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If you reaffirm a mortgage with one company and they sold your loan before the paperwork are you required to reaffirm with new?

Saint Paul, MN |

We had a mortgage with one company when we filed for bankruptcy. We listed our intent to reaffirm. We reaffirmed with that company, but they sold the loan before the paperwork so it did not transfer. Are we required to send this reaffirmation paperwork to the new company? Our preference at this point would be to not reaffirm with this new company. What are our options?

Attorney Answers 4

Posted

Before you reaffirm on a mortgage you need to seek legal advice. Generally, a reaffirmation is not required to maintain the property and only exposes you to liability in the event of later losing the property due to unforeseen circumstances. Get the advise of a bankruptcy attorney before reaffirming.

This answer in no way creates an attorney-client relationship. The answer is not a complete answer and requires additional facts in order to provide the best options. The submitter accepts the risk of relying on such an incomplete answer and waives any claims of damages for doing so. As stated in the answer the submitter should contact a qualified bankruptcy attorney is discuss these issues further before any action is taken. Any action taken without advise and counsel of a qualified attorney is inadvisable.

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2 comments

Asker

Posted

But what if I signed one that was never transfered to the new mortgage company. Am I required to reaffirm with them because I reaffirmed with the other?

John Gerth Merna

John Gerth Merna

Posted

Reaffirmations are not transferred. They are lodged with the bankruptcy court. You need to talk to an attorney about immediately withdrawing it if it is not too late.

Posted

You are never required to reaffirm a real estate debt & it would be stupid to do this in any event. After all, the mortgage company cannot foreclose without following state laws on foreclosure & you not signing a reaffirmation is not a legitimate break of your mortgage contract.

Hope this perspective helps!

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1 found this helpful

5 comments

Asker

Posted

But what if I signed one that was never transfered to the new mortgage company. Am I required to reaffirm with them because I reaffirmed with the other?

Dorothy G Bunce

Dorothy G Bunce

Posted

No, if you reaffirmed with one & it was approved by the bankruptcy court, the reaffirmation will transfer to the new company automatically by operation of law.

Asker

Posted

It did not transfer and I'm not sure it has ever gone through. How do I check?

Dorothy G Bunce

Dorothy G Bunce

Posted

First find out if the reaffirmation agreement was approved by the bankruptcy court. If it wasn't approved, it doesn't exist. Any agreement you sign after the bankruptcy is over will not be eligible for approval by the bankruptcy court. If the judge did approve the reaffirmation, the new mortgage company will be bound by it.

Asker

Posted

I just spoke to my lawyer and it appears that the first mortgage company never sent it in to the courts.

Posted

Reaffirming a mortgage is generally a bad idea. You should only reaffirm a mortgage if your attorney advises you to do so.

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1 comment

Asker

Posted

I did sign one, but I don't think it ever went through because or loan was sold to a different company before finalized. Am I required to reaffirm with the new company?

Posted

I don't personally practice bankruptcy, so I can't accurately provide guidance about whether a reaffirmation is transferred to the new company or not. I believe that it would go to the new company, though. You reaffirmed the obligation; after that time, the old company transferred it to the new company. It seems that if you prefer to not have a reaffirmation with the new company, you will need to find a bankruptcy attorney for some assistance ASAP.

Additionally, I have to disagree with my colleagues on one point: there is some benefit to reaffirming an obligation pursuant to a mortgage. Many mortgage documents provide that it is an act of default to file for bankruptcy. The "bread and butter" of my firm's practice is foreclosure defense, and we've run into problems (infrequently) because the mortgagee was invoking a paragraph of the mortgage documents that provided that our clients were in default on their obligations due to filing for bankruptcy and then neglecting to reaffirm their debt obligation. Those problems are rare, but it is something to keep in mind.

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