What is most likely to happen if we stop making our second mortgage?

[tucson]

No one is arguing that the discharge removes one's liability on the loans, but the original post was asking about whether or not BOA would foreclose if one kept paying the 1st and stopped paying the 2nd. They CAN foreclose and the consensus here is that the likely WILL foreclose in this case (but hopefully not).

Edit: By the way, you have to include your house in the bankruptcy (assuming chapter 7); you aren't allowed to pick and choose which debts you put in your bankruptcy. You get discharged and then you can keep the house or not; they can't come after you for the debt, but they can take your house if you stop paying. No free houses...

Well lets hope they don't foreclose ...We know we are not liable for our home any longer but we like our home and we have attempted for a very long time now to work with B of A to no avail. Maybe this will get their attention or maybe it will get us booted only time will tell. My husband made the payment on the first yesterday and skipped the second. I imagine in will be at least a couple of weeks before someone takes notice. Since we seem to be the only one in this situation I will keep you all updated on what happens.

[aquavir]

Exactly, thank you for making the point so eloquently.

However, if the holder of both notes is the same bank, then the low valuation does not come into play in the same way - while they still cannot pursue a deficiency, they WILL recover some funds by foreclosing.

I guess if Tucson doesn't want such a high housing payment and is willing to walk, it is a good gamble though. Perhaps with all the extra inventory hitting the market BOA will be happy to be getting with the 1st; I just wonder if they would just sit and wait for the real estate market to recover and foreclose in a few years, which would take any equity built up...although at that point you could look to sell and payoff both.

[onwards]

No one is arguing that the discharge removes one's liability on the loans, but the original post was asking about whether or not BOA would foreclose if one kept paying the 1st and stopped paying the 2nd. They CAN foreclose and the consensus here is that the likely WILL foreclose in this case (but hopefully not).

Edit: By the way, you have to include your house in the bankruptcy (assuming chapter 7); you aren't allowed to pick and choose which debts you put in your bankruptcy. You get discharged and then you can keep the house or not; they can't come after you for the debt, but they can take your house if you stop paying. No free houses...

Exactly, thank you for making the point so eloquently.

The post I was replying to seemed to imply there was some difference between the 1st and 2nd within the BK process, and there simply is not.

The strategy of paying 1st and not 2nd in order to force a cheap settlement of the second - which I am attempting at present - is made possible through the combination of the discharge and low valuation. The latter makes it so the note on the 2nd is effectively worthless, and the former removes the incentive for its holder to foreclose (since they can no longer pursue the deficiency). That's why it has a good chance of working. However, if the holder of both notes is the same bank, then the low valuation does not come into play in the same way - while they still cannot pursue a deficiency, they WILL recover some funds by foreclosing.

[aquavir]

Onwards-

Exactly what me and my husband did was file chapter 7 and we included the house.. the 1st and the 2nd which by the way BofA held the note on both. We "decided" to surrendered the house in our bankruptcy which took care of the 1st and our obligation on the 2nd was discharged by the court. It's not nonsense. It happens. We choose to surrender the house. Maybe thats the part your confused about. It was a choice we made and was not mandated by the court. It was and is a way to protect yourself from a deficiency judgement.

No one is arguing that the discharge removes one's liability on the loans, but the original post was asking about whether or not BOA would foreclose if one kept paying the 1st and stopped paying the 2nd. They CAN foreclose and the consensus here is that the likely WILL foreclose in this case (but hopefully not).

Edit: By the way, you have to include your house in the bankruptcy (assuming chapter 7); you aren't allowed to pick and choose which debts you put in your bankruptcy. You get discharged and then you can keep the house or not; they can't come after you for the debt, but they can take your house if you stop paying. No free houses...

[pcn]

If I'm not mistaken the bk process in general is your protection from a deficiency judgment, as long as the home is included in the bk. Retain, surrender, or redeem are your choices. You are protected if you either retain or surrender. If you redeem, you don't really need protection since you paid it off. If you retain and signed a new contract that would remove your protection, but BOA doesn't do that as a practice.

[lorrieduke]

Onwards-

Exactly what me and my husband did was file chapter 7 and we included the house.. the 1st and the 2nd which by the way BofA held the note on both. We "decided" to surrendered the house in our bankruptcy which took care of the 1st and our obligation on the 2nd was discharged by the court. It's not nonsense. It happens. We choose to surrender the house. Maybe thats the part your confused about. It was a choice we made and was not mandated by the court. It was and is a way to protect yourself from a deficiency judgement.

[onwards]

Except that if someone were upside down on the house and the 2nd WAS with a different company than the first it would be a waste of money for the 2nd to foreclose, as they would incur a bunch of legal fees and there wouldn't be anything left after the 1st was paid off...correct?

Sure - that's the exact strategy I'm using right now with our second. But it has nothing to do with the BK process; the loans were still treated the same from that perspective.

[aquavir]

Huh?

There is absolutely NO difference between the first and second in this regard.

Except that if someone were upside down on the house and the 2nd WAS with a different company than the first it would be a waste of money for the 2nd to foreclose, as they would incur a bunch of legal fees and there wouldn't be anything left after the 1st was paid off...correct?

[tucson]

Assumung you filed Chapter 7 BK and included your second mortgage, you don't have to pay it and there is nothing the bank can do about it should you stop making the payments on the second only. Regardless if both notes are held by the same institution, if the second was discharged in a chapter 7 bankruptcy then that means you no longer owe it and they are forbidden by law to pursue you for it in any way shape or form. It's history and shoud not even be an issue.

But the first, thats a little different. If it was included in a Chapter 7 bankruptcy, that means you surrendered the home back to the bank. If your still making payments on the first note, I suppose they won't forclose until you fall behind, but legally you already surrendered the property when you included the first in the BK.

I don't understand what you mean when say you the bank tells you they can not talk to you until the case is closed? What are you talking about? I'm confused because you said your bankruptcy has been discharged. What is there to close?

Why hasn't you bankruptcy attorney given you the advice your seeking? After all, you paid him already right?
I would call him and have him answer your questions.

Both the first and second mortgage were included in the bankruptcy but the home was not surrendered. We chose the retain and pay option but as stated are now having difficulties paying both the first and the second. Our attorney has advised us to stop paying the second and see what happens. Maybe B of A wont want the house back as long as they are getting the payment on the first...Maybe they will we'll just have to wait and see I guess..LOL My hope was someone had already been down this road and could give me some insight..Thanks!

[onwards]

Assumung you filed Chapter 7 BK and included your second mortgage, you don't have to pay it and there is nothing the bank can do about it should you stop making the payments on the second only. Regardless if both notes are held by the same institution, if the second was discharged in a chapter 7 bankruptcy then that means you no longer owe it and they are forbidden by law to pursue you for it in any way shape or form. It's history and shoud not even be an issue.

But the first, thats a little different. If it was included in a Chapter 7 bankruptcy, that means you surrendered the home back to the bank. If your still making payments on the first note, I suppose they won't forclose until you fall behind, but legally you already surrendered the property when you included the first in the BK.

Huh?

Let's sort things out a bit...

BOTH loans are no longer your personal responsibility if they had been discharged in a chapter 7.

BOTH loans still have valid notes and liens. Therefore, a default on EITHER loan can lead to foreclosure - even if that's all that can occur (due to the discharge).

There is absolutely NO difference between the first and second in this regard.

And NOTHING in the bankruptcy code says you automatically "surrender" the property in a chapter 7. That's nonsense. Normally, you choose the "retain and pay" option, which means that everything goes the same as before, but your personal obligation for the debt is discharged. This works only for houses, by the way (prior to 2005, you could use this for things like cars too).

[aquavir]

Assumung you filed Chapter 7 BK and included your second mortgage, you don't have to pay it and there is nothing the bank can do about it should you stop making the payments on the second only. Regardless if both notes are held by the same institution, if the second was discharged in a chapter 7 bankruptcy then that means you no longer owe it and they are forbidden by law to pursue you for it in any way shape or form. It's history and shoud not even be an issue.

But the first, thats a little different. If it was included in a Chapter 7 bankruptcy, that means you surrendered the home back to the bank. If your still making payments on the first note, I suppose they won't forclose until you fall behind, but legally you already surrendered the property when you included the first in the BK.

I don't understand what you mean when say you the bank tells you they can not talk to you until the case is closed? What are you talking about? I'm confused because you said your bankruptcy has been discharged. What is there to close?

Why hasn't you bankruptcy attorney given you the advice your seeking? After all, you paid him already right?
I would call him and have him answer your questions.

The bank still owns the house until it is paid off, regardless of whether or not they can come after you for the money. I'm pretty sure the 2nd has at least some kind of lien on the property, and in this case it's the same company, so I would think they would foreclose.

[lorrieduke]

Assumung you filed Chapter 7 BK and included your second mortgage, you don't have to pay it and there is nothing the bank can do about it should you stop making the payments on the second only. Regardless if both notes are held by the same institution, if the second was discharged in a chapter 7 bankruptcy then that means you no longer owe it and they are forbidden by law to pursue you for it in any way shape or form. It's history and shoud not even be an issue.

But the first, thats a little different. If it was included in a Chapter 7 bankruptcy, that means you surrendered the home back to the bank. If your still making payments on the first note, I suppose they won't forclose until you fall behind, but legally you already surrendered the property when you included the first in the BK.

I don't understand what you mean when say you the bank tells you they can not talk to you until the case is closed? What are you talking about? I'm confused because you said your bankruptcy has been discharged. What is there to close?

Why hasn't you bankruptcy attorney given you the advice your seeking? After all, you paid him already right?
I would call him and have him answer your questions.

[tucson]

If it were different banks, this would be true, but seeing as its the same bank... not even sure if you should be making payments on the first.

With that said, why don't you qualify for HAMP? yes, you need the discharge first, but I got a permanent mod following a discharge recently.

Thanks for the responses...I have continued to call B of A almost daily but I continue to be told they cannot talk to me until the case is closed which In AZ may be years at this point. Anyone know of another avenue I can call other than the 800 number? Thanks

[onwards]

No we havent because we can't yet, or at least thats what we are told. Our BK discharged in April but has not closed yet so no one will talk to us at BofA

We were hoping that if they still saw that monthly payment on the first coming in they would look the other way? Wishful thinking

Guess we just wait till the case is finally closed.

If it were different banks, this would be true, but seeing as its the same bank... not even sure if you should be making payments on the first.

With that said, why don't you qualify for HAMP? yes, you need the discharge first, but I got a permanent mod following a discharge recently.

[tucson]

they will foreclose. same institution so they don't lose any more by doing that. did you apply for hamp?

No we havent because we can't yet, or at least thats what we are told. Our BK discharged in April but has not closed yet so no one will talk to us at BofA

We were hoping that if they still saw that monthly payment on the first coming in they would look the other way? Wishful thinking

Guess we just wait till the case is finally closed.