Below is an article written by Attorney Peter Francis Geraci regarding reaffirmation agreements. Reaffirmation agreements can be complicated, use below as a guide to answer questions like – What do I do if I want to refinance and did not reaffirm my debt? My bank is telling me to reopen my Chapter 7 case and my attorney is telling me no. And more!
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Reaffirmation Agreements and Mortgages – if the mortgage company fails to offer me one? – by Attorney Peter Francis Geraci
Under Chapter 7, your mortgage lenders get notice of filing the day we file your case. The court sends notice, and most lenders search daily for new bankruptcy filings. Your petition includes a “statement of intention” to reaffirm, redeem or surrender the property. The lender then
- ceases any collection activity if you are late,
- may want a letter from us stating you can talk to them direct
- may stop sending you statements, and cancel auto pay and online access (you may have to mail payments 5 days before due)
If you are current and want to keep the property, and your lender acts goofy like this, it can be a pain! It may be as simple as
- call your lender and say: “ I want to continue payments, and statements”
- ask them what they need so you can keep on paying and have online access
- tell them you want to “reaffirm” your personal liability (they already know this)
What does “reaffirmation” of my personal liability on a mortgage have to do with paying them? A “reaffirmation” makes your personal liability survive discharge, so if you default, and they foreclose, and sell the property, and don’t get enough to cover the loan, they can come after you personally. A reaffirmation doesn’t affect the validity of your mortgage, or your ability to pay it. And they charge you $800 or so for preparing one.
Does it matter if my lender doesn’t want a reaffirmation of my personal liability? No. It shouldn’t. Your bankruptcy included a “statement of intent to reaffirm”. If you checked yes, it doesn’t mean much except you are OK with your personal liability on the mortgage surviving discharge.
Who decides if the lender wants to enter into a “reaffirmation”? The lender decides. Not you or us.
Lenders always send your info to their attorneys, who prepare the “reaffirmation” and send it to us. (Unlike credit unions, mortgage companies don’t do their own paperwork, they won’t send anything to you, or to us. They have their attorneys do it. So all you can do is tell whatever mortgage servicer to start taking your payments, and if they feel like it, you are OK with signing a reaffirmation, if they will prepare it. No lender will sign anything prepared by you or your lawyer. Lenders will NOT prepare a “reaffirmation” if
- you are behind in any payment, taxes or insurance
- you are in some kind of forbearance, loss mitigation
- they don’t want to (maybe they sold your loan, or lost the original paperwork)
- they don’t have a valid lien on your property, etc. etc. etc.
If my lender wants to prepare a ‘reaffirmation” when do I sign it? Before Discharge. The lender’s attorney must get us their reaffirmation so you can sign it before Discharge, about 4 months after filing of a Chapter 7. You can ask us to delay discharge if no reaffirmation before Discharge.
Do I need a reaffirmation agreement to keep my house? No. Your mortgage is not affected. You don’t need a “reaffirmation” to stay current.
If the bank allows me to reaffirm my liability on the promissory note, why should I sign a reaffirmation? Lenders may refuse to report your payments to a credit bureau, or make any number of bizarre excuses for aggravating you, and say “You didn’t sign a reaffirmation, call your lawyers and have them reopen the case and send us one,” They are just trying to get rid of you.
- Write down the Name, Employee #, contact info of anyone who tells you such nonsense, they might be located in China or India.
- Ask to speak to a supervisor. Ask them to put the nonsense in writing. Contact us with the details so we can help.
If your mortgage company stopped reporting to the credit bureaus, and won’t accept your request to start reporting,
- Request a payment history from your current mortgage company. Send this payment history to the 3 credit bureaus showing timely payments after bankruptcy discharge to show there are no missed payments.
- Send your mortgage company a letter in writing stating:
- You want the mortgage company to report both the timely and missed mortgage payments to Transunion, Equifax and Experian.
- You do not consider the payment history reporting to the credit bureau a violation of collections.
Let your lawyers at Geraci Law know EXACTLY what the problem is, (who what where and when, take notes) if you can’t solve it with your lender. We are pretty good at figuring things out, and there is NO charge for helping straighten out a mortgage lender, we do it all the time! Don’t take bad treatment from a mortgage lender or servicer personally, they do it all the time. The hotline for the federal Consumer Financial Protection Bureau is at https://www.consumerfinance.gov/
Dial 1-800-CALL-PFG for a free phone mini-consultation, or make an appointment online 24/7 at www.infotapes.com. Bankruptcy laws are in place to help you. Who knows bankruptcy like Geraci Law? Geraci Law has 30,000 5-star reviews since November 2016!
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