankruptcy discharge July of 2015 and requested mortgage reaffirmation. For the next 2 years however, my credit report would show the mortgage account as 0 balance and closed. When I first noticed that, I contacted the lawyer who handled the bankruptcy and he said the mortgage was indeed reaffirmed and to take it up with the bank. I never pursued it thinking just let it not reaffirm then. I really didn't care either way.

Yesterday I received a letter in the mail from Wells Fargo stating that as of August they've restarted to report my mortgage again to the credit agencies. I'm sure that's going to give my score a big hit now, but i'm fine with that because I have every card I want and don't plan on applying for anything big for a long while.

I'm just curious if this is normal procedure when reaffirming a mortgage? Does the bank stop reporting for a certain number of months before starting up again? It seems weird and I wonder what the reasoning would be? I'm actually happy it's going to report again because I plan to live here for the rest of my life, unless I hit the lotto lol. And will it help improve my credit score over time by having it suddenly report again? I know (or at least I THINK) it will take a hit initially. Hasn't yet because it's still showing as closed, but i'm going to be checking daily now. 

[Shooting-For-800]

I always heard the opposite.

If you DONT reaffirm and keep paying the payments wont show.

Why do you think having your mortgage report now will hurt you?  It might actually help you.

YMMV

[Anonymous]

I would say it's bad only because my credit report will suddenly show a $50k increase (balance of my mortgage) in my debt. My score is around 625 and I have under $10k in debt. Wouldn't my score drop with such a huge increase in debt like that? And will stabilize once my on time payments for it have shown after a while. 

[Shooting-For-800]

Mortgage debt is not bad.  It is not like credit card debt at all.

In fact, homeownership and credit mix (revolving, installment, etc.) are better for profile and/or score.

Don't sweat it.  Especially $50k.

If you have always been on time with them since BK filed, I would request that they update your profile with all of your on time payments.

It seems that they were unaffected by your BK so it is the least they can do.

What you want is a history of reducing your mortgage balance over time with on time payments.

YMMV

[Anonymous]

Thanks for the advice. I'll contact the bank and ask about that. If they show the past 2 years of payments after the BK it would probably be good for my score because all of them have been on time and even early. I'm still confused why it took 2 years for them to acknowledge the reaffirmation and will ask about that too. 

[StartingOver10]

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@Anonymous wrote:

Thanks for the advice. I'll contact the bank and ask about that. If they show the past 2 years of payments after the BK it would probably be good for my score because all of them have been on time and even early. I'm still confused why it took 2 years for them to acknowledge the reaffirmation and will ask about that too. 

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You are actually fortunate that they are going to report it now. They are under no obligation to report reaffirmed TL's and many lenders wouldn't report it. Acknowledgement of the reaffirmation is done by their signing the reaffirmation agreement, not by their reporting it to the CRA's.  You can always downloan your entire Bk case file from PACER, including the signed reaffirmation agreement so you have a copy. 

[Anonymous]

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@StartingOver10 wrote:

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@Anonymous wrote:

Thanks for the advice. I'll contact the bank and ask about that. If they show the past 2 years of payments after the BK it would probably be good for my score because all of them have been on time and even early. I'm still confused why it took 2 years for them to acknowledge the reaffirmation and will ask about that too. 

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You are actually fortunate that they are going to report it now. They are under no obligation to report reaffirmed TL's and many lenders wouldn't report it. Acknowledgement of the reaffirmation is done by their signing the reaffirmation agreement, not by their reporting it to the CRA's.  You can always downloan your entire Bk case file from PACER, including the signed reaffirmation agreement so you have a copy. 

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I see. My BK discharge was back in July of 2015 and I reaffirmed and have the papers showing it, but I guess the bank apparently never signed the agreement because I have no papers of that. (should I?). It's only now, 2 years later that the bank sent the letter acknowledging the reaffirmation and their intention to begin reporting the mortgage again. I just wonder if it's standard practice to wait a certain amount of time for banks to reaffirm? Shouldn't they have done this back in 2015?

Not complaining because the more I think about it, and from the advice here, it's a good thing that it's going to report and i'm glad. Just wonder why the 2 year delay? Could it be they wanted to see a steady practice of on time payments from me first before reaffirming on their end? 

[Dalmus]

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@Anonymous wrote:

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@StartingOver10 wrote:

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@Anonymous wrote:

Thanks for the advice. I'll contact the bank and ask about that. If they show the past 2 years of payments after the BK it would probably be good for my score because all of them have been on time and even early. I'm still confused why it took 2 years for them to acknowledge the reaffirmation and will ask about that too. 

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You are actually fortunate that they are going to report it now. They are under no obligation to report reaffirmed TL's and many lenders wouldn't report it. Acknowledgement of the reaffirmation is done by their signing the reaffirmation agreement, not by their reporting it to the CRA's.  You can always downloan your entire Bk case file from PACER, including the signed reaffirmation agreement so you have a copy. 

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I see. My BK discharge was back in July of 2015 and I reaffirmed and have the papers showing it, but I guess the bank apparently never signed the agreement because I have no papers of that. (should I?). It's only now, 2 years later that the bank sent the letter acknowledging the reaffirmation and their intention to begin reporting the mortgage again. I just wonder if it's standard practice to wait a certain amount of time for banks to reaffirm? Shouldn't they have done this back in 2015?

Not complaining because the more I think about it, and from the advice here, it's a good thing that it's going to report and i'm glad. Just wonder why the 2 year delay? Could it be they wanted to see a steady practice of on time payments from me first before reaffirming on their end? 

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 Techinically, they had to have agreed to the reaffirmation BEFORE the discharge.  There must be a countersigned copy of the reaffirmation agreement somewhere if your lawyer says it was reaffirmed.  *IF* they did not actually sign the reaffirmation agreement before the discharge, I don't think that its valid, legally speaking.  I would ask your lawyer for a copy, or pay the couple bucks and get it off PACER.

 Since you've been paying and you intend to stay and pay, its not really an issue...  But if they didn't countersign before the discharge date, then you could technically walk away from the house if your financial situtation changes in the future.

[Anonymous]

In all my bankruptcy papers, i've never seen anything signed by the bank regarding them agreeing to reaffirmation. This is why I contacted the lawyer a few months after discharge to question it. He replied that it was reaffirmed and I just let it go. But you're right, it's really a non issue since I plan on staying put. The balance of the mortgage is 51k and the home value has appreciateted to 109k and still climbing, (Orlando is a hot market!) so i'd be a fool to let it go, especially with the way home prices are skyrocketing all over the country. I'd be back in the poor house in no time.