HELP! Question on Ch 7 filing!

[kjbm]

I filed Ch 7 (did not reaffirm my home).
I have a 1st and 2nd mortgage... (all-together owe more than property is worth).
I s/b discharged within 2-3 weeks.
Is it possible to call my mortgage company (1st) after I am discharged, and talk to them to see if they will modify, or allow me to keep the home?
Will the 2nd Mortgage (equity line) totally be discharged at this point, or does the Foreclosure process have to happen in order to reaffirm my original mortgage? Not sure how to handle...or if possible.
Any input is greatly appreciated!

[justbroke]

Is it possible to call my mortgage company (1st) after I am discharged, and talk to them to see if they will modify, or allow me to keep the home?

I was actually looking at this and technically it's tricky territory for the lender. If the debt was discharged, they can't just "reinstate" the old mortgage and terms, because it "could" be seen as circumventing the Reaffirmation process. They also can't just "modify" the existing mortgage, because it's toast. (read "re-affirmation" issues).

They would probably have to draw up a new mortgage/note. It would be interesting if you were able to do that because I'm thinking this would be the ultimate back-door lien strip in a Chapter 7.

However, the second still has their lien...

Will the 2nd Mortgage (equity line) totally be discharged at this point, or does the Foreclosure process have to happen in order to reaffirm my original mortgage?

Yes, when you discharge, BOTH are discharged and hence your issue.

[kjbm]

Thanks for the info...
So, if I understand you correctly, it is worth trying it out, right? All they can say is 'no' that they do not want to reinstate the mortgage back to me. I am hoping that they will be willing to set me up w/ a new mortgage (even if it costs me more fees). I just worry about the 2nd mtg bank coming after me---that part still confuses me. Even though it will be discharged, they most likely will want some $$ from the foreclosure, right? So confused!

[justbroke]

So, if I understand you correctly, it is worth trying it out, right? All they can say is 'no' that they do not want to reinstate the mortgage back to me.

They can't just "re-instate" the mortgage. They'd have to give you a new mortgage.

I am hoping that they will be willing to set me up w/ a new mortgage (even if it costs me more fees). I just worry about the 2nd mtg bank coming after me---that part still confuses me.

Here's the part where it gets muddy real quick... The first mortgage holder would have to actually foreclose it's mortgage so that they too get a clean title (leaving the 2nd mortgage holder with nothing -- more than likely). They can't just "not" foreclose. This creates more problems for a first deed of trust holder than it is probably worth.

Even though it will be discharged, they most likely will want some $$ from the foreclosure, right? So confused!

Perhaps... I can't even speculate on that part.

[eddiep]

This thread is so interesting and I would love it if you could update us as you go along in this process. I can tell you from my experience with my mortgage holder, they seem to have very concrete rules and just love to play catch 22. Unfortunately the banks dont seem capable of thinking outside the box. But you never know, just a year or two ago, loan modifications were unheard of.

[dingdong]

Isn't their some "Rule" about a person that is party to a note in foreclosure, not being allowed to purchase the home at auction/TS, or after the F/C unless it is through the redemption period.


I don't think you can legally purchase the home again after it has been F/C.

The idea sounds great, but ripe for fraud. Especially for 2nd holders.

[kjbm]

I will contact the bank after my discharge and will see what they have to say .... I am not too optimistic, but you never know! With all of the foreclosures, etc right now, maybe it'll work in my favor (so they don't have to deal with all of the costs associated with that process....) --- I am sure the last thing they want is another house back! But like you said, if I have to have a new mortgage written, I will most likely be out of luck due to the fact I filed bankruptcy. We'll see!! I will keep ya all posted!

[flnybk]

We were thinking the same. But I want to still pay my first mortgage since they would be quick to foreclose since if they sell, they get their money. It is the 2nd line that gets almost nothing of the $150,000. We were thinking after discharge to stop paying the 2nd so they will change our terms so we can start paying it down faster and actually get the house to a true value.