What will happen with the second mortgage since it was reaffirmed? 15 Answers as of August 27, 2014

My husband and I signed a reaffirmation agreement with the second mortgage company but not the first mortgage company when we filed Chapter 7 in 2010. Now, the payment on our first has gone up due to escrow and we can no longer afford to keep the house. We have a foreclosure notice from the first company and we don't want to stay in the house any longer.

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GARCIA & GONZALES, P.C.
GARCIA & GONZALES, P.C. | Richard N. Gonzales
I always advise my clients to never reaffirm a mortgage. If the first mortgage forecloses on the home, it is likely the 2nd mortgage will fall off. However, they can sue you on the promissory note since you reaffirmed it. This is EXACTLY why I counsel my clients against reaffirming any mortgage. The good news is you can file a Chapter 13 and make a small payment for 36 months if necessary. Talk to an experienced BK lawyer. You can only get so much info here. Avoid lawyers who offer free consultations. You normally don't meet with a lawyer any way, or if you do meet with a lawyer, it will be for 15 mins. You need more info to make an informed decision. Don't be penny wise and pound foolish. Good luck!
Answer Applies to: Colorado
Replied: 8/27/2014
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
And that is why I don't recommend reaffirmation agreements on mortgages. Every state has different laws on this, seek out a local lawyer.
Answer Applies to: California
Replied: 8/25/2014
Tokarska Law Center
Tokarska Law Center | Kathryn U. Tokarska
Signing the reaffirmation was not a good idea. Assuming ALL of the following listed below are true the second loan holder can come after you for deficiency: you are in California and foreclosure is done non-judicially you reaffirmed the second mortgage the second mortgage is a recourse loan (recourse means the loan is not the original purchase loan, instead it's either a home equity line of credit that you acquired after purchase or a loan that was created by refinancing the original loan) the property when sold at auction fetches less than what is owed on it If this is what is happening some options include: 1) attempt loan modification on both loans 2) budget adjustments: might need to include renting a room in the house to help offset the costs of property ownership 3) attempt to do a shortsale - subject to lender's approval but if lenders approve it they agree to take less than what is owed to them.
Answer Applies to: California
Replied: 8/22/2014
Steele, George, Schofield & Ramos, LLP
Steele, George, Schofield & Ramos, LLP | Alan E. Ramos
I have no idea why you reaffirmed your second mortgage; however, the most likely effect of doing so was to make you personally liable for the debt. If the holder of the First Deed of Trust completes a foreclosure, you will be personally liable to pay off the second. You should see an attorney to determine what you obligation would be in the event of a foreclosure.
Answer Applies to: California
Replied: 8/22/2014
Dickson Law Group, LLC
Dickson Law Group, LLC | John P. Dickson
I cannot imagine a situation where it would be prudent to reaffirm the second mortgage only. You should speak with your bankruptcy attorney to figure out how things were messed up so badly.
Answer Applies to: Illinois
Replied: 8/22/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    Not sure who advised you to sign the reaffirmation agreement but now you are both personally liable for the entire amount of the 2nd mortgage.
    Answer Applies to: New York
    Replied: 8/22/2014
    The Troglin Firm | William M. Troglin
    In Georgia, if the 1st mortgage holder forecloses, it wipes out the lien of the second mortgage holder but NOT THE DEBT so after the foreclosure, you will be personally liable for the balance of the second since you reaffirmed that debt in your bankruptcy.
    Answer Applies to: Georgia
    Replied: 8/22/2014
    Cohen & Kendziorra, P.A.
    Cohen & Kendziorra, P.A. | Robert S. Cohen
    Unfortunately since you reaffirmed on the second, you are no longer protected as you are on the first mortgage since that was not reaffirmed when you filed bankruptcy. Once the home is foreclosed, the second will most likely be unsecured and you are liable for the amount owed on the note.
    Answer Applies to: Florida
    Replied: 8/22/2014
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    You have a big problem because by reaffirming your second mortgage, the lender has the right to sue you to collect on 100% of the value of the second mortgage. If a foreclosure takes place, the second mortgage company is unlikely to get paid anything at all. I would urge you to look into other options, such as applying for a loan modification on your 1st to make your payments more affordable or refinancing the first with a different lender. Lastly, you could attempt to sell the property to minimize the amount owed to your second lender. BTW, even if you signed a reaffirmation, if the court didn't approve this deal, and many bankruptcy judges will not do this, you are off the hook. See your bankruptcy lawyer for more advice.
    Answer Applies to: Nevada
    Replied: 8/22/2014
    Ronald K. Nims LLC | Ronald K. Nims
    Since you reaffirm the 2nd mortgage, you're personally liable. If there is enough equity in your house to pay off both mortgages, you need to sell it and pay them off. If you allow the house to go into foreclosure, the late charges, penalties and attorney fees on the first mortgage will total tens of thousands of dollars and almost certainly absorb any equity you have.
    Answer Applies to: Ohio
    Replied: 8/22/2014
    Law Offices of Linda Rose Fessler | Linda Fessler
    You are still obligated on the second. I suggest you might ask for a modification on both first and second. This will stall the foreclosure. Do not make any payments. Chances are you probably have grounds to sue the banks that gave you the mortgages. That would probably stall the foreclosure even longer.
    Answer Applies to: California
    Replied: 8/22/2014
    Law Office of Michael Johnson
    Law Office of Michael Johnson | Michael Johnson
    I would attempt a short sale and get the 2nd mortgage to take less.
    Answer Applies to: Florida
    Replied: 8/22/2014
    Barnhart Law Office
    Barnhart Law Office | Bruce C Barnhart
    When you reaffirmed your second mortgage, you made yourself personally liable on the mortgage note. If the first mortgage company forecloses, it is very unlikely that the second mortgage company will receive any payment from the foreclosure sale. You should check your bankruptcy docket and see whether or not the reaffirmation agreement was entered and approved.
    Answer Applies to: Nebraska
    Replied: 8/22/2014
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    You are liable for the 2nd mtg. I recommend trying to do a short sale.
    Answer Applies to: Nevada
    Replied: 8/22/2014
    EDWARD P RUSSELL | EDWARD P RUSSELL
    Unfortunately since you signed the reaffirmation agreement for the second mortgage you are still responsible for that debt. In the foreclosure proceedings the first mortgage company will be the only bidder at the sheriff's sale and will take title to the property. The second mortgage company will get nothing from the sale and assuming that the foreclosure is by way of advertisement and not court action you will owe the balance on the second mortgage. If it is more than 4 years since you filed for the Ch 7 bankruptcy you would be eligible for a discharge in a Ch 13 bankruptcy. You could list the second mortgage deficiency sale as unsecured debt.
    Answer Applies to: Minnesota
    Replied: 8/22/2014
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