My wife and I filed for bankruptcy in 2010 (Chapter 7) and I recently
contacted our mortgage company (Wells Fargo) about refinancing and they
told me I couldn't do anything because the loan was not reaffirmed. I know
this can't be done at this point, nor would I ever want to. Is there
anything I can do to get a new loan with Wells Fargo or a loan from a
different mortgage provider without the loan being reaffirmed?
Also, we rent the house out and are losing money every month because of our
high interest rate. Is there any further penalty to our credit if we would
stop making payments and let the bank take the house? We owe more than it
is worth and unless we can refinance it makes zero sense to me to keep
losing money every month.
It is unlikely that Wells Fargo will refinance you after bankruptcy because they just don't do this kind of thing. Better option is to speak with other lenders, including local credit unions who have greater flexibility. Because this property is not your residence, you are not likely to qualify for most kinds of loan modification programs. The fact that you didn't reaffirm the debt is a red herring that the fools at the mortgage company are feeding you because they don't know any better. Since the property is underwater, why are you trying to keep it & killing yourselves in the process? I would suggest looking into a short sale. Hope this perspective helps!
You may need to try refinancing with a different lender. Regarding letting the property go to foreclosure, that will result in a further ding to your credit report when the foreclosure sale gets reported there in the public records section.
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Some lenders will take a payment history that you would obtain from Wells in order to refinance
Mark here if this answer is helpful
It is doubtful that you will be able to obtain new financing with the bankruptcy on your record and the bankruptcy court would never agree to a reaffirmation for a house that is upside down. Based on the above and because there is no equity and because you are losing money each month, may make sense to give it back during the bankruptcy.
Wells Fargo didn't tell you this but they will take the position that a re-finance is a violation of the discharge order in your chapter 7. This makes sense if you think about it. After your bankruptcy. Wells Fargo only has an In rem interest in the property, your personal obligation on the note is discharged. By using new money to pay off a discharged debt, it could be seen as re-obligating you and therefore a violation of the discharge order. You are better off trying to modify the existing discharged obligation. If you really do want to refinance, you will need to go to a less cerebral lender.
Wells Fargo won't refinance but they may modify the existing. Another lender may refinance if it's been 2 or 3 years since your discharge but not too much sooner than that.
There isn't anything you can do to force Wells Fargo to offer you a new loan. You should apply to other mortgage providers. Reaffirmation of a mortgage is not a prerequisite to obtaining new financing. However, many banks will not report your payments without a reaffirmation. You will have to amass your payment verification yourself. However, the great benefit of not reaffirming is that you can now walk away from the property and be assured that you are not personally obligated for the mortgage debt. If you do walk away, keep in mind that a foreclosure will significantly impact your credit score.
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