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Mortgage after bankruptcy, no reaffirmation, stay & pay situation

Filed and discharged bankruptcy in 2009 due to a loss of primary income that lasted a year. We intended, as it states on our bankruptcy papers, to reaffirm our mortgage. Lender didn't issue a reaffirmation agreement so we stayed and continue to pay without one. We contacted a local broker but he isn't very knowledgeable about our situation (he seems surprised by the outcomes we're getting) and I think it's time to find someone with more resources and knowledge to see if it's possible for us to get a mortgage. We have income enough to qualify both mortgages according to the broker I've been working with. We've had 6 FHA lenders turn us down. Every one for the same reason....we don't have a reaffirmation agreement. Moved on to a conforming loan, same thing. Next option is non-conforming and I'm still waiting to hear from a few lenders for a pre-approval on that. I'm just not convinced we're going to be financed even though our home is and has always been current, we have the income to cover both mortgages while we look for a renter, and our credit scores are in the high 600's. No one has looked at how much cash we have in the bank or asked what my plans for the current home are. They simply don't want us because we don't have a reaffirmation agreement. Is it time to look for another broker? Do I have other mortgage options? Or am I just not mortgage-able? I'm very discouraged, feeling deflated, and don't know where to go or what to do next. Thanks for any input. by downsized from Detroit, Michigan. Dec 19th 2012 Reply


Bert Carpenter (BertCarpenter)
#38 ranked lender in Arizona - 1,819 contributions

You didn't state if your current home has equity or if you are upside down. Here is your problem. Without the reaffirmation agreement, you are no longer liable on the note and can give the house back to the lender at any time without repercussion. If you have little or no equity in the home your new lender is thinking that you are going to buy and bail. Why? Because thousands of people have done that. It doesn't matter if that is your plan or not. You are not going to get a new loan with the old loan outstanding without a reaffirmation and you are not going to get your current lender to accept a reaffirmation agreement. Re-opening your BK case is probably a can of worms you should probably avoid. You have two other options: If you have equity, refinance into a new mortgage. Once you have done that, you will need to wait at least 6-9 months before you begin to find a new primary residence. The other would be if you do not have equity. That would be a short sale. FHA allows for a new loan immediately after a short sale provided the following conditions are met: No payments (mortgage and all other payments) in the preceding 12 months were paid late; The short sales was NOT to take advantage of declining market conditions; and Purchase at a reduced price a similar or superior property within a reasonable commuting distance. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Dec 19th 2012
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Jeremy Redlinger (JeremyR)
#31 ranked lender in Minnesota - 191 contributions

This is another example of how crooked Wells Fargo is. I have came across this situation a few times in my career and Wells Fargo will not reaffirm your first mortgage in a bk. This means that they will no longer need to report your mortgage to the credit bureaus and makes it impossible to refinance your mortgage with anybody. Sorry to bear the bad news but your are stuck with Wells Fargo until the loan is paid off.

Dec 19th 2012
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,550 contributions

I think you need an attorney.. You cannot force Wells Fargo's hands and make them issue a reaffirmation agreement.. So that's a dead end there.. if you reopen your BK, that can be a disaster... You will not be able to get a mortgage while you still own that property without the reaffirmation... you could sell the home and be done with it.. But as you can see,,, very limited options.. An attorney might have a better idea..... I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Dec 19th 2012
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Ken Burrows (mortgagesforamerica)
#19 ranked lender in Nevada - 572 contributions

Who is the current lender and why won't they give you a reaffirmation agreement or reinstatement letter?

Dec 19th 2012
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Wells Fargo. And I don't know why they didn't issue one. At this point, I believe it's too late unless I try to petition the court to reopen our case. It's been almost 3 1/2 years since our case was discharged.

Dec 19th 2012
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Ken Burrows (mortgagesforamerica)
#19 ranked lender in Nevada - 572 contributions

Is Wells Fargo reporting the loan each month on your credit report? Did Wells Fargo purchase the loan from another lender?

Dec 19th 2012
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Thank you for the responses. I appreciate the time and advice from everyone. To answer some questions: Wells Fargo doesn't not report our payments to credit bureaus. They didn't purchase the loan from anyone since we filed, they were the lender the day we filed and still are. Bankruptcy was a chapter 7. Home has no equity. Regarding short sale, I can sell that way even though I don't have a financial hardship making it difficult to make my payments? I thought sellers had to have a good reason in order to be approved by their lender for a short sale? I doubt we'd qualify. We don't have any financial reason to sell. We want to move for more space, better schools, and a safer neighborhood. The payment on our home is low enough that we could rent it out and still have a few bucks to tuck away to cover maintenance, repairs, etc. Of course, that doesn't mean anything to the lenders, I know.

Dec 19th 2012
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Brian Paris (bparis)
#631 ranked lender in California - 51 contributions

You need to go back to your atty and reaffirm the debt with wells and get it approved by the court. After that you will be able to do a refinance conv or streamline.

Dec 19th 2012
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Ken Burrows (mortgagesforamerica)
#19 ranked lender in Nevada - 572 contributions

Yes your bankruptcy attorney should handle this. It shouldn't be much more than a motion and you most likely won't even need to go to court. If you don't want to pay the attorney call Wells Fargo and ask their legal team what to do. They should be somewhat helpful. If not I would state you are just going to walk away from the property. That should get their attention and direct you to the proper department. I know it might be a pain but you do need to go through the proper motions.

Dec 20th 2012
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Amber Bushnell (amber1970)
#58 ranked lender in Pennsylvania - 8 contributions

I called my corporate office about your situation and I am getting great feed back, but will Wells give usPayment history?Accurate pay off?Can you tell me what your current score is and month and year that the Chp7 discharged?Also value of the home (approximate) and how much you owe?Are you escrowed?My company underwrites its own loans. I think we should talk as I feel that I can structure this in such a way that I can get it closed so you can take advantage of the rates while they are still low.. My number is 724-791-3100 I am here until 9pm M-F and I have to tell you I have had similar situations. Attorneys at the time of the Chapter 7 are really just trying to protect you from re affirmation in case the situation gets worse and you must walk away. I would like to gather all the info I can from you and request that my underwriters give you a prequalification. We are NOT a hard money lender and we do conventional, FHA VA as well as USDA and reverse mortgages. Give me a call 724-791-3100

May 27th 2014
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