Does 2nd Mortgage become Unsecured?

[dovette7]

Can't find a clear answer.
We are surrendering house and it will be foreclosed on or sold by short sale next week.
1st Mortgage: $322K
2nd Mortgage: $52K
If foreclosed on, I know the 2nd mortgage will get nothing. Will that $52K then be applied as an Unsecured creditor in my Ch. 13? If sold in short sale, the difference in loan balances and what they sell at.... does that become unsecured in my ch 13?

Same thing on other surrendered property: Motercycle, Jetski, and Artwork. We surrendered these...so if they take them back, then sell them at a lower amount... is the difference "unsecured"?


Thanks

[rrockinggramma]

I did a short sale in 2002. Had first mortgage and a second mortgage. My 2nd was with HFC (enough said about that) Anyways, after closing, HFC refused to sign off on the deed so it could be transferred and recorded. They of course got nothing from the sale. As a result, and I was not involved in any of this at this point due to my deficiency balance being discharged in BK, Citi Mortgage (who held the 1st) offered a settlement to HFC which they refused. In the end, they got what Citi offered (which wasn't much at all, like 1000 out of the 5000 we owed) and then the agents forked over some of their own proceeds to up it to 2500. Only then did HFC sign off on the deal. It won't affect you but creates lots of headaches for relators and the holder of your 1st mortgage. And now Citi who encouraged us to do the short sale in the first place refuses to fix the credit report and shows us as deliquent for many years now and no listing of IIB. HFC was pissed off because until that point, our payments had been current and never missed. So they tried to take us to the IRS and claimed we owed them money on our taxes for the difference. The IRS worked with us on that one but we had to send in all of our documents to the IRS. LOLOL good luck! Because Citi hasn't reported the BK at all on the credit report, to my way of thinking the delinquency mark should fall off after 7 years of reporting. I am waiting to see what they do. (They also tried to file a claim in my chapter 13 for the deficiency amount of the short sale 75,000) I objected and that was withdrawn too.

[rrockinggramma]

and yes, your deficiency balances will become unsecured which means they will only get the same percentage of what the other unsecured creditors get.