Re-affirm or to not Re-affirm?

[Freddy01]

Ok I know it would be silly of me to re-affirm my mortgage in my Ch 7 because I'm about 80K underwater. I plan on staying in my house and just keep on paying.

Does anyone have any experience with Wells Fargo and not reaffirming?

What happens if I want to sell down the road?

What happens if I ever pay the house off - Is it still mine?

Also at the time that I file (Nov 19th) my Nov payment (due date 11/12) would not be paid until 12/3 and Dec's payment would be paid 12/31. Will being 3 weeks late cause a problem and Wells Fargo would move to foreclose?

[jq26]

Does anyone have any experience with Wells Fargo and not reaffirming?

No.

What happens if I want to sell down the road?

You must pay the note off or you cannot sell it because the mortgage lien still remains intact. If net sale price (less realtor/transfer tax/closing) funds are less than the mortgage lien, then you come to the table with cash. Or you attempt to go short. Or you stop paying and the lender forecloses. Whatever option- the lender can no longer attack your credit report nor sue you personally. Your personal liability is extinguished.

What happens if I ever pay the house off - Is it still mine?

Of course. You pay the loan off, the lien is satisfied, and the home is all yours.

Also at the time that I file (Nov 19th) my Nov payment (due date 11/12) would not be paid until 12/3 and Dec's payment would be paid 12/31. Will being 3 weeks late cause a problem and Wells Fargo would move to foreclose?

Not sure about that. I would try to remain current so you don't rock the boat and give them an opportunity to file for relief and lift the automatic stay. But then again, an underwater property with a slow pay is better than a foreclosure, so it may be unlikely that they do anything.

[Methuss]

Treat the property as any other business arrangement. Dispassionately analyze if it is worth keeping. Seriously. Too many people going through financial difficulties dig themselves deeper by having emotional attachment to their debts.

Keep inmind the following:

Florida is a full documentation foreclosure State. They must produce the Note and Mortgage and fully document what you allegedly owe before they can even properly file for foreclosure. Florida is so backlogged that it takes about a year to eighteen months from the time they actually file the case to the point where the property goes up for auction.

Although Florida is a recourse State, they cannot as jq26 points out, go after any remaining balance if you file BK7. You liability is gone with the discharge.

FHA's current guidelines are that you must go two years after BK7 discharge either re-establishing credit or choosing not to take on any credit at all to qualify. USDA's loan program is three years.

So look at it this way, if you bankrupted the house, stayed until you had to leave paying nothing, then lived in a modest apartment for two years (or with relatives) and socked away all the extra cash, how much would you have to buy a house at market cost and terms? 10%? 20% or even more?

(by the by...many lenders actually pay foreclosed owners a tidy sum to leave the home in good condition once the auction has occurred. My next door neighbor was foreclosed and they paid him $3500 to leave the house 'broom clean' and empty. And he had stayed for nearly 18 months payment free during the foreclosure process.)

I can tell you from my personal experience, I qualified after 2 years for FHA without ever touching credit again after my BK7. Other than a house payment -- and only because saving cash is unrealistic with houses costing several years salary -- I don't borrow. No car loans, no credit cards, no furniture store cards, nothing. I keep a lot more cash each month as a result. Buying a house became very easy once I had jettisoned all the stuff that was dragging me down.

Edited September 30, 2010 by Methuss

[MrMarshall]

If you reaffirm, and you decide to change your mind. You can recind the bankruptcy reaffirmation. I do believe it's 3 months.

[defeatCA]

Or you stop paying and the lender forecloses. Whatever option- the lender can no longer attack your credit report nor sue you personally.

They can't sue, that's correct...HOWEVER, if the property goes into foreclosure (reaffirmed or not), the foreclosure WILL show up on the credit-report.

[WhoCares1000]

The question is, can the report as foreclosure or does the bank have to report iib? If they have to report iib, then not reaffirming does not matter.

No matter what though, the OP will not be able to purchase a house until at least 2 - 5 years after the foreclosure anyways so why worry if it is on your report or not.

[defeatCA]

The question is, can the report as foreclosure or does the bank have to report iib?

The BANK has to report "IIB".

The foreclosure, however, will be reported as Public Record. This has nothing to do with the reaffirmation.

Edited October 5, 2010 by defeatCA

[WhoCares1000]

So lets see, you dropped a nuclear bomb on your credit report with the BK and then send in a cruise missile with the foreclosure. Does sending the cruise missile really matter at that point?

In either case, you are at least 1 - 2 years out from getting another credit card, 2 - 3 years out from getting an auto loan at a somewhat decent rate, and 2 - 5 years out from getting another home loan.

In this situation, I would not worry about what will happen with the pre-BK stuff but what you will do after the BK. I was able to get my credit score into the low 700s 2 years after BK so it is not hard to repair. It just takes time and knowledge (and making sure your credit report reflects only what really happened).

[defeatCA]

So lets see, you dropped a nuclear bomb on your credit report with the BK and then send in a cruise missile with the foreclosure. Does sending the cruise missile really matter at that point?

Not necessarily. If the cruise missle hits the same time because you surrendered your home during BK, probably not. However, if you decide to walk away 3 years after discharge, the missle blows away what you just rebuilt...

In either case, you are at least 1 - 2 years out from getting another credit card, 2 - 3 years out from getting an auto loan at a somewhat decent rate, and 2 - 5 years out from getting another home loan.

The timeframe about getting another house sounds about right. On the CCs and auto-loan, however, you are a bit too pessimistic. It all depends what you are doing RIGHT AFTER DISCHARGE. If you immediately start rebuilding credit, it doesn't look too bad. The first credit-card offers will be mailed to you right after discharge - you don't even have to apply for them..the decent auto-loan depends on your auto-loan history.

In this situation, I would not worry about what will happen with the pre-BK stuff but what you will do after the BK. I was able to get my credit score into the low 700s 2 years after BK so it is not hard to repair. It just takes time and knowledge (and making sure your credit report reflects only what really happened).

Exactly!