Reaffirmation for mortgage

What is the name of your state? CA
I've asked this question once before but here goes again. I wanted to know if it was necessary to reaffirm the debt for my mortgage. I spoke with my mortgage company today about another matter and the person brought up the question of whether or not I would be reaffirming my debt with them. The person said that if I don't reaffirm, the debt will be discharged with the other debts and they will report it to the credit agencies as a defaulted loan. He said that if I go to get a new mortgage or refinance, no one will approve me. He said they will not touch my place as long as I remain current, but will not report any of the payments and the debt will show as bad. I do want to refinance my mortgage after the BK and don't want to find out that I'm stuck, with an adjustable rate mortgage, for 10 years with rates so low now. Is this true? I filed pro se so I don't really have a lawyer to ask. The last time I asked, I was told I did not have to reaffirm, but just make the payments on time. But I did see another posting where someone wanted to refinance and were told that they needed to reaffirm the old mortgage debt before they would be approved for the new mortgage.

[Ladynred]

You do not HAVE to reaffirm. In fact, its not really up to you at all. You can ASK to reaffirm, but the BK judge has the final say as to whether or not you can go thru with it. So, even if you ask, you may not get it, it depends on the judge.

Secured debts aren't discharged. You have to keep paying to keep the property that secures the loan. If you don't, you lose it. If that happens, you just won't be liable for any deficiency from the sale of the property.

It can be a tough decision, since many of us would like to use our mortgages to establish positive tradelines post BK. We chose not to reaffirm the mortgage, since it is a LARGE debt (compared to most CCs) and just in case something happens and we have to walk away.

However, we will do everything we can to continue to pay on time and sell our home (hopefully for a profit) when the time comes so that the debt will be paid in full. When it comes time to purchase another house, we will explain all of this and have copies of our bank statements to prove prompt payment (showing the electronic payment on time every month -- odd that our mortgage lender continues to debit our account when we didn't reaffirm!). A savvy mortgage broker should have no trouble with this practice.

Worse will be not making the payments and being foreclosed on, which is a huge black mark to mortgage lenders.

Good luck!

So Hannahsgift, are you saying that what I was told is true that the mortgage company will report the debt as being in default and any payments I make will not be shown on my credit report and continuing to pay the mortgage on time will not help me to re-establish my credit? Maybe it's better then that I re-affirm it. I don't plan to walk away and just like when I bought, this was a risk that I assumed at that time when I accepted the loan. I'm sorry to say that this is my second BK and during the first, 12 years ago, we had a car loan, which we did not reaffirm but the credit agencies reflected that we had been making the payments and also when it was paid in full, the credit agencies reported the debt as paid in full. So I was thinking the mortgage company was just trying to scare me into reaffirming the debt with what they told me?

Splitting hairs here -- but it is actually reported as "included in bankruptcy". As far as reaffirming, I'm not sure how they report it since the two loans I reaffirmed are showing IIB on all three credit reports. I'm posting separately to see if anyone can answer that question.

Lady is correct, secured debts are not "discharged." However, any expenses related to taking back the security becomes the obligation of the lienholder -- they can't come after you. For example, if you don't file BK and your house is foreclosed, the mortgage holder can hound you for anything you owe on the loan as well as the attorney fees, realtor/auction fees, etc. etc. When you include it in BK, you can walk away without concern for all those additional expenses, although you will still have the foreclosure on your record.

Reaffirming simply means you'll take responsibility for the debt. Since we've already gone through the bad taste of BK, we don't want to take on anything we don't have to, so we didn't reaffirm. But like I said, we are paying our mortgage on time, so I suppose it's just a technicality in many ways.

As for reaffirming before you refi, that probably only matters if you refi with the same company. The mortgage lien is still on the property whether you reaffirm or not, so I don't know why it would make a difference.

Good luck!

scott1962 and Hannah - This is long...

Regarding how "reaffirmed loans" (cars, mortgages, etc) are supposed to be reported by the CRAs - is no one knows and can provide "absolutely correct" info. I've spent literally days looking into this - searched lots of "credit sites" and did a "google" search.

The closest explanation of how reaffirmations are "supposed" to be reported was found on [url]http://www.molleurlaw.com/articles-03.htm,[/url] a site provided to me by someone on [url]www.creditnet.com.[/url]

In my case, two months after my bk 7 was discharged (I reaffirmed my second mortgage, just kept paying the first - long story) I ordered my credit reports. Of course, some of discharged tradelines were not "IIB" and I am chipping away at those, but my reaffirmed second mortgage was "IIB" on all three credit reports. So I contacted my second mortgage company, explained the problem and they wrote a letter to all three CRAs stating that I had reaffirmed my mortgage. They also sent a letter to me stating that they sent the letters. I waited the 30 - 45 days the OC said it would take to update the CRAs. In fact I waited 50. This was early May. Equifax (on-line report) said REAFFIRMATION OF DEBT, but it was in the "negative" section; TU on-line report said "IIB" and I couldn't my online report from EXP so I had it mailed. My EXP second mortgage still said "IIB".

Mailed dispute letters to TU and EXP regarding the way they were listing my mortgage tradeline, included reaffiramation paperwork and letter from mortgage company and EXP sent new copy of credit report, ACCEPTING my info, with mortgage moved to the positive section - no mention of reaffirmation.

Meanwhile, TU was working on reinvestigations of some on- line disputes and when they were done they combined my on-line disputes with my letter and TU added the "new information" I provided. My new tradeline was moved to the positive section and said REAFFIRMATION OF DEBT, but my tradeline was now marked "CLOSED". Sent a new dispute, included, more info how the account was not closed, I was still making payments, etc, etc. Yesterday I received a letter from TU telling me to contact the OC. Back to where I started ... seems to be a vicious circle.

And to add insult to injury, on July 3 I ordered my new FICO EXP credit report and score; while my regular EXP direct from the source had "Paying as agreed/ Never Late" (True - I have never missed a payment) my EXP FICO said I had missed two payments - I could scream. I sent Myfico EXP (different PO box - sample city and zip) a certified letter yesterday.

My new (7/3/03) Equifax online report finally has moved my mortgage tl to the positives.

*Very* ironically, my first mortgage (that I did not reaffirm) says "paying as agreed" instead of "IIB", and is being reported as a positive tradeline, LOL - don't count on having a non-reaffirmed mortgage being reported as a positive though.