What happens to 2nd Mortgage?

[Medora]

It all depends if IRA wants to keep the home. If he wants to keep it, he can't discharge the second in BK Ch 7. If he stops paying it, they can try and get a judgement on him. However, he witll proabably be able to negotiate a settlement--I am hearing on a foreclosure forum 25% is common, BUT only if you use the THREAT of BK. I'm in a similar position, and am negotiating right now. If we can get our 1st situated reasonably, we'll start on the 2nd. If not, we'll give the house back...since we're in Cali, the 1st can't come after us, but the second can. We'll bring them into BK with us. 2nds are willing to lose principal--contrary to what someone said, they are unlikely to force foreclosure because they won't get anything. That's why they are so willing to work with you.
So if you want to keep your house, try a loan mod with the 2nd--tell them you need serious principal reduction or you are taking them into BK with you (you can threaten 13). A Chapter 20--a 7 followed by a 13--isn't illegal exactly but can be tricky and is frowned upon when it's used just to do a lein stripping.
Good luck!!

[dogbone33]

That is a bummer~ I was hoping to get rid of that 2nd Mortgage. You would figure it would be stripped if there is nothing securing it? We don't owe much on it but when you are paying that much of a payment for a house not worth as much it sucks! We were young and dumb when we got that, I really didn't even know what it was. That's what we get for not talking to our parents! LOL

[happy_ira]

No you need to make the system work for you. that's what planing is all about BUT do you want to be in BK for the next 3 to 5 with a back breaking plan?

??? You just lost me.

After I get my discharge on my ch7... I wait 6 months; meanwhile, I continue to pay my 1st and 2nd mortgages and stay "current" on them... then in 6 months file a ch13 and toss the unsecured 2nd mortgage in there. How am I any worse off with a 5-year plan for just the 2nd mortgage as compared to paying it for 28 more years? I dont get it.???

[TEW]

So, will my lawyer think I am a "whack job" if I ask to file a ch 13 in a few months in order to strip the 2nd?

No you need to make the system work for you. that's what planing is all about BUT do you want to be in BK for the next 3 to 5 with a back breaking plan?

[happy_ira]

So, will my lawyer think I am a "whack job" if I ask to file a ch 13 in a few months in order to strip the 2nd?

[TEW]

Wow. Sounds sophisticated but makes sense!

But wait... if someone gets a ch7 approved (meaning, they have monthly negative *before* deducting unsecured cc debt), how can they turn around to file a ch13 (which has to show some kind of payment plan of positive)?

[happy_ira]

Yes, however some better lawyers are doing what is called a chapter 20. you file a 7, discharge your unsecured, then follow it up with a 13 and strip the 2nd mortgage. Now the trustee will require the amount of the monthly payment to be paid for 5 years + attorneys fees and the trustee. after 5 years the lein is stripped.

Wow. Sounds sophisticated but makes sense!

But wait... if someone gets a ch7 approved (meaning, they have monthly negative *before* deducting unsecured cc debt), how can they turn around to file a ch13 (which has to show some kind of payment plan of positive)?

[albacore44]

The lein will survive bk. They could conceivably foreclose.

Yes, however some better lawyers are doing what is called a chapter 20. you file a 7, discharge your unsecured, then follow it up with a 13 and strip the 2nd mortgage. Now the trustee will require the amount of the monthly payment to be paid for 5 years + attorneys fees and the trustee. after 5 years the lein is stripped.

[liz417]

Got it.

So, if I remain "current" for the life of the loans, no one should come knocking as I understand it, correct?

Okay, but having a "lein" on the house and on your credit report isn't good right? What happens (in the future) when you decide to refinance or buy a car, the lein will show up?

[happy_ira]

The lein will survive bk. They could conceivably foreclose.

Got it.

So, if I remain "current" for the life of the loans, no one should come knocking as I understand it, correct?

[keepmine]

The lein will survive bk. They could conceivably foreclose.

[happy_ira]

The examples in these posts refer to lein stripping and is available only in a Chapter 13. In a 7, that 2nd survives bk.

keepmine - That's what I initially understood. Thanks.

So a follow-up then... if I am *not* reaffirming my first or second (but rather I plan to stay "current" and pay on time), what happens if hypothetically I stop paying my 2nd mortgage. What can they do? There is no equity in the home and they don't really have a secured asset they can come after, can they?

What could the 2nd mortgage co. do?

[keepmine]

The examples in these posts refer to lein stripping and is available only in a Chapter 13.
In a 7, that 2nd survives bk.

[texanboy76]

Whoa. Wait a sec... I have a huge question because my situation is similar to the above and I didn't file anything special:

I have two mortgages on my home: 1st mortgage is $395k, 2nd mortgage is $100k. Recently (a couple months ago), my home was appraised at $390k. (When I originally bought the home in 2006, it was worth $550k, but home prices where I lived have hugely fallen.)

So, based on the info above, the second mortgage is clearly "unsecured". Naturally, I listed all creditors (including 1st and 2nd mortgages on my home) in my chapter 7 filing. The case trustee and US trustee are done with their reviews, and I am now in the waiting period.

SSOOOOO..... do I need to *do* anything in order to get rid of this second mortgage? (I am not reaffirming it.) Or after I get my discharge, do I simply ignore the invoices that come from the 2nd mortgage company?

(Side point: What if they contest the value of $390k (which is certified from a licensed real estate appraiser)?)

Comments, anyone?

my situation is the same as well!!!

My 1st is $419K and the 2nd is $60K. The home when I refied was valued at $560k. I'm going to keep the home and I'm current on payments. Can they do anything if my value is $540K in my neighborhood? I live in Texas and have only 2K in equity since my other was an ARM loan before I re-fied.

[happy_ira]

then so is the secured protion of your second mortgage. If you owe a 100,000 first and a 50,000 second, and now your house is wirth 95,000 for example- the second mortgage is now unsecured, and will be discharged just like a credit card balance would be discharged. Also if your mortgage is over the value at all there is talk of the court being able to strip the mortgage to the current market value. Things will be happening...

Whoa. Wait a sec... I have a huge question because my situation is similar to the above and I didn't file anything special:

I have two mortgages on my home: 1st mortgage is $395k, 2nd mortgage is $100k. Recently (a couple months ago), my home was appraised at $390k. (When I originally bought the home in 2006, it was worth $550k, but home prices where I lived have hugely fallen.)

So, based on the info above, the second mortgage is clearly "unsecured". Naturally, I listed all creditors (including 1st and 2nd mortgages on my home) in my chapter 7 filing. The case trustee and US trustee are done with their reviews, and I am now in the waiting period.

SSOOOOO..... do I need to *do* anything in order to get rid of this second mortgage? (I am not reaffirming it.) Or after I get my discharge, do I simply ignore the invoices that come from the 2nd mortgage company?

(Side point: What if they contest the value of $390k (which is certified from a licensed real estate appraiser)?)

Comments, anyone?