What happens to 2nd Mortgage?

[pcn]

You will have to wait for 4 years before you can file your chapter 13 to lien strip the 2nd. You can't receive a chapter 13 discharge within 4 years of receiving a chapter 7 discharge.

IF you file a chapter 13 within the time frame it has to be a 100% payback plan.

thats why it's used for priority tax debt or mortgage arrears when filing a chapter 13 after a 7.

If your attorney is telling you that you can lien strip right after a chapter 7 discharge you better get a new one.

I think your own quote "You can't receive a chapter 13 discharge within 4 years of receiving a chapter 7 discharge." actually explains what makes it work. You aren't discharged until 5 years after you file the ch13.

[biotechsolution]

I had a chapter 7 that was discharged. I did include my 2nd mortgage in the chapter 7, BUT i continued to pay my first mortgage and stayed current on it.

Now, the second mortgage that was originally secured by the house is now
a unsecured debt- being discharged in the chapter 7. It survives the chapter 7 and the lein stays on the house.

Now, I stopped paying my first mortgage and I am going into a chapter 13. I will pay the 1st mortgage arrears payments back in a 3-5 year plan, once I payoff the chapter 13 plan the second mortgage lein will be stipped of the house.

You will have to wait for 4 years before you can file your chapter 13 to lien strip the 2nd. You can't receive a chapter 13 discharge within 4 years of receiving a chapter 7 discharge.

IF you file a chapter 13 within the time frame it has to be a 100% payback plan.

thats why it's used for priority tax debt or mortgage arrears when filing a chapter 13 after a 7.

If your attorney is telling you that you can lien strip right after a chapter 7 discharge you better get a new one.

[daytona]

now thats very interesting. They call that a Ch- 20

I didn't think chapter 20's were available anymore after the law change in 2005..??

I've posted this elsewhere but I'll throw another curve at you. I have a 125% "overequity" 2nd of ~150k. The appraisal they used made about 100k "unsecured" at funding...another words the 2nd knew they were lending approx 2/3 unsecured at closing. Needless to say home values have dropped and the value would not even cover the first.

I don't see why the ~100k of the 2nd shouldn't be stripped in a CH7 as it was knowling lent unsecured at funding...paid off credit cards, etc.

I know true "stripping" of a 2nd can only happen in a Ch13 and if even $1.00 of value remains then the whole mortgage survives. In my case 1.00 would not survive period...that is beside the point.....BUT why shouldn't the "unsecured" portion be stripped? I plan to bring this up to the attorneys I plan to meet this week to see what their take is...

As others have stated the other alternative is to not reaffirm the second and settle with them after a Ch7...I would rather settle 50k than 150k in my case and again the lendor lent "unsecured" for the 100k...it's right in their own closing documents with the appraisal they used.

[albacore44]

I had a chapter 7 that was discharged. I did include my 2nd mortgage in the chapter 7, BUT i continued to pay my first mortgage and stayed current on it.

Now, the second mortgage that was originally secured by the house is now
a unsecured debt- being discharged in the chapter 7. It survives the chapter 7 and the lein stays on the house.

Now, I stopped paying my first mortgage and I am going into a chapter 13. I will pay the 1st mortgage arrears payments back in a 3-5 year plan, once I payoff the chapter 13 plan the second mortgage lein will be stipped of the house.

now thats very interesting. They call that a Ch- 20

[jessegirl]

I had a chapter 7 that was discharged. I did include my 2nd mortgage in the chapter 7, BUT i continued to pay my first mortgage and stayed current on it.

Now, the second mortgage that was originally secured by the house is now
a unsecured debt- being discharged in the chapter 7. It survives the chapter 7 and the lein stays on the house.

Now, I stopped paying my first mortgage and I am going into a chapter 13. I will pay the 1st mortgage arrears payments back in a 3-5 year plan, once I payoff the chapter 13 plan the second mortgage lein will be stipped of the house.

[flynbvr]

I am current on my 1st but my confusion comes from not understanding the need to be current on my 2nd. Sorry for my ignorance on the matter!

My atty says to stop all mortgage payments 1st and 2nd in an effort to play hardball with Chase and get them to renegotiate/loan mod. I dont feel comfortable doing that so I am searching for additional knowledge on the matter.

Our 341 is next month and my 1st is due in 3 days. As I understand it I am not required to make payments during the bk process. With the information Ive shared would I be advised to make a voluntary payment or wait until after the disharge?

Knowledge is power

[albacore44]

Financially, we stated we intend on keeping the house and truck. Everything else must go. However, we cant afford the second. Im now second guessing our decision. Is it too late to say we do not intend on reaffirming the house? Our court date is next month.

You really need to talk to your attourney. It could get ugly and the UST push you into a CH-13 depending on your income. If it was me, I would get current on both mortgages, get my discharge, then decide to walk away or not. Like I said, it depends on your income, if you really need to show those mortgage payments to qualify for the Ch-7

[flynbvr]

Financially, we stated we intend on keeping the house and truck. Everything else must go. However, we cant afford the second. Im now second guessing our decision. Is it too late to say we do not intend on reaffirming the house? Our court date is next month.

[albacore44]

I have disclosed all information to my atty. The atty suggested we make no further payments (1st or 2nd) and try to negotiate a loan mod. If we are unsuccessful then let them foreclose, if successful then maybe we will come out on top. There is no guarantee of the outcome with either path.

We are letting go a boat, travel trailer, car, cc's, and offroad vehicles. All together nearly $500K. when you add the 2nd ($150K). Do you really think the UST would push for 13 over 7? If so, what does that process look like (court process not what 13 is)?

.

Darn. thats a lot to lose. No more Glamis I guess.

Anyway........it depends on your income. If you really need those mortgage payments to qualify for a Ch-7, then you need to be current. Otherwise, the UST could determine you dont intend to keep the house, and dis-allow them in favor of the much smaller IRS housing allowing expense. Not sure who your attourney is, but I would have thought he told you this. Did you declare on your petition that you intend to keep your house ??

[flynbvr]

I have disclosed all information to my atty. The atty suggested we make no further payments (1st or 2nd) and try to negotiate a loan mod. If we are unsuccessful then let them foreclose, if successful then maybe we will come out on top. There is no guarantee of the outcome with either path.

We are letting go a boat, travel trailer, car, cc's, and offroad vehicles. All together nearly $500K. when you add the 2nd ($150K). Do you really think the UST would push for 13 over 7? If so, what does that process look like (court process not what 13 is)?

[albacore44]

My court date is set for early next month. We are filing ch7. We have a $460K 1st and a $150K HELOC. The house is currently worth approx $320K. We have never missed a payment on the 1st and are currently 100+ days late on the 2nd.

Our intention was to reaffirm the 1st only. Should we be trying to renegtiate both during this process or only the 2nd? What happens if we do nothing further on the 2nd if in the future we refinance? If the refinance is for say $450K and the house is worth say $400K and the second is a lien of $150K does it then go away, will it stay with the house indefinitely, or does it then become the first as the current 1st gets paid off during the refi which would inturn most likely make us ineligible for a refi?

Does your Att know your late on the 2nd ?? What Did he advise you ? If the UST see's this it's possible they would move to push you into a Ch-13 since you have established that you do not intend to pay the 2nd, and the payment would be excluded from your monthly expenses.

[flynbvr]

Both are held by WAMU which is now Chase. I am 100+ days late on the second and never late on the first. We are underwater by approx $250K+. We filed last month and our court date is next month. We have rcvd an Acceleration arning (Notice of Intent to Foreclose) on the second.

I just cant see that making good business sense if we are current on the 1st ($460K) which is more than $100K over the value of the property that they would foreclose if a ride thru on the 1st and stay current.

[mysticspirit25]

If the 2nd is a different servicer/lienholder then they will not move to foreclose, unless there will be equity. They have to essentially buy out the first leinholder to foreclose, a point that would be a bad bad business decision. My buddy just did this, he had a 1st through Wells and a 2nd through Citi, the first was 270k, second was 79k, house worth 245 or so, he filed a 7, kept current on the first and stopped paying then 2nd, key was to be current on both at filing. After his discharge he got a few calls from Citi, told them it had been discharged, they sent him BS paperwork to get a mod, he threw it away and then offered 10 cents on the dollar to remove the lien, the settled for 15% and the 2nd is gone and lien removed.

[flynbvr]

My court date is set for early next month. We are filing ch7. We have a $460K 1st and a $150K HELOC. The house is currently worth approx $320K. We have never missed a payment on the 1st and are currently 100+ days late on the 2nd.

Our intention was to reaffirm the 1st only. Should we be trying to renegtiate both during this process or only the 2nd? What happens if we do nothing further on the 2nd if in the future we refinance? If the refinance is for say $450K and the house is worth say $400K and the second is a lien of $150K does it then go away, will it stay with the house indefinitely, or does it then become the first as the current 1st gets paid off during the refi which would inturn most likely make us ineligible for a refi?

[albacore44]

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!!

interesting...........would like to know more about that. My Heloc is with HSBC and owe $240K. Inland so cal.....land of many foreclosures.