Hi guys, we are new to this forum but it seems like a great place! This is a little bit of a long story but please bear with me!
This situation is I think a little unusual. My husband already owned our home when we married. He had however previously filed Chapter 7 after a long and costly divorce and custody battle, and the mortgage on the home was discharged in the bankruptcy (discharge was in July 05). He actually thought he had reaffirmed the mortgage, and had continued to pay as normal. It wasnt until we tried to refinance into joint names in 06 that we found out it was reported as discharged to the credit bureaus and discovered that the bk attorney had forgotten to file the reaffirmation.
Shortly after that, I was diagnosed with MS and became pregnant. The home value at that time had increased a little and we took out a home equity line of credit for $10,000 which HFC at a 19.6% interest rate (CRAZY I know) which got us through the period where I was unable to work and after our daughter was born. It also pushed the LTV to the maximum value of the property. Hindsight is 20/20 but it got us through very hard times and paid for the medical assistance I needed.
Fast forward to Dec 08 and my husband got laid off. We were unable continue making payments. We contacted the lender (Magna Bank) immediately and they sent us loss mitigation paperwork which we completed and sent back weeks ago - we havent heard a peep since then.
The house value is now approx $20-25,000 less than the loans we have on it. I know that we can walk away from the first mortgage since it was discharged in BK, but my concern is what would happen to the HELOC/2nd mtg with HFC? Several people have told me the loan should never have been given since the 1st was discharged in BK.
Clearly, they would get nothing from a foreclosure sale because everything would go to the 1st lender. The area we live in has declined awfully, and is going downhill fast. My husband just started a new job and we can resume payments, but dont have the $$ to pay the missed ones. Even if the lender offers a modification it would seem crazy to reaffirm to a loan on a home that is worth tens of thousands less than what it would be mortgaged for - but I dont know what to do about the 2nd mortgage if we walk away - could it be converted to a personal loan do you think? We are only one month behind on that payment right now.
Thanks for any advice anyone can offer!
This situation is I think a little unusual. My husband already owned our home when we married. He had however previously filed Chapter 7 after a long and costly divorce and custody battle, and the mortgage on the home was discharged in the bankruptcy (discharge was in July 05). He actually thought he had reaffirmed the mortgage, and had continued to pay as normal. It wasnt until we tried to refinance into joint names in 06 that we found out it was reported as discharged to the credit bureaus and discovered that the bk attorney had forgotten to file the reaffirmation.
Shortly after that, I was diagnosed with MS and became pregnant. The home value at that time had increased a little and we took out a home equity line of credit for $10,000 which HFC at a 19.6% interest rate (CRAZY I know) which got us through the period where I was unable to work and after our daughter was born. It also pushed the LTV to the maximum value of the property. Hindsight is 20/20 but it got us through very hard times and paid for the medical assistance I needed.
Fast forward to Dec 08 and my husband got laid off. We were unable continue making payments. We contacted the lender (Magna Bank) immediately and they sent us loss mitigation paperwork which we completed and sent back weeks ago - we havent heard a peep since then.
The house value is now approx $20-25,000 less than the loans we have on it. I know that we can walk away from the first mortgage since it was discharged in BK, but my concern is what would happen to the HELOC/2nd mtg with HFC? Several people have told me the loan should never have been given since the 1st was discharged in BK.
Clearly, they would get nothing from a foreclosure sale because everything would go to the 1st lender. The area we live in has declined awfully, and is going downhill fast. My husband just started a new job and we can resume payments, but dont have the $$ to pay the missed ones. Even if the lender offers a modification it would seem crazy to reaffirm to a loan on a home that is worth tens of thousands less than what it would be mortgaged for - but I dont know what to do about the 2nd mortgage if we walk away - could it be converted to a personal loan do you think? We are only one month behind on that payment right now.
Thanks for any advice anyone can offer!
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