Didn't know about second mortage!!

[bam531]

When we bought our home 4 years ago, the mortage didn't cover entire cost of house. So we were left owing the seller $7,000. We signed a piece of paper saying that we would pay it over time. The paper was not notorized and was just something the seller typed up. He stated that it was not a second mortage and therefore would not be filed with the courthouse . We did not make any payments ( loss of income, we moved and was actually trying to sell the house but our buyer backed out) and we never heard anything else from the seller. I turned him in on our chapter 13 bankruptcy for the $7,000 owed (and explained to the lawyer why). Today I recieved a letter from our attorney stating that the seller claims to have a second mortage on the house. Shouldn't we have signed something else or been informed before now? We refinanced 2 years ago and the new finance company didn't say anything, and there is nothing on our credit report. What will happen now? We go to court June 25 to have payments adjusted due to my getting fewer hours a work. We didn't lie about owing him the money and we were unaware that he turned it into a second mortage. He claims he sent something to the trustee but he wants to know why he isn't recieving any money yet. Lawyer said for me to go to the courthouse and see if he does have this so called second mortage. ARGHH!! Not sure how much more I can take!! Been sick since I opened the letter 2 hours ago. Can she put us in jail? Take away our house? Will I have a nervous breakdown before this is over? Hope someone can help!!

[rrockinggramma]

the issue will be over whether his claim is paid at 100 percent or as an unsecured creditor. You listed him and his claim, so you are not in any trouble. So relax about that. The lawyer wants you to go to the courthouse to see if the country clerk has any documentation that he recorded a lein against the property for the 7000 you owe him. That would make the claim secured and he would be paid at 100 percent, which would effect your plan payments and length of plan etc. If there is NO documentation recorded by the county clerk (i.e. mortgage, judgment, etc) then the claim is unsecured and he will get the same percentage as all of the other creditors. If that is the decision, then he could object and try tod fight it and the trustee would decide (or the judge of the trustee) if the claim is paid at 100 percent or not. It might hold up your confirmation but nothing else. You just make your payments and go forward. This is nothing to get upset about. He will either get the full 7000 or the percentage to unsecured, nothing more.

[bam531]

Thanks, that makes me feel a little better. I'm just curious as to if he did the second mortage, why didn't we recieve anything? He has our phone number and our address...just seems like we should have known before now. I hope it doesn't raise our payments ( already having a tough time) and we are in this for 5 years. I am sorry I am so panicky, just seems like everything is going wrong at once. Thanks for the advice!!

[rrockinggramma]

well I suspect he did not record anything at the county clerk's office or when you refinanced it would have been found. Filling out those claim forms is confusing to many and he believes he has a secured debt so he doesn't understand why he isn't paid like the other secured creditors. I am sure he will be not very happy with only getting a percentage but hey, better than nothing. And if nothing is recorded, then you will be all done with him at the end of your plan and he will have no recourse. So for that alone, don't default on this BK. LOL GL and RELAX!

and he probably sent a copy of the contract you signed for the 7000.00 But if it isn't recorded, it isn't secured and that will be the deciding factor if he gets it all or part.

[Flamingo]

The best thing you did was list that debt on your Chapter 13. However, what was on that "piece of paper" that you signed...were you provided a copy? What was the agreement as to the terms of your repayment on this loan which was held by the seller of the house that you purchased? I'm surprised he did not attempt to contact you for payment if you had not made any payments on the amount due over a four year period. Since you made no payments, has interest accumulated also? Penalties? Depends on whatever is on that document you signed.

It sounds to me as it is a loan only granted from the seller to the buyer to help with the purchase price of the house. If it was a second mortgage, it would have been found during the title search for the refinancing you mentioned and would have had to be paid off in order for you to refinance.

[holding on]

First off, head on down to the courthouse or city/county clerk office and check any property lien's against your home. If his name is not on record then it's just a money loan. Check for any judgements against you by him, if none then the loan ain't secured either and he is just another unsecured creditor. Doesn't matter if he did or didn't contact you, you did everything right in putting him down as a creditor.

[bam531]

Thanks everyone for the info. I am going to the courthouse Friday to see what they say. All the paper that we signed says is " 'Our names 'owe ''His name balance of
$ 7,000 on the doublewide we purchased at 'Our address'. Signed and dated by both of us. It's not notorized, and just typed on plain paper. We think he may have done this about 2 months prior to us filing Ch 13. ( October 2007) I had contacted him and told him we may have it sold ( which fell thru) and we were including his money in the selling price. Guess he was afraid we would sell it and not give him his part. If he is down as a second mortage, will he get all of his part during the 5 year period or we will still owe him after discharge? I have calmed down some..I was afraid the trustee would put us in jail ( I don't look good in stripes or a bright orange jumpsuit) or take our home away from us. Thank you all for putting my mind at ease!! I will let you know what I find out Friday!!

[AngelinaCat]

Hi bam531: We are glad you found this forum and it has helped you to calm down a bit. You should have seen the state my hubby (AngelinaCatHub) and I were in when we found this forum in April. It has helped us to keep what little shred of sanity we have left, and also learn and plan a way to deal with the mess our *******attorney left us in.

[rrockinggramma]

well keep us posted on what you find out on Friday.

[bam531]

Went to courthouse today... there is nothing filed with the register of deeds ( finally I can breath again). The only thing they have is where we owe our mortage company. So now what hapens? Is he considered a unsecured debt? Can he cause problems? Will the trustee ask us anything on this matter next Wednesday(modification hearing)? Again, I want to thank everyone for letting me ramble on and I appreciate any thoughts you may have!!

[southernbelle]

Sounds like he is SOL and will get paid a percentage like everybody else. I'm glad this will work out in your favor, but just to be sure re-read those papers you signed with him.

[rrockinggramma]

let your attorney know this asap and check to see if he filed a claim as secured or unsecured. If secured, then object, if unsecured, just let him get what everyone else gets. Glad it worked out for you!

[bam531]

Had modification hearing this past Wednesday and it went very well! Trustee was not there, just her assistant. What a relief! She was so patient and understanding with everyone, alot more friendly then the original trustee. I told lawyer that there was nothing on file at courthouse about a second mortage, so guess that means it is an unsecured debt. Lawyer said not to panic...lets hope he is right. Thank you everyone for your help!!

[AngelinaCatHub]

Greetings "Bam531"; Some Counties have online records search. You can look up under your name or his. If he wrote up this agreement, it may not be a legal document and the fact it is not notorized is a stupid mistake on his part. I'm not promoting you to 'stiff' him, but he needed to pay doc stamps and get it recorded. The records office needs certain things on every document in our state (FL) such as preparer of document and address of same, Date, witnesses on some and for sure notory. He could be out of luck all together. BTW, was the house forclosed? If a mortgage company forcloses it must purchase out the other mortgage to releive a lien. There is no lien on the house. He has made a bad mistake, you have not. 'Hub