Chapter 13 Refi question

[cc8225]

Hello,

I am 1 year into a 3 year Chapter 13. I stripped mortgage 2 and 3 and owe 295,000 on my first at 7.5 interest only. My value is at 285K-290K How soon can I refi to a better interest rate. I have been current on all payments since the BK started. My Mortgage is with wells fargo.

CC

[justbroke]

You are in a very peculiar situation. Because you have junior liens, the junior lienholders would have to grant the right to the "new" first mortgage holder to subordinate their junior liens. I

'm not sure if you understand about how lien priority works, but here's a refresher. Lien priority is based on when the lien was recorded. If you file the first lien, then you are the "senior" lienholder. You take precedence on all other junior lienholders. If you file the second lien, you are in the "second" position. All other junior lienholders are "subordinate" to you. In this scenario, if the first (senior) lienholder foreclosed, the junior lienholders might not get any money. Also in this scenario, if the 2nd lienholder foreclosed, the first lienholder (senior lienhoder) would be paid. (There are some caveats in strict foreclosure States.)

There are some "super" liens that get priority over everything and those are generally taxes (federal and state) as well as HOA and condominium feeds.

Since liens are based on the order in which they are filed, if you refinance the first mortgage, the second would move into the first position. This is not good for the bank refinancing you because they WANT to be in the first position. In order for this to work, the bank will make you get the junior lienholders to subordinate their liens to the bank. This would put the bank that is refinancing your loan, back into the first lienholder position (senior lien).

I think it may be tough, but you'd have to see what the junior lienholder's appetites are for being subordinated. If you don't make it through the Chapter 13, they'd be in the same position as before.

Perhaps you can get Wells Fargo to modify the loan?