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Chapter 13 Mortgage Lien Strips.

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  • Originally posted by HHM View Post
    Probably. But banks are getting more aggressive about fighting this sort of thing. Keep the caveat in mind, if you "cram down", you MUST pay the new value IN the chapter 13 plan. The issue might turn on how the property is recorded and taxed at the county. If there is only ONE parcel number for all 3 units, you will probably lose and the loan will be considered a primary residence loan since you live there. If each unit has its own parcel number, then you will probably win and be able to cram down.

    Thanks HHM. But that seems backwards, did you mean it the other way around? I do know that the triplex is a single parcel property in a residential zone. It's also has single utility meters for the whole house. So it seems, considering what you said, that if it is treated as a single parcel/home that I could do the strip down? I think I'm upside down in value by a few thousand.

    Comment


    • Nope, that is how I meant it

      If single parcel, the loan will probably be considered primary residence and cannot be crammed.

      If multiple parcels, then you have an argument that the loan is NOT primary residence and CAN BE crammed.

      At least, if I were the bank's attorney, that is what I would argue.
      Last edited by HHM; 06-06-2010, 09:17 AM.

      Comment


      • Originally posted by HHM View Post
        Nope, that is how I meant it

        If single parcel, the loan is primary residence and cannot be crammed.

        If multiple parcels, then you have an argument that the loan is NOT primary residence and CAN BE crammed.

        At least, if I were the bank's attorney, that is what I would argue.

        I'm still confused because that doesn't jive with what you said in post #1. I'll take what's in post #1! LOL

        Comment


        • Originally posted by ShooFly View Post
          I'm still confused because that doesn't jive with what you said in post #1. I'll take what's in post #1! LOL
          Okay, the issue probably is you haven't really explained your situation.

          If your question is...

          "I live in an owner occupied tri-plex and have a HELOC (2nd mortgage) and the value of the triplex is worth less than what is owed on the FIRST mortgage;" then YES, you may "strip" that HELOC. The fact that the tri-plex is owner occupied is a non-issue in that scenario.

          However, if your question is

          "I live in an owner occupied tri-plex and have a HELOC (2nd mortgage) but the value of triplex is worth MORE than the first mortgage, can I "cram down" the value of the HELOC...in that scenario, the answer will probably depending on the parceling of the real estate and how you took out the loan (primary residence, investment property, 2nd home etc). And based on what you have shared so far, the answer is probably no; you would not be able to cram down.

          Strip = remove the second mortgage and owe nothing
          Cramdown= reduce the principal balance owed on the 2nd mortgage to what the creditor could get if the property were sold today, and pay that amount.

          Comment


          • Originally posted by HHM View Post
            Okay, the issue probably is you haven't really explained your situation.

            If your question is...

            "I live in an owner occupied tri-plex and have a HELOC (2nd mortgage) and the value of the triplex is worth less than what is owed on the FIRST mortgage;" then YES, you may "strip" that HELOC. The fact that the tri-plex is owner occupied is a non-issue in that scenario.

            However, if your question is

            "I live in an owner occupied tri-plex and have a HELOC (2nd mortgage) but the value of triplex is worth MORE than the first mortgage, can I "cram down" the value of the HELOC...in that scenario, the answer will probably depending on the parceling of the real estate and how you took out the loan (primary residence, investment property, 2nd home etc). And based on what you have shared so far, the answer is probably no; you would not be able to cram down.

            Strip = remove the second mortgage and owe nothing
            Cramdown= reduce the principal balance owed on the 2nd mortgage to what the creditor could get if the property were sold today, and pay that amount.
            Thanks, I think I'll need an appraisal to know the true answer. My bank did a flimsy computer appraisal 2 months ago (but nobody came to my property) during a "save my home" application, and their appraisal was $25k below the first mortgage balance. However, I do believe, even in this market, that it's worth more because it's a totally remodled multi-family property. I did put the HELOC funds into the property and quite a few thousand before that. So I guess my ego wants it to be worth more than owed, but I should actually be hoping for less. I appreciate your input!

            Comment


            • Lien Strip Approved had 341 Meeting wtih Trustee

              Hello there! Well folks, I got thru it! Fifth Third Bank agreed to strip the unsecured 2nd mortgage lien upon my completing the 5-year repayment plan for my Chapter 13. I just had my 341 meeting today - the Trustee wasn't happy that I wanted to keep my $480k home - actually I'd LOVE to move - but can't sell it for what I owe on 2 mortgages. I make too much income to file a Chapter 7 (don't meet that means test), so I have no other choice. I was able to FINALLY get a loan modification with Chase, which BARELY makes my home affordable - not alot of room for budgeting error - let me tell ya! The trustee was very detailed in my #'s that he went over - asked alot of questions. When he asked me why I wanted to keep it - I told him that I'd rather pay on a 2% mortgage for 5 more years, than be saddled with $160k in debt from my 2nd mortgage and try to re-establish a home for myself and my kids. I also noted that I would be paying about $40k in principal over that 5 years and between that and stripping the 2nd mortgage - I might be in the black when I go to sell it. He finally approved it but put a stipulation in that I had to meet with him in 2 years to see if my income changed.

              So let me ask this question: I am in sales and we get commissions and bonus. If I were to increase my income by $25k, would they increase the actual bottom line amount I owed them? If so, that's crazy - deincents you from making any extra money - that and taking your fricken' tax returns!

              Another question: To pay off a Chapter 13 early - does that MEAN the entire amount of unsecured debt?

              I am so relieved and exhausted - no sleep at all. This is alot to take on but darn it - I am going to give it everything I have to be a "success statistic".

              Thanks,

              Comment


              • Chapter 13 and Creditors...

                In my Chapter 13 - just had my 341 meeting, I did not name 3 creditors that I owe money too - not alot - $975 to one, $1200 to another, $1300 to another. These are 0% interest credit arrangements for larger purchases like TV's and bedroom furniture. All these creditors are aware I filed as they all stopped allowing me to make on-line web paymetns. Howver, I had planned on making those payments outside the Chapter 13. My attorney told me that IF these creditors request to get "added" to the repayment plan, they have 120 days to do so, then they will get SOME of their money and have chosen NOT to have me pay them directly. If they don't prusue that patch, than I am responsible.

                What might happen here? Do you think the creditors will prefer to get added to the Chapter 13 repayment plan? Anyone know the answer?

                Comment


                • Originally posted by Brokeinohio View Post
                  In my Chapter 13 - just had my 341 meeting, I did not name 3 creditors that I owe money too - not alot - $975 to one, $1200 to another, $1300 to another.
                  Did your attorney know that you withheld three creditor debts and didn't include them on your creditor list when you filed? (I'm betting not, because the bk law clearly states that you have to list ALL debts when you file, no exceptions. No attorney would allow you to leave known debts off your creditor list intentionally.)

                  What might happen here? Do you think the creditors will prefer to get added to the Chapter 13 repayment plan? Anyone know the answer?
                  If you didn't list them on your creditors list when you filed, they weren't notified by the court. If they know you filed (and you say they do), then only an idiot unsecured company would file a claim to get back only part of what you owe them when by staying quiet you'll have to pay them ALL you owe them.

                  I'm assuming you didn't list these three creditors because they held loans secured to stuff you wanted to be sure you could keep and couldn't protect with your state exemptions. Am I right?
                  I am not a lawyer and this is not legal advice nor a statement of the law - only a lawyer can provide those.

                  06/01/06 - Filed Ch 13
                  06/28/06 - 341 Meeting
                  07/18/06 - Confirmation Hearing - not confirmed, 3 objections
                  10/05/06 - Hearing to resolve 2 trustee objections
                  01/24/07 - Judge dismisses mortgage company objection
                  09/27/07 - Confirmed at last!
                  06/10/11 - Trustee confirms all payments made
                  08/10/11 - DISCHARGED !

                  10/02/11 - CASE CLOSED
                  Countdown: 60 months paid, 0 months to go

                  Comment


                  • 3 Creditors

                    Yes - they were 0% interest purchases that one was only $35/month for 5 years and I had 2.5 years to go. The other was 0% interest and I had 10 more months to go. So rather than "stiff" them and have them come get my TV and my sons' bedroom furniture, I wanted to make "good" on the debt. I probably should have just included them in the filing. I just feel awful about not being able to pay. I NEVER thought I'd lose my job and get a job paying 40% less - add to that divorce, a home under water and trying to get my 3 kids taken care of.....honestly!

                    My attorney said that the Chapter 13 stays open for 120 days - meaning that other creditors aware of my bankruptcy have the chance to get "added". And what you are saying is if those creditors are smart - they'll hold on to the chance to be repaid 100% vs. not. What I have seen is right up to today's date , I have been current with BOTH these creditors to ensure the 0% interest stays in tact - however, one of them - HSBC (Best Buy), has gone ahead and added all the back interest to my balance just BECAUSE of the bankruptcy - even though I did NOT name them ($695 worth). I sent them an email of dispute, wrote a letter also. That is CRAP - unless they did that because they are planning to get added. NEVER paid late - not ONCE!

                    Do they have the right to do that if I have still honored my purchase contract payment terms?

                    Comment


                    • Originally posted by Brokeinohio View Post
                      Yes - they were 0% interest purchases that one was only $35/month for 5 years and I had 2.5 years to go. The other was 0% interest and I had 10 more months to go. So rather than "stiff" them and have them come get my TV and my sons' bedroom furniture, I wanted to make "good" on the debt. I probably should have just included them in the filing. I just feel awful about not being able to pay. I NEVER thought I'd lose my job and get a job paying 40% less - add to that divorce, a home under water and trying to get my 3 kids taken care of.....honestly!

                      My attorney said that the Chapter 13 stays open for 120 days - meaning that other creditors aware of my bankruptcy have the chance to get "added". And what you are saying is if those creditors are smart - they'll hold on to the chance to be repaid 100% vs. not. What I have seen is right up to today's date , I have been current with BOTH these creditors to ensure the 0% interest stays in tact - however, one of them - HSBC (Best Buy), has gone ahead and added all the back interest to my balance just BECAUSE of the bankruptcy - even though I did NOT name them ($695 worth). I sent them an email of dispute, wrote a letter also. That is CRAP - unless they did that because they are planning to get added. NEVER paid late - not ONCE!

                      Do they have the right to do that if I have still honored my purchase contract payment terms?
                      They wouldn't have come after your property. In a 13 the automatic stay is for the full length of the plan. I have no idea what your attorney was thinking on this...

                      If this was me I would have your attorney amend your plan and add these creditors. They will get a piece of the pie and they cannot come and get your things.
                      Filed Chapter 13 02/2006 - Confirmed 05/2006 - Discharged 09/2011
                      I'm not an attorney. My replies are merely suggestions or observations, not legal advice. As always, consult with an attorney before making any decisions.

                      Comment


                      • Thank YOU! My 341 Meeting was just yesterday -- the final filing is scheduled for June 15th so I think I can make it with the Amendment? Does the Trustee review as well!? I already emailed my attorney about the amendment - waiting to hear back. Thanks again.

                        Comment


                        • Originally posted by Brokeinohio View Post
                          Hello there! Well folks, I got thru it! Fifth Third Bank agreed to strip the unsecured 2nd mortgage lien upon my completing the 5-year repayment plan for my Chapter 13. I just had my 341 meeting today - the Trustee wasn't happy that I wanted to keep my $480k home - actually I'd LOVE to move - but can't sell it for what I owe on 2 mortgages. I make too much income to file a Chapter 7 (don't meet that means test), so I have no other choice. I was able to FINALLY get a loan modification with Chase, which BARELY makes my home affordable - not alot of room for budgeting error - let me tell ya! The trustee was very detailed in my #'s that he went over - asked alot of questions. When he asked me why I wanted to keep it - I told him that I'd rather pay on a 2% mortgage for 5 more years, than be saddled with $160k in debt from my 2nd mortgage and try to re-establish a home for myself and my kids. I also noted that I would be paying about $40k in principal over that 5 years and between that and stripping the 2nd mortgage - I might be in the black when I go to sell it. He finally approved it but put a stipulation in that I had to meet with him in 2 years to see if my income changed.

                          So let me ask this question: I am in sales and we get commissions and bonus. If I were to increase my income by $25k, would they increase the actual bottom line amount I owed them? If so, that's crazy - deincents you from making any extra money - that and taking your fricken' tax returns!

                          Another question: To pay off a Chapter 13 early - does that MEAN the entire amount of unsecured debt?

                          I am so relieved and exhausted - no sleep at all. This is alot to take on but darn it - I am going to give it everything I have to be a "success statistic".

                          Thanks,

                          question is - can you afford the 1st mortgage once it adjusts after year 5 and so on and so forth? You're assuming that the housing market will go up in a short timeframe it seems ...or at least thats how I'm reading it regarding the "when I go to sell it.."

                          I think your trustee was looking out for your best interest and long-term. Remember, not only does your rate increase after year 5, but your T&I can increase during the entire time as well (including those first 5 years and beyond) - if the house gains any in value (which is unlikely at this juncture, but..stranger things have happened).

                          My question then becomes if you cannot afford it after year 5 since you stated the mod is "barely affordable" at this point - you will have to convert from a 13 to a 7...therefore , nullifying the strip I believe.

                          Comment


                          • I certainly understand the Trustee's due diligence - no question. And YES, I am taking a huge risk. However, my loan modification rate is 2% for 5 years, 3% for year 6, 4% for year 7 and 5% LOCKED in year 5 for the duration. So it's not that bad a deal. The BIGGER question is will any appreciation happen in addition to principal I pay down. You are also right, if this gamble doesn't work - then I will likely move to a Ch 7. If that happens - and the lien strip is nullified - then I have to surrender my house and liquidate. Life pretty much SUCKS.

                            BTW - what is T&I? Time and Income?

                            Comment


                            • Originally posted by Brokeinohio View Post
                              I certainly understand the Trustee's due diligence - no question. And YES, I am taking a huge risk. However, my loan modification rate is 2% for 5 years, 3% for year 6, 4% for year 7 and 5% LOCKED in year 5 for the duration. So it's not that bad a deal. The BIGGER question is will any appreciation happen in addition to principal I pay down. You are also right, if this gamble doesn't work - then I will likely move to a Ch 7. If that happens - and the lien strip is nullified - then I have to surrender my house and liquidate. Life pretty much SUCKS.
                              Yeah, big gamble for you - I hope it works in your favor . We also were modded (HAMP) so we also have the waterfall rate - but we looked at it long term and if we couldnt afford it at year 8 to end of loan, then we were walking away. In for a penny..in for a pound type of thing...

                              I cannot wait until we're confirmed - then we can get all this behind us, strip the 2nd - and by the time our 1st adjusts at year 6 to the 3%, our 13 will be paid off! YAY!!

                              Comment


                              • Amen!

                                I hear you! I really just wanted that 2nd mortgage off my back and enough time to SELL the house and walk away without any CRAZY debt! Think about it - 5 years and $160k in a 2nd mortgage goes away and I am hopeful I will AT LEAST NOT owe anything on the house! Not sure if this is the BEST thing to do, but I'd never pay off $160k of an unsecured debt - I'd die before that was paid off -- this was the ONLY option for me and I just need to buckle down and figure out how to MAKE it work! On the bright side, I live in a very NICE home - yes maintenance, utilities, etc. all cost MORE - but I have a 12 year old that will be just graduating from high school about the time this thing IS OVER!

                                Best wishes to you and your confirmation. Appreciate the feedback.

                                Comment

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