FILED CHAPTER 7 IN 2005. kEPT HOME BUT LAWYER DID NOT REASSUME LOAN.

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FILED CHAPTER 7 IN 2005. kEPT HOME BUT LAWYER DID NOT REASSUME LOAN.

I have called mortgage company to find out why they quit reporting to credit agencies on my behalf. Mortgage company said Lawyer needed to reassume loan and I will have to have my lawyer do it. Is this true? My credit is not good and I need my house payments to show up.

Asked on June 24, 2009 under Bankruptcy Law, New Mexico

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

Not reaffirming a mortgage obligation means that you are not personally liable on the promissory note associated with the security agreement.   The property remains encumbered by the mortgage obligation and you continue to maintain and grow your equity interest in the property.  Your title interest does not change.

The biggest difference is that you are no longer personally liable on the note.   This is a positive development in that you cannot be sued personally if you were to abandon the property and a foreclosure sale generated less than what was owed.

However there is a negative about not having personal liability. As you, personally have no obligation to make any payments, you are not personally accessing any credit.  As is the situation in your case, your credit report will not reflect the payments that you do make. 

What you can do to remedy this is to contact your lender and arrange to "reaffirm" the debt and get back into a more traditional security instrument (mortgage) plus promissory note situation.   Future payments will the be reported on your credit report. 

By the way, your attorney may have purposefully have done this.  Many attorneys try to insulate their clients from further liability in the event of  a foreclosure by not having the mortgage loan reaffirmed.  Unfortunately they fail to fully explain the consequences of doing so to their clients.


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