Foreclosure Article
Mortgage Reaffirmation Requirements Bogus
When a homeowner files for bankruptcy there is most likely a lender on the home involved. Once the discharge of the debts is entered by the Bankruptcy Court then borrower is no longer personally liable for the debt. But, if the borrower wants to keep their home they will need to pay the regular monthly payment because there is a lien or security interest in the real property. Some lenders will ask the borrower to sign a reaffirmation agreement after the bankruptcy is filed. This reaffirmation agreement will give the lender the right to sue the borrower if there is a later default.
Some states have laws that protect their homeowners called no-recourse or anti-deficiency statutes. For instance in Arizona a house homeowner cannot be sued after a trustee’s sale is completed so long as the property fits into a certain description: 2 1/2 acres or less, utilized and occupied as a one or two family residence. Therefore, even if an Arizona homeowner signs a reaffirmation agreement they will be not be liable on a first position deed of trust (probably not true for a junior deed of trust). Having said that the judges in Arizona will not sign reaffirmation agreements on residential property. They take this position in order to protect the naive homeowner who is being bullied by the lender into signing a reaffirmation agreement.
Reaffirmation agreement becomes effective upon filing with the Court if represented by an attorney and not presumed an undue hardship. Per the reaffirmation agreement language set out in the Code, “…No court approval is required if your reaffirmation agreement is for a consumer debt secured by a mortgage, deed of trust, security deed, or other lien on your real property, like your home.” § 524(k)(3)(J)(i)7.
Many lenders will state that they cannot refinance a mortgage loan because the loan was not reaffirmed in the bankruptcy. But, any lender has the right to refinance any loan, assuming no federal or state prohibitions. Instead the lender blames the borrower’s attorney. Stating that the attorney did something wrong. In Arizona this is a bold faced lie.
Many programs will refinance once a bankruptcy is completed. For instance -Borrowers who have received a Chapter 7 bankruptcy discharge in a case involving the first lien mortgage who did not reaffirm the mortgage debt under applicable law are eligible for certain programs, depending on the type of loan. According to one expert “The following language must be inserted in Section 1 of the Home Affordable Modification Agreement: “I was discharged in a Chapter 7 bankruptcy proceeding subsequent to the execution of the loan documents. Based on this representation, Lender agrees that I will not have personal liability on the debt pursuant to this Agreement.” ” Accord, In re Bellano, 456 B.R. 220, 224 (Bankr. E.D. Pa. 2011); In re Owens, 10-72509, 2013 WL 4052874 (Bankr. W.D. Va. Aug. 9, 2013) (“…the lack of a reaffirmation agreement with the Bank and the issuance of the discharge to the Debtor do not appear to preclude the latter even now from filing an application under the HAMP program.”); In re Pope, 10-19688-RGM, 2011 WL 671972 (Bankr. E.D. Va. Feb. 17, 2011) (Finding that a lender’s requirement of reaffirmation as a condition precedent to consideration of a loan modification was improper).
My point – your lender is not your friend when it comes to reaffirmation agreements. Talk to your attorney, get good legal advice in order to determine the law and your rights. Talk to the folks at www.makinghomeaffordable.gov. Talk to other lenders. This is an area of law that is changing every day. Do not fall into the trap of assuming a “no” today will still be a “no” tomorrow.
Contributing Attorney: Diane L. Drain is an Arizona bankruptcy attorney at the Law Office of D L Drain.
Comments:
QUESTIONS
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How can I get back my property I sold to someone (deed of trust) who promised to pay me monthly for 30 years arrangement, but become delinquent in payments? How to foreclose it from home owner? Does home owner covered by AZ anti-deficiency law?
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I need advise and assistance. Have been working with ***Mortgage Servicer*** since 10/2011 to obtain a HAMP 1.0 Tier modification. I have filed for Chapter 11 protection in 4/12 to stop the foreclosure process and continue to work unsuccessfully with Mortgage Servicer. They have made my life so unbelievably stressful with their constant requests for duplicate information provided and 2 denials of the request based on incorrect information that I am spending hours proving their errors. Need assistance to further clarify the settlement terms of the AZ AG's office case and what can be done to help me obtain the HAMP
(This question was edited by the site administrator to redact the proper name of an individual or business)
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Is there protection for tenants in foreclosure actions now that the federal act's sunset provision has taken effect?
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what assistance is available to me I was 12 months behind caught up on six in September and they started foreclosure this month sell date is Feb of 2015 I thought they were working with me and no notice foreclosure.? my husband was on unemployment for over 4 years and recently is now working and we are able to catch up and stay on track.
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We currently have a mortgage on our home as well as a home equity line of credit. If the first mortgage company forecloses on our property, can the bank that we have a home equity line of credit sue us or file a judgement on us for the amount of the home equity line of credit we used?
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Are purchase money mortgages limited to no recourse notes?
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I rent a house that is in foreclosure. the landlord does not know that i am aware . The house is being put up for auction in 60 days. Am I within my legal rights to withhold rent so I can find another place to live? Can he try to evict prior to the auction due to unpaid rent?
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My husband recently lost his job after working for the company for 10 years they let him go, we couldn’t afford the payment on the house with my pay so we contacted our mortgage they made partial payment plan for us for 12months so we don’t loose our home after some long time of searching for job my husband and used up all the credit cards so we couldn’t pay them all of so we filed for chapter 7 bankruptcy after that my husband found a job and we contacted our WF mortgage loan to start the payment process next thing i know ee got motion filed with the court to forclose our home what should
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If house is foreclosed on, what does the new owner need to provide to the old owner and how long does the the old owner have to get out by law?
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My home went to foreclosure. The amount owed was $368,000 ,the bank set the opening bid at $302,000, The home sold for $371,000. Should the excess funds be the difference between $371,000 and $368,000 or between $371,000 and $302,000. Thx
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