What Can You Do If You Did Not Reaffirm Your Mortgage? Can You Just Reopen Your Bankruptcy And Reaffirm The Mortgage? You may be reading this because your mortgage company has told you that they cannot (or will not) report your mortgage payment history on your credit report because you did not reaffirm your mortgage in your Chapter 7 case.
Mortgage companies will not report your mortgage payments because they are concerned that it violates the automatic stay or discharge injunction. The concern is that reporting the payments on the credit report can be treated as an attempt to collect a discharged debt.
Get in touch with the bank, lender, or loan servicer reporting the late (s) If they are at fault and admit it, get a letter in writing and ask them to fix it If it’s your fault, you can still try to dispute it and get it removed Similar to the speeding ticket rule where you win if no one “shows up”
You got the late for a reason that was nobody’s fault but your own, and you have to pay the price. But if for any reason that mortgage late was the fault of the bank or lender, the loan servicer, or another third party, you can successfully get it removed from your credit report.
Mortgage companies will not report your mortgage payments because they are concerned that it violates the automatic stay or discharge injunction. The concern is that reporting the payments on the credit report can be treated as an attempt to collect a discharged debt.
Looking for Mortgage Analysis Services Homeowners are also allowed to negotiate the reinstatement of their mortgages loans with the lenders. Negotiating a reinstatement of a defaulted mortgage with the lender is a bit more involved than simply paying all missed payments and late fees, though.
This decrease probably won't show up immediately, but you'll see it reported within 1 or 2 months of your closing, when your lender reports your first payment. On average it takes about 5 months for your score to climb back up as you make on-time payments, provided the rest of your credit habits stay strong.
If your loan is in default, your lender may send you a mortgage reinstatement letter. The document would detail the funds required to reinstate your mortgage, also known as a mortgage reinstatement quote.
The reinstatement quote will give you the exact amount needed to cure the default (generally, the default is failing to make payments), as well as a good-through date for that amount. The amount you'll have to pay ordinarily includes: all of the back and current payments due, including principal and interest.
What is a reinstatement letter? A reinstatement letter is a missive a former employee sends to a previous employer asking for their job back.
Inquiries. When you apply for a mortgage, your credit score will drop slightly; however, the impact is minimal. According to MyFICO.com, an inquiry lowers most scores by less than five points. If you shopped around for the best rate by getting quotes from several lenders, you will not get dinged for each inquiry.
30 to 90 daysOne of the most common reasons you don't yet see your mortgage on your credit report is because there's been a simple reporting delay. For most people, it can take anywhere from 30 to 90 days for a new or refinanced loan to appear.
According to FICO, depending on how high your credit score was to start, it can take between nine months and three years for your score to fully recover from a 30-day late payment. For a 90-day late payment, it can take between nine months and seven years.
What action must the lender take when a notice of reinstatement occurs? The lender must dismiss the suit and continue the mortgage.
“Debt reinstatement involves the use of the bankruptcy process to restructure a company's bad debt while simultaneously using the Bankruptcy Code's reinstatement provisions to retain valuable credit with below-market terms,” says Winikka.
A defeasance clause is a term within a mortgage contract that states the property's title (a fancy word for “ownership”) will be transferred to the borrower (mortgagor) when they satisfy payment conditions from the lender (mortgagee).
After filing for bankruptcy, you may have noticed that your monthly mortgage payments are not being listed on your credit report. Instead you will see the account listed as “Included in Bankruptcy”, with no further notations on the monthly payments being made.
The credit bureaus will contact the creditor to resolve the dispute as to the information being reported. The creditor can then provide their own documents supporting the accuracy of the credit report or they may not dispute the payment history. If the creditor does not dispute the information, then the credit bureaus will update your information ...
When you file for bankruptcy, you are required to list all of your debts and this includes your mortgages. When you receive a discharge in bankruptcy it also discharges your personal liability for the mortgages on the home. It does not remove the mortgage lien that exists on your home.
If your bankruptcy case was closed and you did not sign a reaffirmation agreement, then you will have to check if it is possible to have your case reopened to sign a reaffirmation agreement.
It does not remove the mortgage lien that exists on your home. This means that if you fail to make the payments on the home, then the mortgage company can foreclose on the home but cannot pursue you for any deficiency judgment. Mortgage companies will not report your mortgage payments because they are concerned that it violates ...
You can utilize the payment history to dispute the accuracy of your credit report, for your mortgage payments. You can request that the credit bureau update your credit report with the payment history that you have submitted. The credit bureaus will contact the creditor to resolve the dispute as to the information being reported.
Reaffirming your mortgage is not necessary in order to keep your home. In most cases it is not advisable that you reaffirm your mortgage. Signing a reaffirmation agreement for your mortgage, makes you personally liable for the debt, after bankruptcy.
That means if you fail to pay, the lender can forclose but isn’t allowed to come after you for the deficiency after the foreclosure sale . It means you owe $0 on your mortgage.
A reaffirmation is a promise to repay a debt in spite of your bankruptcy – in essence, to pretend as if the bankruptcy never happened as to that particular creditor. You can reaffirm a debt while the bankruptcy case is open, but many judges won’t let you reopen a closed case for the purpose of reaffirming a debt.
Credit Reporting Of Discharged Debts After Bankruptcy. The Federal Trade Commission, in the famous Brinckerhoff-Lovern letter of April 24, 1998, spells out exactly how a debt discharged in bankruptcy must be reported. It states as follows:
As far as the FTC is concerned, reporting anything but the fact that the debt was discharged in bankruptcy and now has $0 due is inaccurate. Therefore, you should dispute under the Fair Credit Reporting Act to correct the error. If the error persists, there may be grounds for a lawsuit.
But remember, reaffirmation can be dangerous. Once you reaffirm a debt, you’re on the hook in case things go badly in the future. I don’t usually recommend reaffirmation to my clients, but that’s on a case-by-case basis.
In our view, it is not a reasonable procedure to label an account that has been discharged in bankruptcy as “charged off as bad debt” if the account was open and not charged off when the consumer filed bankruptcy.
The mortgage company isn’t allowed to report on the account – at all. No payments, no balance, no skipped payments. Nothing. That’s good if you fall behind, but if you’re up-to-date you’re not going to “get credit” for those payments.
If that doesn't work, you can file a complaint with the Consumer Financial Protection Bureau or get an attorney to help you resolve the matter. In the meantime, continue making your regular mortgage payments while the issue is pending. Otherwise, you could risk going into default and face a possible foreclosure.
If you believe your mortgage servicer made a mistake when handling your payment, the first step you should take is to contact them. If a phone call doesn't take care of the problem, you can follow up by sending the servicer a "notice of error.".
Talk to a Lawyer. If the servicer doesn't respond to your call, notice of error, or complaint, or disagrees that it made an error, consider talking to a lawyer. An attorney can advise you about what to do in your situation and help you enforce your rights.
If a phone call doesn't resolve the problem, you can send the servicer what's called a " notice of error ." Under the federal Real Estate Settlement Procedures Act (RESPA), you get the right to send your servicer a letter letting them know that it made an error on your account, and the servicer must fix the mistake within a specific amount of time.
You may also file a complaint about the servicer with the Consumer Financial Protection Bureau online or by calling 855-411-2372. The bureau will forward your complaint and any documents you provide to the servicer and work to get a response from them, generally within 15 days.
Call Your Servicer . The first step to take if your payment doesn't get credited to your account is to call the servicer to explain the problem. If the person you speak to can't immediately remedy the matter, ask when you should expect a resolution and a return call about the issue.
Your servicer must acknowledge your notice of error within five business days . The servicer must respond within 30 business days after it gets your notice. The servicer may generally extend the 30-day period by 15 days if, within the 30 days, it informs you about the extension and tells you why the process is delayed.
But if the servicer doesn’t credit the money to your account, you should send them a notice of error. In this article, you’ll learn about what’s commonly called the “prompt crediting rule” and notices of error.
§ 1026.36 (c) (1) (i)), the servicer has to credit your payment to your loan account as of the date of receipt—subject to a few exceptions.
If your servicer doesn’t respond to your notice of error—or if the servicer disagrees that it made a mistake—consider talking to an attorney to get advice about what steps you should take next and to learn about different options.
You didn’t comply with the servicer’s written instructions on how to make your payment. In this scenario, the servicer has to credit the payment within five days of receiving it. You made a partial payment that was less than the full amount due, including principal, interest, and escrow, if applicable.
Exceptions to the Prompt Crediting Rule. The servicer doesn’t have to apply the funds to your account on the day the payment comes in if any of the following are true. The servicer doesn’t charge a late fee, additional interest, or any similar penalty because of the delay.
In this scenario, a debtor would send a brief statement to the credit reporting agency disputing the accuracy of the reported payment history, indicate they are current on payments, and assert that the only reason the “on time” payment history is not shown is because the mortgage was not reaffirmed in the Chapter 7.
Instead, your mortgage company simply quits reporting your post- bankruptcy payment history to them. The mortgage creditor quits reporting because courts have punished mortgage creditors for reporting payments missed after filing under the theory that doing so is a prohibited collection effort.
After bankruptcy, many clients later seek to incur debt such as a new home loan or, maybe, a refinance of the existing mortgage debt discharged in the Chapter 7. Most mortgage lenders obtain a mortgage payment history from a credit report.
Some lenders want to see the payment history on your credit report because that is how choose to calculate whether you qualify. That is their prerogative. However, not all lenders are this rigid. Sometimes you just have to be persistent and check with multiple lenders including local credit unions.
When you finance the purchase of a home, you normally sign a (1) Promissory Note that states how much your borrowed and the terms of repayment, and (2) Deed of Trust that indicates the creditor has a lien on the home and that they can foreclose (take the home) if you fall into default on payments (or lack of insurance, etc.).
To be effective, Reaffirmation Agreements must be filed with the bankruptcy court before entry of the Discharge Order (which occurs 60 days after the initial 341 meeting). In much of the country, a debtor is personally obligated on the balance due on a mortgage debt after foreclosure.
Obtaining a new loan can be a problem if your mortgage creditor is not reporting post-bankruptcy payment activity to the credit reporting agencies. A debtor might try to resolve this by obtaining a payment history directly from their mortgage creditor and providing this history to the prospective lender.
If your statement is late — even by just a few days — call the mortgage company to track it down in case there’s a problem with your account.
If you get a notice that your servicer has changed, call your current servicer to confirm the new mortgage servicer — before you send in your next payment. This will make sure your payment goes to the right servicer, avoid delays in processing, and can help you avoid a scam.
When you get a mortgage loan, you sign a contract and agree to pay back the lender. The servicer is the company that handles the daily management of your account. Sometimes, the lender is also the servicer.
Raise and resolve disputes or errors 1 Use the Sample Complaint Letter to write your request, including your account number and an explanation of why you think your account is incorrect. 2 Gather any documents that support your request. Your records should include copies of your statements, coupon book, and paperwork showing that you made your payments (for instance, canceled checks, bank account statements, online account histories, and other letters to the servicer). These can serve as proof of your payment history and your interactions with the servicer. 3 Send your letter — and copies of any documents that support your request — to the mortgage servicer’s customer service address by certified mail, and request a return receipt. This may be a different address from where you send your payments. 4 Keep a copy of your letter and the originals of the documents you sent.
It’s important to know your mortgage servicer because it’s the company that. processes your mortgage payments. answers questions about your loan balance and payment history. pays your insurance and taxes, if you have an escrow account. An escrow account is where you set aside money to pay insurance and taxes.
Know your rights under the law. Under the Real Estate Settlement Procedures Act (RESPA), your servicer must. acknowledge your letter (“qualified written request”) in writing within five business days of getting it. correct your account or determine instead that there is no error — generally, within 30 business days.
You have a 60-day grace period after a transfer to a new servicer. That means you can’t be charged a late fee if you send your on-time mortgage payment to the old servicer by mistake — and your new servicer can’t report that payment as late to a credit bureau.
Because the loan servicer misapplied the payment, the servicer then wrongfully reports Brandon’s payment as late to the credit reporting bureaus and charges a late fee to his account.
When a mortgage servicer gets a partial payment from a borrower, the servicer usually puts that money into a suspense account. In the example above, if Brandon paid just $1,000 of the monthly amount due, the servicer would consider his payment a partial payment.
The CFPB will forward your complaint to the servicer and work to get a response for you, usually within 15 days.
Under a federal law, the Real Estate Settlement Procedures Act (RESPA), if you send your servicer a letter letting the servicer know that it made an error on your account, the servicer must fix the mistake within a specific time period.
Misapplying payments is just one common error that mortgage servicers sometimes make. But, of course, servicers make other types of mistakes as well. If you think your mortgage servicer made an error when managing your account and need help resolving it—or if you’re facing imminent foreclosure—consider talking to a foreclosure attorney who can explain what to do in your particular situation.
If you need to resolve the mortgage late payment immediately, once your credit is pulled by a bank or lender, simply send the letter to the credit reporting company the bank or lender used to pull your credit.
Because it can be very time-consuming to successfully complete a dispute. And you may have more success with added time on your side. Perhaps a better plan is to resolve any credit reporting issues long before you apply for a mortgage, instead of rushing what could be a very critical and time-consuming issue.
If they’re a no-show, you generally get let off the hook, even if you were at fault. Similarly, if a loan servicer or mortgage lender doesn’t respond to your dispute, the credit bureau might remove the mortgage late, even if it was your fault.
However, because of the frequency of mortgage lates committed by homeowners in recent years, some mortgage lenders and banks now allow one 30-day mortgage late in the past 24 months before a subsequent home loan application. So there’s a bit of leeway.
That would otherwise normally take weeks to reflect in your credit scores. While this may solve the mortgage late problem, your FICO scores may still be deflated for a while before the credit bureaus take notice. Assuming you need a mortgage immediately, you may not have time to wait.
Late mortgage payment (s) must be 30+ days past due to impact credit scores. If you’re only a few days (or even weeks) late you’ll likely only have to pay a late fee. So it typically doesn’t happen by accident. Impact will vary based on credit history and number/severity of late payments.
Depending on where your scores stood prior to the mortgage late, they could fall anywhere from 60 to 100+ points.
With most mortgage companies, you don't have to make your payment by the due date—usually the first of the month—because you have a grace period. Fifteen days is the most common grace period length. This gives you breathing room if you have to make the payment after the due date.
Though the length of your grace period depends on your mortgage lender, the 15-day timeline is a good general rule. If your payment is more than 15 days late, you're out of the grace period and you'll have to pay a late fee.
The best way to avoid making late payments is to make sure your payments are affordable. As mentioned above, a HUD-approved housing counselor can help you understand your options for making your mortgage more affordable. You could also consult with a local attorney.