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

[Anonymous]

Hi, new to the forums. I have a similiar issue and need some suggestions. BK7 after a divorce discharged 6/10. Home has 80/20 mortgage that began 4/2004. 80% ARM is now with PNC Bank (sold several times in the 10 years) and the 20% is Citimortgage (15 year balloon... coming due 4/2019). I'm the only one on the mortgages (husband wasn't in the picture when I bought) and I've never been late. Of course I never reaffirmed these things in the BK7. I looked at a refi when the rates were super low, but the lenders wouldn't touch it since the house was underwater and the loan wasn't Freddie or Fannie backed so I couldn't take advantage there. Now the market has improved in the area and I'm about $20k in the black. We are looking at selling the home soon, but I wanted to see how I should approach a new lender and also what information should I request from the old lenders I've been diligently paying all these years. With the prior BK, will I be able to qualify for FHA loans and/or not need a 20% DP on a new place? Everyone keeps telling me I'll get drug over the coals because of the BK7 and failure to reaffirm.

[DaveInAZ]

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@Anonymous wrote:

Hi, new to the forums. I have a similiar issue and need some suggestions. BK7 after a divorce discharged 6/10. Home has 80/20 mortgage that began 4/2004. 80% ARM is now with PNC Bank (sold several times in the 10 years) and the 20% is Citimortgage (15 year balloon... coming due 4/2019). I'm the only one on the mortgages (husband wasn't in the picture when I bought) and I've never been late. Of course I never reaffirmed these things in the BK7. I looked at a refi when the rates were super low, but the lenders wouldn't touch it since the house was underwater and the loan wasn't Freddie or Fannie backed so I couldn't take advantage there. Now the market has improved in the area and I'm about $20k in the black. We are looking at selling the home soon, but I wanted to see how I should approach a new lender and also what information should I request from the old lenders I've been diligently paying all these years. With the prior BK, will I be able to qualify for FHA loans and/or not need a 20% DP on a new place? Everyone keeps telling me I'll get drug over the coals because of the BK7 and failure to reaffirm.

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I'm in a similar situation, BK7 discharged 01/31/11, didn't reaffirm mortgage. As far as info from the old lenders on your 4+ years of payments that don't show up on your CR, you should already have that info - mortgage lenders must send you a 1098 form every January that you would use to figure income taxes if you itemize deductions, it lists the amount of interest you paid & lists your payments. I'm going to refi in Feb. when I'm 4+ years post discharge and am already working with a mortgage broker, I gave her my past 3 years 1098s and she said that was great, was all she needed. As for being penalized in getting a new mortgage, if your FICO is 650+ you shouldn't have a problem, FHA allows mortgages 2 years post discharge, conventional morgages (Freddie/Fannie) require 4 years post discharge. For a number of reasons I want to refi with conventional mortgage.

[StartingOver10]

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@DaveInAZ wrote:

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@Anonymous wrote:

Hi, new to the forums. I have a similiar issue and need some suggestions. BK7 after a divorce discharged 6/10. Home has 80/20 mortgage that began 4/2004. 80% ARM is now with PNC Bank (sold several times in the 10 years) and the 20% is Citimortgage (15 year balloon... coming due 4/2019). I'm the only one on the mortgages (husband wasn't in the picture when I bought) and I've never been late. Of course I never reaffirmed these things in the BK7. I looked at a refi when the rates were super low, but the lenders wouldn't touch it since the house was underwater and the loan wasn't Freddie or Fannie backed so I couldn't take advantage there. Now the market has improved in the area and I'm about $20k in the black. We are looking at selling the home soon, but I wanted to see how I should approach a new lender and also what information should I request from the old lenders I've been diligently paying all these years. With the prior BK, will I be able to qualify for FHA loans and/or not need a 20% DP on a new place? Everyone keeps telling me I'll get drug over the coals because of the BK7 and failure to reaffirm.

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I'm in a similar situation, BK7 discharged 01/31/11, didn't reaffirm mortgage. As far as info from the old lenders on your 4+ years of payments that don't show up on your CR, you should already have that info - mortgage lenders must send you a 1098 form every January that you would use to figure income taxes if you itemize deductions, it lists the amount of interest you paid & lists your payments. I'm going to refi in Feb. when I'm 4+ years post discharge and am already working with a mortgage broker, I gave her my past 3 years 1098s and she said that was great, was all she needed. As for being penalized in getting a new mortgage, if your FICO is 650+ you shouldn't have a problem, FHA allows mortgages 2 years post discharge, conventional morgages (Freddie/Fannie) require 4 years post discharge. For a number of reasons I want to refi with conventional mortgage.

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^^^It is possible the underwriter will specifically ask for proof of payments made in the last 12 months - that would be cancelled checks or the bank statements showing the payments were paid ontime. That is the most common requirement I see (in addition to the 1098s). Other than that, you shouldn't have an issue at all (either of you!)

[cin67]

FHA will lend to you 2 yrs post BK7. The u/w will send a form to your old lenders which asks the old lenders to disclose any late payments in prior 24 month period, per FHA Guidelines. Your u/w is also likely to ask for proof of on-time utility,credit-carrd or other payment history the last 12 months. FHA does not reqire 20% DP. However, if you don't pay 20% DP, you will have to pay PMI which is difficult to terminate. FHA DP can be as low as 3.5%. Any large withdrawals or deposits in the past few months (six I think) will have to be explained in a signed letter by you, with any relevant supporting documentation. You can check into conventional loans now that you are 4 yrs post BK7.  Best wishes.

[DaveInAZ]

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@StartingOver10 wrote:

^^^It is possible the underwriter will specifically ask for proof of payments made in the last 12 months - that would be cancelled checks or the bank statements showing the payments were paid ontime. That is the most common requirement I see (in addition to the 1098s). Other than that, you shouldn't have an issue at all (either of you!)

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All my mortgage broker asked for in addition to last 2 years 1098s was the current month mortgage statement, which shows the payment is current, and details the YTD interest & principal paid and no late charges. Also I gave them the last 2 months bank statements which shows the mortgage payments, but the bank statements also confirmed my income as direct deposits. They say I'm good to go once I clear the 4 years post discharge for a conventional mortgage on 1/31/15.

[Anonymous]

I just read all the entries in this thread. Here are things you need to know about reaffirmation of a mortgage debt. If you had no attorney then you probably did not know how the reaffirmation process legally works, and the information herein will not help you. If you had an attorney representing you in a chapter 7 bankruptcy and you listed your intent to reaffirm your mortgage within your bankruptcy petition; then this information will help you understand what happened. If you did not obtain a reaffirmation agreement in a chapter 7 and you asked for one in your bankruptcy petition there is a 99% possibility that your bankruptcy attorney screwed you. Here is why. Your attorney has to certify in writing that he or she advised the debtor of the consequences of defaulting on the loan post-discharge when it is reaffirmed; and must also certify that the debtor was fully informed and voluntarily made the reaffirmation agreement and that the reaffirmation agreement will not create an undue hardship for the debtor or the debtor's dependents. Most bankruptcy attorneys do not want the liabilites and damages that might result in their making these certifications about debtors - so they don't bring up filing the reaffirmation agreement with their clients. This is called a "failure-to-reaffirm ride-through"; which means the attorney who represented you ignores your intention to reaffirmation and rides through the bankruptct failing to do their duty to represent you. After the bankruptcy discharge of the mortgage; lenders have no good reason to refuse refinancing loans that have always been paid-as-agreed to in the loan documents. The property title is rarely altered just because you filed a chapter 7. So that is a lame excuse to deny refinancing. Fannie Mae and Freddie Mac have no loan servicing guidelines that prohibit loan servicers from serving refinanced loans not reaffirmed in bankruptcies. So why do lenders fail to refaince these loans? Over the past five years so-called cash buyers have acted to purchase a majority of foreclosed homes. Banks make more money lending to these cash buyers (businesses) than they do in making or serving mortgage loans. The fact that you cannot refinance your home and you have make all the payments on time is not because your loan was not reaffirmed in a chapter 7 bankruptcy. It is because lenders and loan servicers have conflicts of interest in making business decisions. They potentially make more money screwing home owners. The solution is to change the laws so that businesses cannot game the system. In other words, you need to vote for lawmakers that want to help consumers, not help businesses exploit and defraud consumers. Good luck in finding an honest candidate to vote for. I just default to voting for democrats - lesser of two evils. I expect to get nasty responses to this posting from bankruptcy attorneys and lenders pretending to be consumers.

[DaveInAZ]

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@Anonymous wrote:

I just read all the entries in this thread. Here are things you need to know about reaffirmation of a mortgage debt. If you had no attorney then you probably did not know how the reaffirmation process legally works, and the information herein will not help you. If you had an attorney representing you in a chapter 7 bankruptcy and you listed your intent to reaffirm your mortgage within your bankruptcy petition; then this information will help you understand what happened. If you did not obtain a reaffirmation agreement in a chapter 7 and you asked for one in your bankruptcy petition there is a 99% possibility that your bankruptcy attorney screwed you. Here is why. Your attorney has to certify in writing that he or she advised the debtor of the consequences of defaulting on the loan post-discharge when it is reaffirmed; and must also certify that the debtor was fully informed and voluntarily made the reaffirmation agreement and that the reaffirmation agreement will not create an undue hardship for the debtor or the debtor's dependents. Most bankruptcy attorneys do not want the liabilites and damages that might result in their making these certifications about debtors - so they don't bring up filing the reaffirmation agreement with their clients. This is called a "failure-to-reaffirm ride-through"; which means the attorney who represented you ignores your intention to reaffirmation and rides through the bankruptct failing to do their duty to represent you. After the bankruptcy discharge of the mortgage; lenders have no good reason to refuse refinancing loans that have always been paid-as-agreed to in the loan documents. The property title is rarely altered just because you filed a chapter 7. So that is a lame excuse to deny refinancing. Fannie Mae and Freddie Mac have no loan servicing guidelines that prohibit loan servicers from serving refinanced loans not reaffirmed in bankruptcies. So why do lenders fail to refaince these loans? Over the past five years so-called cash buyers have acted to purchase a majority of foreclosed homes. Banks make more money lending to these cash buyers (businesses) than they do in making or serving mortgage loans. The fact that you cannot refinance your home and you have make all the payments on time is not because your loan was not reaffirmed in a chapter 7 bankruptcy. It is because lenders and loan servicers have conflicts of interest in making business decisions. They potentially make more money screwing home owners. The solution is to change the laws so that businesses cannot game the system. In other words, you need to vote for lawmakers that want to help consumers, not help businesses exploit and defraud consumers. Good luck in finding an honest candidate to vote for. I just default to voting for democrats - lesser of two evils. I expect to get nasty responses to this posting from bankruptcy attorneys and lenders pretending to be consumers.

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Interesting. That's pretty much exactly what happened to me with my attorney - filed w/ Intent to Reaffirm but he never explained what needed to be done to reaffirm. And while I'm happy with my home and would rather stay here, I'm selling strictly for financial reasons. After 4+ years of perfect post discharge payments that no one knows about except me & the bank, and after a couple attempts at refinancing, I've decided the only way I'm going to recoup the equity I've built up is to sell and buy another. Thanks a bunch, Mr. Attorney. Hope you didn't blow though that $2k I paid you too quickly. .

[Wizdog1]

Same here Dave. Made it very clear as I wrote out check for 2500.00 here in CA that I wanted to reaffirm auto and mortgage, trustee asked at 341 I said yes although still no paperwork on it yet. Attorney for credit union was on top of it for auto loan, but as time passed I contacted Wells Fargo on my own who advised they had heard from no one. They in turn got their attorneys on board and presented my attorney with packet, I called everyday to see when I could come in to sign. Said they never received it and next thing you know discharged with no reaffirmation. Had I known this I would of asked for something in writing before I paid. She agreed to it in the beginning but after discharge she kept saying it was not in my best interest. I love my house, I'm going no where. I love Wells Fargo and continue to bank there and have my mortgage deducted weekly but no one else knows just like you Dave and many others. Thank you everyone for allowing me to vent and I hope this helps someone else.

[lalittman]

File a complaint with CFPB and all 3 credit reporting agencies.  Keep filing complaints till they get tired of dealing with this.  We have been dealing with Chase for 2 years on a mortgage discharged while making payments, and some clown in exec mortgage says we are harrasing Chase with all the complaints.  It made my day.

[cem13]

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@lalittman wrote:

File a complaint with CFPB and all 3 credit reporting agencies.  Keep filing complaints till they get tired of dealing with this.  We have been dealing with Chase for 2 years on a mortgage discharged while making payments, and some clown in exec mortgage says we are harrasing Chase with all the complaints.  It made my day.

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I had to burst out laughing at this one.  If companies were more accurate with their reporting, then they would not get hit with complaints.

Keep up the good work.  Eventually they will tire of the complaints and either fix the problem or make it go away for you.