Hi all,
Well, my intuition was right, and we are officially in deep crap. I have posted before regarding our situation, but the short of it is as follows: Bad spending habits and a bad mortgage decision, which includes appraisal fraud, has led us to chapter 13. We have an ARM for a 1st mortgage, and a balloon 2nd (which we were decieved about), and in the process our home was over-appraised by about 30,000, leading us to being approximately 40,000 in negative equity in our house.
When our ARM started adjusting in August of 07, we looked into refinancing, which led us to discover the situation above. After that, bills became harder to pay and we looked into chapter 13. We waivered at first as to either surrender the home or keep it. On the advice of our lawyer (COUGH, COUGH), we decided to keep it, as she was absolutely confident we would be able to strip the second lien down, leaving us with just our 1st mortgage after the plan was finished. I verified this info with her on several occasions, even after reading on this board that lien stripping was a rare occurance. No problem, she stated. The plus was that in 5 years we would be down to just our first, and most likely have equity again in our house, be able to sell or refinance, and get something out of the thousands we've put in it.
We then decided to go ahead and file, which we did on 12/21, and since that time there have been some random objections, I have been checking PACER regularly (and questioning her when I saw objections), all of which she reassured me were merely "form" related. In that time our payments have increased from 1500 to 3300, to include our mortgage, as well as our cars. Our plan is doable but definately not much wiggle room worked in.
I saw a refiled plan over the weekend on PACER which listed our 2nd mortgage as long-term and continuing beyond the plan, which was a new change. I emailed the lawyer and this was her response:
"I've fought with our case administrator on this. Apparently the judges in our district have really been cracking down on lien stripping for seconds - I think it has to do with the foreclosure crisis and the unwillingness to leave lenders completely high and dry. I'm not sure I agree with it, but I can see the detriment to having banks all go broke.
I was unaware of the recent climate in the courts - and I apologize. "
It's not that I disagree with her reasoning above, it's that we would've done things completely differently if we had known then what we know now. Now as it stands we have not confirmed yet...set 2nd week in May.
My questions are this...what are our options? My gut tells me we should surrender (if we still can). We are going to come out of this with the exact same mortgages that we went in with, and probably pretty near the same amount of negative equity (still not paying much in principal on either loan). I would rather rent for the next however many years, and be able to move when I please, rather than remain a prisoner in my own house, unable to sell or refinance. The 2nd mortgage was a majority chunk of our debt.
What gets me about all this is that if we'd have done what we'd wanted to in the beginning, we could've not paid our cards for a few more months (didn't quit until december), saved some money for rent deposits and moving costs, and found a new place before we filed. As it stands now, we have NO money for deposits and/or moving costs! And a bankruptcy on the books.
Any advice and/or support would be greatly appreciated. I have a call and an email out to our lawyer, so I will be discussing all this with her as well. You guys have been great!
Well, my intuition was right, and we are officially in deep crap. I have posted before regarding our situation, but the short of it is as follows: Bad spending habits and a bad mortgage decision, which includes appraisal fraud, has led us to chapter 13. We have an ARM for a 1st mortgage, and a balloon 2nd (which we were decieved about), and in the process our home was over-appraised by about 30,000, leading us to being approximately 40,000 in negative equity in our house.
When our ARM started adjusting in August of 07, we looked into refinancing, which led us to discover the situation above. After that, bills became harder to pay and we looked into chapter 13. We waivered at first as to either surrender the home or keep it. On the advice of our lawyer (COUGH, COUGH), we decided to keep it, as she was absolutely confident we would be able to strip the second lien down, leaving us with just our 1st mortgage after the plan was finished. I verified this info with her on several occasions, even after reading on this board that lien stripping was a rare occurance. No problem, she stated. The plus was that in 5 years we would be down to just our first, and most likely have equity again in our house, be able to sell or refinance, and get something out of the thousands we've put in it.
We then decided to go ahead and file, which we did on 12/21, and since that time there have been some random objections, I have been checking PACER regularly (and questioning her when I saw objections), all of which she reassured me were merely "form" related. In that time our payments have increased from 1500 to 3300, to include our mortgage, as well as our cars. Our plan is doable but definately not much wiggle room worked in.
I saw a refiled plan over the weekend on PACER which listed our 2nd mortgage as long-term and continuing beyond the plan, which was a new change. I emailed the lawyer and this was her response:
"I've fought with our case administrator on this. Apparently the judges in our district have really been cracking down on lien stripping for seconds - I think it has to do with the foreclosure crisis and the unwillingness to leave lenders completely high and dry. I'm not sure I agree with it, but I can see the detriment to having banks all go broke.
I was unaware of the recent climate in the courts - and I apologize. "
It's not that I disagree with her reasoning above, it's that we would've done things completely differently if we had known then what we know now. Now as it stands we have not confirmed yet...set 2nd week in May.
My questions are this...what are our options? My gut tells me we should surrender (if we still can). We are going to come out of this with the exact same mortgages that we went in with, and probably pretty near the same amount of negative equity (still not paying much in principal on either loan). I would rather rent for the next however many years, and be able to move when I please, rather than remain a prisoner in my own house, unable to sell or refinance. The 2nd mortgage was a majority chunk of our debt.
What gets me about all this is that if we'd have done what we'd wanted to in the beginning, we could've not paid our cards for a few more months (didn't quit until december), saved some money for rent deposits and moving costs, and found a new place before we filed. As it stands now, we have NO money for deposits and/or moving costs! And a bankruptcy on the books.
Any advice and/or support would be greatly appreciated. I have a call and an email out to our lawyer, so I will be discussing all this with her as well. You guys have been great!
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