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The Harper Financial Edu-Series on: Reaffirmed and Non-Reaffirmed Mortgages

Reaffirmed Mortgages:

In a bankruptcy case, a reaffirmation agreement is a legal contract stating that you promise to repay all or part of a debt that would have otherwise been released once the bankruptcy was discharged.

Reaffirming your mortgage means that you are recommitting to the loan and all of its terms. Both the lender and the borrower must sign off on the agreement. Should you not be able to keep up with your payments and default on the loan, your home will be subject to foreclosure. Translation: You become permanently liable for the loan, regardless of what happens.

Non-Reaffirmed Mortgages:

Unlike some personal property, you do not need to reaffirm a mortgage to keep your house. As long as you keep your payments current, you keep the house, regardless of whether you reaffirm the mortgage or not. For the aforementioned reason, as well as others, a homeowner may choose not to reaffirm his/her mortgage.

The caveat: Most banks will not work with you on a refinance if you have not reaffirmed your mortgage. Moreover, they’ll often cease reporting your current payments to the credit bureaus in an attempt to pressure you into reaffirming. Why? Well, as long as you have the mortgage scheduled in your bankruptcy, the lender cannot go after you personally for any shortfall or deficiency.

The good news? Harper Financial will work with you on a refinance of a non-reaffirmed loan!

According to Winnie Uniacke, Harper Financial’s senior loan expert, “We understand the full implication of and ramifications for borrowers with non-reaffirmed mortgages and are ready, willing and able to assist them. We have an in-depth understanding of bankruptcy law as well as lending guidelines and know how to obtain financing for these — and all — unique situations including non-reaffirmed mortgages.”

Uniacke adds: “When we say we offer custom solutions to unique situations, we mean it.”

Email us here or call 508.559.2477 to find out how we can help you!