Posted on: 19th Sep, 2009 12:23 pm
hi, i wonder if anyone can offer some advice in this horrible mess, we don't know where to turn at this point. it's a long story but i will start at the beginning. we are in tennessee.
in 2005, my husband (we were not together back then) filed for chapter 7 following a divorce. the bankruptcy was discharged in june 2005. he did not intend to include his house in the bk. he signed a reaffirmation agreement and continued to make payments on time on the loan. subsequently we met and married and i moved into the house. in 2006, we decided to think about moving. we applied for a mortgage and were told after our credit was run that the existing loan was discharged in bankruptcy and never reaffirmed. we contacted the mortgage lender as we assumed it was being reported incorrectly by the mortgage lender to the credit reporting agencies as we had a copy of the reaffirmation agreement he signed back in 05. they told us it was not reaffirmed and then went ahead and hired a lawyer to review the file and write to us showing proof that our attorney sent the reaffirmation to their attorney to be filed 2 days after the chapter 7 was discharged. they charged $2000 to his mortgage account for "legal fees". so, we established it was not reaffirmed.
moving on to 2007, i was diagnosed with multiple sclerosis and discovered i was pregnant in the same week. my health took a downturn and after our daughter was born we were left without my income so we took a 2nd mortgage out with hfc for $10k with a balloon payment in 10 years. they valued the house at 95k, it was not really worth that but at the time we had no other options to get through that time period where i could not work. they didn't care about the situation with the first mortgage not being reaffirmed etc.
2008 arrived and i got better, and went back to work after our daughter was born. the same month, my husband was laid off from his job of 10 yrs. he was out of work for 5-6 months. we fell 4 payments behind on the mortgage. it is an fha loan and they contacted us and said they would do loss mitigation. they suggested a partial claim and we had to make 3 or 4 on time payments in order to be eligible. we paid on time and continued to make payments on the 2nd loan also. we never heard from the 1st lender after that period ended and they never sent us partial claim paperwork and months went by with us just paying the monthly payment but still 4 payments behind.
this week they have contacted us and said we must sign the partial claim document by friday or they will start foreclosure proceedings. they also want the $2k in legal fees by friday for the dispute in 06, or they will start foreclosure proceedings. i asked them about a short sale and they said yes, we could do that and list the house, and have 90 days to get an offer. the house however is now worth $75k at best, and there is a total of $83 outstanding on 1st mtg and $10k on 2nd. there are extensive repairs needing done to the home. since the 2nd would get nothing, i doubt they would agree to a short sale? right now, that loan is current and on a temporary interest rate reduction.
the first lender said if we walk away and they foreclose, we are liable for the 2k in "legal fees" and the late fees on the mortgage as they were incurred after the loan was discharged in bankruptcy.
what a mess. i guess our questions are this:
1. can they really add more fees to a loan discharged in bankruptcy? they have indicated they will try and sue my husband for any shortfall in a foreclosure because he said he intended to reaffirm even though he never did.
2. if it forecloses what is the process with the 2nd mortgage when there is nothing left to pay them? my understanding is that tn has non judicial and judicial foreclosures and i didn't know what the difference was.
3. if we try to do a short sale (if hfc agree), are there tax implications? i read somewhere that in 2007-2009 those who lose their primary residence will not be penalized by the irs or have the written off amount considered as income. would that even come into play anyway on the first mtg since it is discharged?
4. would a foreclosure be added to his credit report now even although the loan was discharged 4 years ago? he has gotten his credit score from 500 to 640 (still not great i know) and someone said a short sale would be less of a ding on credit but of course complicated by the 2nd mtg.
we really don't know where to turn, and only have a few days to decide. it would seem crazy to sign on the dotted line to do the partial claim because then we are bound by a third lien on a property not worth close to what the outstanding loans would be.
any advice? thanks so much for taking the time to read this.
in 2005, my husband (we were not together back then) filed for chapter 7 following a divorce. the bankruptcy was discharged in june 2005. he did not intend to include his house in the bk. he signed a reaffirmation agreement and continued to make payments on time on the loan. subsequently we met and married and i moved into the house. in 2006, we decided to think about moving. we applied for a mortgage and were told after our credit was run that the existing loan was discharged in bankruptcy and never reaffirmed. we contacted the mortgage lender as we assumed it was being reported incorrectly by the mortgage lender to the credit reporting agencies as we had a copy of the reaffirmation agreement he signed back in 05. they told us it was not reaffirmed and then went ahead and hired a lawyer to review the file and write to us showing proof that our attorney sent the reaffirmation to their attorney to be filed 2 days after the chapter 7 was discharged. they charged $2000 to his mortgage account for "legal fees". so, we established it was not reaffirmed.
moving on to 2007, i was diagnosed with multiple sclerosis and discovered i was pregnant in the same week. my health took a downturn and after our daughter was born we were left without my income so we took a 2nd mortgage out with hfc for $10k with a balloon payment in 10 years. they valued the house at 95k, it was not really worth that but at the time we had no other options to get through that time period where i could not work. they didn't care about the situation with the first mortgage not being reaffirmed etc.
2008 arrived and i got better, and went back to work after our daughter was born. the same month, my husband was laid off from his job of 10 yrs. he was out of work for 5-6 months. we fell 4 payments behind on the mortgage. it is an fha loan and they contacted us and said they would do loss mitigation. they suggested a partial claim and we had to make 3 or 4 on time payments in order to be eligible. we paid on time and continued to make payments on the 2nd loan also. we never heard from the 1st lender after that period ended and they never sent us partial claim paperwork and months went by with us just paying the monthly payment but still 4 payments behind.
this week they have contacted us and said we must sign the partial claim document by friday or they will start foreclosure proceedings. they also want the $2k in legal fees by friday for the dispute in 06, or they will start foreclosure proceedings. i asked them about a short sale and they said yes, we could do that and list the house, and have 90 days to get an offer. the house however is now worth $75k at best, and there is a total of $83 outstanding on 1st mtg and $10k on 2nd. there are extensive repairs needing done to the home. since the 2nd would get nothing, i doubt they would agree to a short sale? right now, that loan is current and on a temporary interest rate reduction.
the first lender said if we walk away and they foreclose, we are liable for the 2k in "legal fees" and the late fees on the mortgage as they were incurred after the loan was discharged in bankruptcy.
what a mess. i guess our questions are this:
1. can they really add more fees to a loan discharged in bankruptcy? they have indicated they will try and sue my husband for any shortfall in a foreclosure because he said he intended to reaffirm even though he never did.
2. if it forecloses what is the process with the 2nd mortgage when there is nothing left to pay them? my understanding is that tn has non judicial and judicial foreclosures and i didn't know what the difference was.
3. if we try to do a short sale (if hfc agree), are there tax implications? i read somewhere that in 2007-2009 those who lose their primary residence will not be penalized by the irs or have the written off amount considered as income. would that even come into play anyway on the first mtg since it is discharged?
4. would a foreclosure be added to his credit report now even although the loan was discharged 4 years ago? he has gotten his credit score from 500 to 640 (still not great i know) and someone said a short sale would be less of a ding on credit but of course complicated by the 2nd mtg.
we really don't know where to turn, and only have a few days to decide. it would seem crazy to sign on the dotted line to do the partial claim because then we are bound by a third lien on a property not worth close to what the outstanding loans would be.
any advice? thanks so much for taking the time to read this.
Hello! Depressing klooper appropriate for my english jer, buti very nice re say gJ$)Kd!!!.
You've certainly had a long road Lesley... And unfortunately, it sounds like it's going to be a tad longer still... The "legal fees" are a red flag for me for some reason. Unfortunately, I'm not at all familiar with BK proceedings nearly enough to be able to even remotely answer your questions. However, I would highly suggest finding a bankruptcy attorney in your area who graduated from Attorney Max Gardner's Bankruptcy Boot camp. Google it as I don't believe I can throw links up here at the moment. Left side of his home page should be a US map. Just under it should be a link to his master graduate list. See if anyone from TN (or surrounding states if you're near a border) completed his program. Max's graduates, generally speaking, would potentially be the best bet to be able to answer the majority of your Qs.
And while you're on his site, if you look over on the right side of the home page you should see an ABC logo for the Nightline piece that Atty Gardner did. That'll give you some insight into his boot camp as well. You might also notice another name that you've heard floating around in that piece as well.. ;)
Hang in there...
And while you're on his site, if you look over on the right side of the home page you should see an ABC logo for the Nightline piece that Atty Gardner did. That'll give you some insight into his boot camp as well. You might also notice another name that you've heard floating around in that piece as well.. ;)
Hang in there...
Thanks for the information! I checked out his site and there is one attorney close to Memphis, and we are going to give him a call tomorrow. Thanks again and have a good evening - hopefully he will be able to give us some guidance.