Chapter 13 Mortgage Lien Strips.

[justbroke]

also, what if the trustee says you can't strip second.. then what, you are behind on the seconds cause you have not paid on it in months..

HHM answered this.

JustBroke, do you need to pay for an appraisal or can you use a CMA from an realastate Agent...? along with cyberhomes value.. most times appraisals are going to appraise high.. and can vary depending on what comps they use...

I would get an appraisal if you really want to lien strip. That way, you won't be in some sort of evidentiary fight (my value is better than yours). Well, that's not to say that the lender won't argue over the valuation in an appraisal. An appraisal performed by a licensed appraiser on a URAR (Uniform Residential Appraisal Report), carries more weight than any of the other things you mention. The only thing that trumps an appraisal, is testimony of an expert witness... which isn't going to be necessary.

I say avoid any fights over value. Get an appraisal done. Shop around for an appraisal. If the value of your home is under $500K, you should be able to get an appraisal done for $300. (I saw an ad for an Atlanta area appraiser that had a 20% discount... $250 for an appraisal. So, shop around. I prefer to get an appraiser who has worked in your specific area before. That way, they understand what comps to use.)

[HHM]

Lien strip is not up to the trustee.

It will ultimately be up to the judge if there is a dispute between as to the value of home between you and the creditor. If that happens and you lose, you simply add the arrears into your plan, no big deal.

[bklawn]

You only need adequate protection on things you're keeping. On the outset, it would seem that you should make adequate protection payments on the 2nd, but it is unsecured.

Adequate protection isn't going to help the 2nd lienholder. Therefore, you do not need to make adequate protection payments on the 2nd that is wholly unsecured.

The worse the 2nd could do is file a Motion For Relief from the Automatic Stay (MFS) seeking relief or adequate protection. That would be negated, of course, by your stripping of the 2nd mortgage. I had this same scenario where I stripped the 2nd and "paid" the first in Plan. Never heard a peep from the 2nd... not even on the motion to stip!

also, what if the trustee says you can't strip second.. then what, you are behind on the seconds cause you have not paid on it in months..


JustBroke, do you need to pay for an appraisal or can you use a CMA from an realastate Agent...? along with cyberhomes value.. most times appraisals are going to appraise high.. and can vary depending on what comps they use...

[justbroke]

When performing a lien strip on a 2nd mortgage of a principal residence, are you required to make adequate protection payments until the final confirmation or can you stop making payments assuming that you will be stripping the lien?

You only need adequate protection on things you're keeping. On the outset, it would seem that you should make adequate protection payments on the 2nd, but it is unsecured.

Adequate protection isn't going to help the 2nd lienholder. Therefore, you do not need to make adequate protection payments on the 2nd that is wholly unsecured.

The worse the 2nd could do is file a Motion For Relief from the Automatic Stay (MFS) seeking relief or adequate protection. That would be negated, of course, by your stripping of the 2nd mortgage. I had this same scenario where I stripped the 2nd and "paid" the first in Plan. Never heard a peep from the 2nd... not even on the motion to stip!

[Wealth]

Protection Payments

When performing a lien strip on a 2nd mortgage of a principal residence, are you required to make adequate protection payments until the final confirmation or can you stop making payments assuming that you will be stripping the lien?

[HHM]

Yes, an IRS lien can be stripped. But it gets stripped under 506 not under 1322(b). Not that it matters, different code section, same result.

[southernbelle]

I have a stupid question about lien stripping.

If I have 2 mortgages and several liens from taxing authorities. Does the seniority of the liens depend on when they were filed and can the liens for taxes be stripped if they have no value after all other liens are deducted from the value of my home? Can an IRS lien be stripped?

[HHM]

Hello All,

I am new to this BK thing. we filed a ch 13 in July due to job lost. I have a first and second with the second being stripped and unsecured debts. We are stripping the second and unsecureds. We already had the 341 and the only they needed was a Decl of contribution from a family memeber since we don't make enough. I'm on EDD.

I was supposed to be confirmed on sep 2 but needed to ask for an extension due to the house value. I got another appraisal and was below my loan value, so that's good. My new conf is on Nov. 4 - along ways out. I still don't have a job, but may land one real soon. My question is, should I take the position after my confirmation date? Would that affect my ch 13 situation? With the new salary, it will put way above and would give us room to breath moving forward and being able to save.

Our main objective is to save our home. That is all that we have and matter. Any problems that I need to worry about?

Any advise will be good.

In a chapter 13, you are required to devote ALL disposible income to the chapter 13 plan during the life of the plan, so, "technically" if you start making more money (significantly more money), the plan is to be amended. It sounds like that if the court needs the declaration from the family member, that is because of your income situation, your plan would not be confirmed because you don't make enough to fund the bare minimum (to save the home).

[ch13ds]

Hello All,

I am new to this BK thing. we filed a ch 13 in July due to job lost. I have a first and second with the second being stripped and unsecured debts. We are stripping the second and unsecureds. We already had the 341 and the only they needed was a Decl of contribution from a family memeber since we don't make enough. I'm on EDD.

I was supposed to be confirmed on sep 2 but needed to ask for an extension due to the house value. I got another appraisal and was below my loan value, so that's good. My new conf is on Nov. 4 - along ways out. I still don't have a job, but may land one real soon. My question is, should I take the position after my confirmation date? Would that affect my ch 13 situation? With the new salary, it will put way above and would give us room to breath moving forward and being able to save.

Our main objective is to save our home. That is all that we have and matter. Any problems that I need to worry about?

Any advise will be good.

[justbroke]

My question is, if he is filing Chapter 13 (in SC) and we are jointly on the 2nd (first is only in my name) is it possible to strip the second (if it is totally unsecured, of course)?

You would need to file a Chapter 13 together. Otherwise, the bank would come after you, if only he filed. (Unless SC is a community property State, and I don't have the energy to look.)

[SCRuth]

Question about lien stripping

My husband is planning to file BK. The only debt that is in both of our names is the second mortgage. We owe about 132,000 on the first and 72,000 on the second. I would be scared to venture the value of our home. We paid 144,000 at the height of the market and our house currently needs some work on it so I would guess 130,000 but it could be more.
My question is, if he is filing Chapter 13 (in SC) and we are jointly on the 2nd (first is only in my name) is it possible to strip the second (if it is totally unsecured, of course)?

[turnipblood]

Thanks! Great info.

[justbroke]

Thanks for the great response. The only thing I found confusing is when you seem to imply that if your principal and your appraisal were too close together (5k) then you couldn't have done it. I thought the idea was if you owed even $1 more on the first than the appraisal, then the strip can't happen. Maybe you mean without the arrears your principal alone was 5k LESS than the appraisal?

No implication at all. If your balance and your appraisal are close, you just may get a challenge from the creditor on the valuation. In the end, the valuation is always up to a challenge by the creditor even when it's $30K or more apart.

I just like to warn people that the closer the appraisal is to the balance of the claim the more agitated the creditor may be and hence up for the challenge.

[turnipblood]

Thanks for the great response. The only thing I found confusing is when you seem to imply that if your principal and your appraisal were too close together (5k) then you couldn't have done it. I thought the idea was if you owed even $1 more on the first than the appraisal, then the strip can't happen. Maybe you mean without the arrears your principal alone was 5k LESS than the appraisal?

[justbroke]

Two questions. First, can you use the county's tax appraisal value for this purpose (they just redid it this month), or does it have to be a separate appraisal?

Using the County's Tax Appraisal value is about as useful as Zillow. Seriously, the County makes up a number so that the tax-base covers the County budget... or they just raise the millage rate. In either case, it doesn't reflect actual market value. The least you should get is a Comparative Market Analysis (CMA) from a Realtor, and best case, an appraisal on the Uniform Residential Appraisal Report (URAR) performed by a license appraiser.

Justbroke says: if you're doing a lien strip, a URAR is best evidence of value. Only an expert witness, giving testimony at a hearing, carries more weight.

Second, we're rightside up on the mortgage by about $1200 with the county's value. If we go on a loan forebearance with BOA for two months, will that raise the principal, put us upside down, and make the strip possible?

Generally, the principal is never raised, but the "balance" is. My principal on my primary residence is exactly where it was the day I filed. I have $30K in arrears, but they have been added to the balance not the principal.

Now that I clarified that, the lien stripping is based on what is owed to the lender, not the principal balance. I was able to lien strip because my balance was about 9% over the value returned by my appraiser. If they went with the principal amount, I would probably not have been able to lien strip, as the principal amount and the appraisal were only $5K apart.