Can someone answer question about 2nd Mtg please?? >>

[mesa777]

Do banks or credit unions ever let a person settle on a 2nd mortgage for less than what the owe? Live in AZ, if I file BK the 2nd mtg is going to be wiped out.. anyone have any luck with a bank making a settlement offer?

Please let me know... Am getting close to filing here soon... just not sure if I am going CH7 or CH13 yet... may just file a 7 and leave the house....

[justbroke]

I have seen some Chapter 13 cases in which the bank renegotiated some terms, dropped the second, and refinanced the first with some of the value from the second mortgage in the new first.

I have never experienced this, nor do I know how they worked it out.

With the way things are, if you're in a Chapter 13, just strip the second and be done with it!

If you're in a Chapter 7, just discharge the second and hope they never foreclose on the second. They generally won't foreclose on the second if there's no equity to even cover the first.

[StartingOver08]

JustBroke is right. I have a 1st ($583k) and a 2nd ($62k). I am surrendering the house in a CH 7. The second didn't even foreclose as the total value is less than $450k now.

However, before I filed, the second did renegotiate the loan to 5% fixed 30 years. It was just too late - I ended up filing BK 4 months later.

[mesa777]

I owe $186K on the first @ 6.25%, 2nd owe $24K at a 10.5% rate, in Az nous maybe worth $165K.... The bank will get nothing... I just don't know if I should keep current before I file... I really need the house payments to help pass the means test...

Anyone? I have a B of A Visa with a $31K bal, offered to settle for $4K, if the second could be settled and lien released I may be able to swing it.. Of course would have to pay tax on the forgiven amts I guess... Can't wait for this to be over, I think alot of ppl will file during this first qrtr of the year...

[Flamingo]

If you are thinking about trying to avoid BK, you can run the numbers on the taxes (state and federal) you would owe if you settle with BofA and be forgiven debt on $27,000 to see if you can pay those taxes when you do your tax returns for 2009. The bank is not going to give you any free principle on the second mortgage but may offer to lower the rate and extend the term to 30 years so you can afford to pay it. Your current financial state will determine that because you will have to qualify and show you can actually make the payments on all your bills.