First mortgage and Home Equity Loan

[woohoogirl]

I've searched the forum and I can't seem to find this question asked. I got a first mortgage and a home equity loan (2 years ago)...a total of 125% loan to value. My payments aren't outrageous and with all my unsecured debt going away, they won't be a problem out all. Now the total of my loans is approximately $76,000 (both are with the big bank) the value of my house per zillow.com is roughly $71,000, is there a chance that some of my home equity loan could be erased in BK? I'm not counting on it happening, but it would be nice. Of course so would winning the lottery!!!
Thanks,
Woo

[HHM]

If you are keeping the house, which is sounds like you are, then the answer is...

Nope, there is no chance.

Under the old law, in some circumstances you could stripe the lien, but that is no longer the case. Striping the lien means that you could reduce the amount owed on a secured debt to the current market value of the securing asset and discharge the overage. But even under the old law, you could only do that under limited circumstances with real estate.

[woohoogirl]

Thanks yet again for your help. A girl has to dream

[HHM]

There may be a loophole, and maybe some of the other members could chime in, but I haven't seen it happening anywhere, so I suspect lien striping on real estate is no longer viable.

In any event, it is not something that is just going to happen on its own as part of the BK, you would need to file a Motion and get an order from the court to stripe the lien and have bifurcate the HELOC into secured and unsecured.

[monkatom]

as a side question do most feel zillow.com is a good source for valuing your home? It valued mine pretty high and I spoke to an appraiser friend who said if i had it appraised it would come in about 40K lower than zillow due to market conditions. So my problem is if I use zillow then I have 20K in equity but if I use appraiser I am upside down. attorney said different trutees want different things so should I shell out 300 bucks for appraisal?

[HHM]

If this appraiser is a "Friend" why not have this person do an informal appraisal. You don't really need anyone to come to your house, you just need someone to pull comparable sales of the MLS system.

Generally speaking, you DO NOT need a full blown home appraisal going into BK. Must people simply put down educated guesses.

Do you think you could "really" sell your home for what Zillow said it might be worth?

[ameliabedilia]

I have heard that it is not at all accurate right now. I actually just looked on zillow today and it is way off in some places. Here in Colorado, I looked at my friends home to see what it was worth and I was shocked that the neighborhood was showing up at $425k and up. Then I realized that there were about 5 homes for sale in her neighborhood, and I looked at the mls and all of them were $289k and below.

[woohoogirl]

I thought my estimate on zillow was fairly accurate. I live in a condo and there have been 2 listed in the past few months. They are list at 79k and 65k. Of course with this housing slump, they aren't moving. My zillow estimate was 71k. I fell pretty good about it and according to my property tax assessment my house is worth about 65k. Should I get another estimate? Unfortunely, I don't have any appraiser friends.