Strip a 2nd Mortgage??

[craftee98]

I have seen alot of comments about stripping a 2nd mortage...Could someone shed some light on what this is???

[LadyInTheRed]

In a Chapter 13, if the value of your home is less than the balance of your 1st mortgage, you can petition the court to have your 2nd mortgage (and any other junior mortgages) ruled unsecured. Your second mortgage is then paid in your Chap 13 plan as an unsecured debt. When your Chap 13 is discharged, the lien is removed leaving only your 1st mortgage.

[tobee43]

lady, is one always successful, providing that meet the criteria of the house value, when undergoing that process with the court?

[HHM]

lady, is one always successful, providing that meet the criteria of the house value, when undergoing that process with the court?

Provided they meet the criteria above, yes...

The courts split on whether a lien strip can be done in a chapter 13 that is not eligible for discharge (e.g. file chapter 7 first, then follow on with the chapter 13 to strip 2nd).

Always overarching is the issue of good faith and fraud.

But generally, if there is a fight on lien stripping, the fight is over the value of the house, not the legal ability to actually strip the 2nd mortgage.

we have a an entire thread on the subject, http://www.bkforum.com/showthread.ph...ge-Lien-Strips.

[craftee98]

Thanks Lady, we owe 80,000.00 on our 1st mortgage and the house is valued at 136,000.00 according to zillow.com. I guess that means we would not qualify?

[tobee43]

Provided they meet the criteria above, yes...

The courts split on whether a lien strip can be done in a chapter 13 that is not eligible for discharge (e.g. file chapter 7 first, then follow on with the chapter 13 to strip 2nd).

Always overarching is the issue of good faith and fraud.

But generally, if there is a fight on lien stripping, the fight is over the value of the house, not the legal ability to actually strip the 2nd mortgage.

we have a an entire thread on the subject, http://www.bkforum.com/showthread.ph...ge-Lien-Strips.

thanks hhm. i really never put much thought into it since we were a 7 and also we never had a 2nd. appreciate the clarification.

[LadyInTheRed]

Thanks Lady, we owe 80,000.00 on our 1st mortgage and the house is valued at 136,000.00 according to zillow.com. I guess that means we would not qualify?

Based on that value, you would not qualify. Zillow isn't the best source for value, but I doubt it is so far off that your house is worth less than $80,000.

[HHM]

Thanks Lady, we owe 80,000.00 on our 1st mortgage and the house is valued at 136,000.00 according to zillow.com. I guess that means we would not qualify?

Not likely, but you should have a realtor give you a current market analysis (CMA), but there are several factors that make zillow more or less accurate, but $50K difference is a pretty wide gap unless you live in a unique area (rural) etc, that has a variety of home sizes, custom homes, and styles (e.g. mobile home on an acre next to a 5000 square foot estate on 1/2 acre).