Lawyer Didn't Reaffirm Mortgage

We went through Ch7 in Michigan. We told the lawyer we wanted to reaffirm our home mortgage. It's a year later now and when I pulled a credit report theres's no evidence of payments. The mortgage company says they've received every payment but that the mortgage wasn't reaffirmed in the Ch.7.

My lawyer says "I don't know what to do". No what???!!!

Thank you.

Once your bankruptcy is discharged, you lawyer is done.

It was up to you to reaffirm the mortgage and make payments.

Were you making payments?

If you were, there's no obligation for the mortgage company to report those payments to the credit bureau.

If you've made payments all this time and the mortgage company has not foreclosed, contact the mortgage company about re-affirming. They'll probably be able to send you forms and instructions.

Thanks for the reply. Yes, we've made every payment on time. I am not taking issue with the mortgage Co. They have told us that we can "walk away" at any time because of this odd situation. Is that true?--seems unlikely.

Thank you

adjuster jack:

If you've made payments all this time and the mortgage company has not foreclosed, contact the mortgage company about re-affirming. They'll probably be able to send you forms and instructions.

A reaffirmation agreement needs to be approved by the bankruptcy court.  Once the bankruptcy is closed it would have to be reopened (hefty filing fee) in order to file a reaffirmation agreement.

Absent a reaffirmation agreement, you were discharged of personal responsibility for the mortgage debt, so in some ways the bank is correct that you could  "walk away" from it.

If you and the bank can reach an agreement regarding refinancing of the mortgage, that might be less expensive and less time consuming (even with points & closing costs) than paying an attorney to file a motion (hefty filing fee in addition to attorney fees) to reopen your bankruptcy just to file a reaffirmation agreement.

I suppose you could contact your attorney to ask whether the mortgage holder ever sent a reaffirmation agreement to the attorney's office.

The way these things are supposed to go, the mortgage holder should send the attorney a reaffirmation agreement, the attorney should review it and if acceptable, forward it to you for your signature, then you return it to your attorney who returns it to the mortgage holder.

MAYBE - if the attorney did receive a reaffirmation agreement and just dropped the ball and didn't forward it to you for your signature - the attorney MIGHT agree to absorb any costs associated with fixing it.

More likely (I've seen this hundreds of times...) the mortgage holder dropped the ball and didn't get a reaff to the attorney, or didn't do it before the case was closed.  Since reaffirmation agreements tend to benefit the creditor more than they benefit the debtor, debtors' attorneys aren't typically in the habit of chasing after lenders for reaff agreements if the lender doesn't get its act together to send one.

LegalSecy:

A reaffirmation agreement needs to be approved by the bankruptcy court. Once the bankruptcy is closed it would have to be reopened (hefty filing fee) in order to file a reaffirmation agreement.

Ouch.

LegalSecy:

If you and the bank can reach an agreement regarding refinancing of the mortgage, that might be less expensive and less time consuming

Good idea.

In fact, since it's been a year and you can apparently afford the payments, I suggest shopping around for a new loan, as your current lender might not be inclined to offer you the best deal.

However, if the market value of your house is less than the loan balance, you will not be able to get new financing unless you have enough cash to pay down the balance to where it can be refinanced.

And if you have that kind of money it might be better to walk away from this house and use the money to buy a replacement at today's lower prices, rather than throw money down the toilet to keep the old house.