2nd mortgage conversion to unsecurd debt?? Help!

[happy_ira]

Hi all. I posted this in the Ch 7 folder, but realize it might be better here since some of you may have experience and can help me.

If you can find an appraiser that will appraise it under $397k with comparisons to other houses in the area you can file a motion with the court to have the 2nd mortgage made into an unsecured debt... Let me see if I can find an article on this.

My home value: $390k
First mortgage: $397k; Second mortgage: $107k

This whole issue of second mortgage has caught my eye. When I first had the appraisal done, before the entire collapse of financial markets and other real estate, the value of my home was $400k. Now it is down another $10k to $390k, which I will have a third party appraiser do an appraisal on.

SO.... as I understand it, since my first mortgage of $397k is worth more than my home of $390k, I can shove the 2nd mortgage into unsecured debt.

At the same time, it looks like my US Trustee is headed to moving my Ch 7 into a Ch 13, therefore I'd like to do the above and convert my second mortgage into unsecured debt. Can anyone help me/point me in direction of what I need to file with the court in order to do so?!? Like specifically the next step once I have the appraisal showing $390k. What do I do with it? And how does the timing work with the UST conversion? Anyone?

[HHM]

You don't need to be too technical.

Once your case is officially converted, you file a motion requesting removal of the lien of the 2nd mortgage holder. All you need to say in the motion is the house is worth $X, I owe "this much" on the first mortgage, and therefore, there is no equity securing the second mortgage. Therefore, I respectfully request this court order the release of lien of XYZ bank. etc etc. And attach proof for each claim, i.e. copy of the appraisal, copy of the payoff statement from the 1st mortgage.

[BKParalegal]

HHM, is correct, but it can vary by jurisdiction in regards to the process. In some jurisdictions, you have to file a Motion to Determine Secured Status, where you explain how you got the value of the asset, what the first mortgage payoff is, and then show how the second is wholly unsecured. The 2nd has X amount of days(it varies by district, but usually 30 days) to object, if no objection than you are on the way to a lien strip. You then have to list the debt in your Chapter 13 plan as either a surrender or as unsecured........ There is more steps, but you get the gist.

Good Luck

[HHM]

You posted this similar question in another thread, and one of the members gave you a very good response.