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Reaffirm a 1st mortgage or not

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Reaffirm a 1st mortgage or not

Hi All,

                I appreciate your feedback. Here is my story. Filed for BK 7 in GA in Aug 2012. Discharged in November 2012. Included were CC debt and a second mortgage from SunTrust Bank. I did not reaffirm my 1st mortgage with Wells Fargo, I still live in the house and make payments on time and now since the housing market rebound, have over 100k in equity.

 

My questions:

  1. Since I didn’t reaffirm, will there be any issues when I sell the house and will I be able to keep all the equity?
  2. I want to be able and use some of my equity for remodeling now but Wells Fargo won’t let me apply for a second or HELOC since the loan is not reaffirmed.
  3. I don’t have the option to refinance with Wells since I have not reaffirmed the loan. Other lenders wont touch me since its less than 5 years from BK7.
  4. I have 2k in late fees from Wells Fargo from before and after my BK7. These were not included in BK7.
  5. Is there a time rules in place before using any home equity after a BK7?
  6. Should I reaffirm and if I do, will I be responsible for the 2k in late fees?
  7. What’s the downside to reaffirm the loan 3.5 years after BK7?
  8. What’s the advantage not to reaffirm.

 

Thanks all!!

Message 1 of 8
7 REPLIES 7
Valued Contributor

Re: Reaffirm a 1st mortgage or not

Well, to put it short, highly unlikely you could reaffirm this late after your discharge.

As far as refinancing - consider an FHA Streamline Refinance.

If you sell, you can keep all positive equity.

You can get a HELOC with a bank that does not hold your mortgage.
BK Discharge 2/11/14

Currently in the garden.
Message 2 of 8
Moderator Emerita

Re: Reaffirm a 1st mortgage or not


@MrChampagne wrote:

Hi All,

                I appreciate your feedback. Here is my story. Filed for BK 7 in GA in Aug 2012. Discharged in November 2012. Included were CC debt and a second mortgage from SunTrust Bank. I did not reaffirm my 1st mortgage with Wells Fargo, I still live in the house and make payments on time and now since the housing market rebound, have over 100k in equity.

 

My questions:

  1. Since I didn’t reaffirm, will there be any issues when I sell the house and will I be able to keep all the equity?  As long as  you keep paying on time when you sell it, whatever equity is avaiable at the time, after your selling expenses, is yours
  2. I want to be able and use some of my equity for remodeling now but Wells Fargo won’t let me apply for a second or HELOC since the loan is not reaffirmed. Go somewhere else to refi or get a HELOC, not a bank. Go to a regular mortgage lender. Banks are much more restrictive and there are a ton of lenders that are much better than Wells Fargo.  Stay away from all the big box banks now....
  3. I don’t have the option to refinance with Wells since I have not reaffirmed the loan. Other lenders wont touch me since its less than 5 years from BK7. This info on the 5 years is not correct.  Lenders will loan to you anywhere from 3 years to 7 years depending upon the loan and your credit/income/debt.
  4. I have 2k in late fees from Wells Fargo from before and after my BK7. These were not included in BK7. The late fees from before your filing are supposed to be included in your Bk.  Is Wells Fargo saying you still owe those late fees from before the BK filing? The fees after your Bk filing you should pay. It is very difficult to overcome late payments after you have been discharged.  
  5. Is there a time rules in place before using any home equity after a BK7? There are lenders that will loan 1 day out of Bk - the terms are not good, but you can get a mortgage.  You have been discharged for 3.5+ years so you can even get market rate if you have re-established yourself. 
  6. Should I reaffirm and if I do, will I be responsible for the 2k in late fees? You can't reaffirm after your Bk is closed - besides it isn't the best thing to do. Why don't you just do a cash out refi?
  7. What’s the downside to reaffirm the loan 3.5 years after BK7? Ask your attorney this question. 
  8. What’s the advantage not to reaffirm. You can walk away anytime. However, if you walk away you lose all of your equity. So not something you want to do

 

Thanks all!!


^^^Talk to a good mortgage lender for accurate info. Don't use Wells - they are really horrible right now anyway. Get a recommendation from your Realtor for a good mortgage lender in your area. 

Message 3 of 8
Valued Member

Re: Reaffirm a 1st mortgage or not

I'm curious about the late fees that were before BK as well.  Over a year later and those late fees still show up on my WF statement as being owed.  We did not reaffirm the mortgage but pay every month.

Message 4 of 8
Valued Member

Re: Reaffirm a 1st mortgage or not

A Ch7 Bk wipes out your obligation to pay the loan and those charges, it does not eliminate the lenders right to collect the loan and assess those charges. They can only enforce them against the property or any parties that might not have been included in a BK.  

 

You had a little more clout to try and eliminate them pre-Bk, although not stops you from trying to do it now. 

 

A Ch 13 might have dealt with that loan and lender and those charges. 

 

 


Ch7 DC Jan 16
May 16: EX672 TU627 EQ686
Message 5 of 8
Established Contributor

Re: Reaffirm a 1st mortgage or not

We had a mortgage will Wells Fargo when we filed our bk13 in 2005. We did not reaffirm. We were able to do a cash out refi with them a couple years after discharge. In addition, they tried to tack on fees related to our filing, which my attorney squashed.it's been a few years so I don't recall the details, but do remember our Atty called BS on them, as they tried to tack them on after our discharge, because they were added afterward.


You can't have your cake and eat it too. But you can dip your finger in the bowl and lick the icing!
Message 6 of 8
New Member

Re: Reaffirm a 1st mortgage or not

Thanks for all the great feedback!!

 

When everyone says go to a regular mortgage lender, what do you mean? that like Lending Tree.com? We have always just used a bigbox like Suntrust, or Wells or Chase. We have been in this house 15 years. I'm really just looking to get some equity out of my house for home improvements. The plan is to sell in 3-4 years so we have a few items to start moving on now.

 

I'm in the Atlanta area so any recommendations would be appreciated!!

Message 7 of 8
Moderator Emerita

Re: Reaffirm a 1st mortgage or not


@MrChampagne wrote:

Thanks for all the great feedback!!

 

When everyone says go to a regular mortgage lender, what do you mean? that like Lending Tree.com? We have always just used a bigbox like Suntrust, or Wells or Chase. We have been in this house 15 years. I'm really just looking to get some equity out of my house for home improvements. The plan is to sell in 3-4 years so we have a few items to start moving on now.

 

I'm in the Atlanta area so any recommendations would be appreciated!!


Lending Tree is not a lender at all.  They are a lead generator for lenders. Stay away from them - you end up with a huge number of inq's while they send your info out to everybody and their brother.

 

I have an excellent lender I can recommend to you that is a 'regular mortgage lender' and not a big box bank.  I will pm you the info  But your Realtor and family and friends are a great resource for you too.  

Message 8 of 8
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