Question regarding a second mortgage that was discharged in chapter 7 in 1992.

[tselona]

Hoping for some answers while waiting to hear back from the title company. In 1992 our chapter 7 bankruptcy was discharged, there was a second mortgage/cramdown included in that bankruptcy. We are now in the end process of selling our home and the title search revealed the second/cramdown mortgage, it was never removed or satisfied. Our question is are we going to be able to get the deed satisfied or stripped (sorry I don't know the proper terminology) or does will this creditor require the loan to be paid even though it was discharged in 1992? Any help would be greatly appreciated we are on pins and needles.

[spidge]

My understanding is that you discharged the debt in your chapter 7, but you actually needed a chapter 13 to strip the lien. Bad situation as you are no longer liable for the debt, but the 7 did nothing for the lien. You may have to pay the lien holder an agreed upon amount to remove the lien.

[justbroke]

Unless you were in a Chapter 13 or somehow had filed a complaint to determine secured status (and were the second was determined lien was voided), then the second lienholder still has rights. I agree that offering to settle the 2nd mortgage may not only be the right course, but the only course other than paying the entire value of the 2nd lien. Please know that interest could have continued to accrue on the original amount due (discharged) and that could make paying 100% of the balance of the second out of reach for payment.

You will need to think about this. Perhaps offering the 2nd 5-10% could work.

[Fallonedward]

We were very fortunate, if you want to call it that, but we received a Full Principal Forgiveness of Your Home Equity Account two years after our BK. We had thought we would have to do a 13 to strip but then we received the notification from BoA about the Full Principal Forgiveness

[Pandora]

I believe if I'm not mistaken, you could also lower the selling price of the home in order for new buyer to satisfy the lien.

[tselona]

I believe if I'm not mistaken, you could also lower the selling price of the home in order for new buyer to satisfy the lien.

Thank you all for your help, we are still waiting and hoping to have a answer by Wednesday. As far as the interest accruing that is a horrific thought.

We are prepared to pay the amount of the loan if that is what is required, not the interest from 1992 to present, at that point we would simply halt the sale and negotiate with the lien holder after we pull the house off the market, as there is no leverage whatsoever if they know you are heading the the settlement table.

Not sure I understand what you mean Pandora? If we lower the price of the home the buyers mortgage would have to reflect that lower price wouldn't it?

I will post back as soon as I hear something.

[keepmine]

The question I have, was a cramdown available for Chapter 7 filers in 199?
I did just a very basic google search and found some references to the bk reform act of 1978 that was supposed to elimenate the pratice but, I also recall some WSJ articles during the oil bust and the S&L crisis in the late 80's where some cramdowns occured in TX. and OK.
I'd suggest the OP contact the bk lawyer who handled the orginal filing or, if that's not possible speak with a bk lawyer that was in practice in that time period and find out what was allowed.

[tselona]

We finally received the answer, we must pay the loan in order to sell the home and the buyer to have clear title. Thank you all for your help.

[justbroke]

I would REALLY think about offering to settle the 2nd at this point. Start at 5% and then see where it goes.

[cookie07]

So the home equity loan we had taken out on our home will not be discharged with our ch7? If we ever try to sell the house it will still show in a title search? I know it has been passed on to a collection agency but I'm not sure if was an in-house collections or if it was sold.

[keepsmiling]

Discharging the debt does not remove the lien on secured property.
What most people here do on underwater seconds is, as jb suggests above, attempt to settle for 5 or 10 %. (assuming they didn't strip them in a 13.... which is always a thought)

[keepsmiling]

There are also a few instances, as mentioned above, of forgiveness. This was a recent phenomenon, probably unprecedented, and limited to certain banks and certain homeowners.