Lien strip a investment home

[mmenz22779]

Can you strip the lien on an investment home?

thanks

[HHM]

No

The lien strip only applies to your primary residence.

[mmenz22779]

well that screws up that idea, Get this my primary home is valued at 320k and my 1st is 290k my 2nd on it is 250k, i will file Bk in april or so due to 2 investment homes, one of those investment homes has a 2nd on it and i belive it the value is under what owe on my 1st. The chances of my Primary property dropping to under 290k is highly unlikely, so I will do a 7 as i pass the means test.

But I was hoping that a lien on a investment home could be stripped. I googled it everywhere and could not find an answer. I thought i heard one lawyer saying you could not strip a lien on a investment home.

I would like to keep one of the investment homes as if the 2nd was not on it i would be positive cash flow. The rent is 1150 and my payment is 931, but i have no disposiable income incase of emergancy happens or the tenent does not pay rent ect.. I have a second child coming in January and my family comes first before investments.

[mmenz22779]

thanks mod, this forum is the best one i have seen. I have learned so much that when i went to interview a few lawyers i think i knew more than they did One did not even know what you could put your taxes in a payment plan of a 13. That is scary.

again thanks MOD for the quick answer, as I am making my game plan early so I am prepard for when the time comes.

This is wil be my second B/K. My first was discharged in 1997, (stock market lossess) and this time (real estate lossess).

I guess it is time to throw in the towl and stick to old fashion Mutual funds. (i am 34).

[justbroke]

HHM, while you may only lien strip a primary residence (not strip down), but there's nothing which protects investment property. Investment property is not subject to the anti-modification clause which is why the primary residence is such a tricky one to do anything to. Most investment properties only have one lien on them so lien stripping isn't possible in that context.

I would venture to guess, based on how I initially treated my investment property in my Chapter 13 Plan, that you could do almost anything to an investment mortgage including a strip down.

Of course, all this depends on the District you file in, as some are not too friendly. However, I don't think it's impossible. The only reason why I didn't strip-down my investment property, is because it's over-secured. I'm surrendering it now anyway, so my dribble may just be that, dribble.

Just wondering...

[mmenz22779]

JustBroke, I am in the same boat. Eventhough i would make 100 a month if i could strip the lien i am not sure if i would stil keep it. Presently i will file BK in april or may and what ever money i do save up until then will need to be used to pay my taxes (owe 5k for 2008).

If something major happens on that investment home at anytime i still dont have the funds to fix it and the main sewer line is on its last leg and need to be replaced 10k to do that job.

It would suck to do a bk, get my debts wiped out and then need to come up with 10k to fix it or what if the tenents move out or eviction. Just too risky with having 2 children now.

When i bought the home i had no children now i have 2 and they are my pride and joy. I will file B/K 7 save up after discharge and if i really really really wanted to could most likely buy anouther investment property after 2 years.

The investment home is my childhood home i grew up in and bought it from my parents, so it is a little hard let go, but my family comes first.

Have not told my parents yet not sure if i should or should not out of respect.

[HHM]

Let me take that back, JustBroke raises a good point...the restriction on modifying security interests only applies to the principal residence, not to other real estate. I haven't seen it done that much, but I think it is possible that you can cram down 2nd mortgages on investment real estate. It's a slightly different procedure...what you are asking the court to do is determine value of the 2nd mortgage on the property. If the value of the lien is zero, then presumably, the debt becomes unsecured and gets lumped together with the unsecured debt...when the chapter 13 gets discharged, bye-bye 2nd mortgage. ("in theory").

Whether it is in your best interests to do so is a different question. (1) doing so may put you over the limits for the amount of unsecured debt on which you can file a chapter 13. (2) Also, you would probably lose the ability to claim the payment on the 2nd mortgage thus conceivably increasing the amount of disposable income in your chapter 13 plan.

[mmenz22779]

In January the properites will become "Vacant" so i will neither use the income or payment for the test.

In addition I would have to let my ohter investment property "CONDO: forclose first as i would be over limits, but then i will be subjet to 3-5 years of monitoring by the trustee and have everymove i make hanging over my shoulders,

Unless i can strip the second on my main home 250k i will do a chapter 7, if my 250k does not get stripped then a 13 really does not make that much sence in my situation as i still dont have any disposible income for emergancies.

[justbroke]

Unless i can strip the second on my main home 250k i will do a chapter 7, if my 250k does not get stripped then a 13 really does not make that much sence in my situation as i still dont have any disposible income for emergancies.

You won't be ale to "lien strip" the 2nd on yoru first mortgage because the 2nd mortgage is not wholly unsecured. You can only "lien strip" -- on your primary residence -- if the first mortgage is undersecured or exactly secured. Once you have $1.00 (theoretically) in value over the first mortgage, you can't strip the 2nd!

So, if your first mortgae is $290K and the second is $250K, and the value is $290K (exactly not a dollar more), you can lien strip the $250K. If the value (by appraisal) of your home is $290,001.00 then you can't.

Yes, it's that cut and dtry.

[justbroke]

Whether it is in your best interests to do so is a different question. (1) doing so may put you over the limits for the amount of unsecured debt on which you can file a chapter 13. (2) Also, you would probably lose the ability to claim the payment on the 2nd mortgage thus conceivably increasing the amount of disposable income in your chapter 13 plan.

I want to echo what HHM posted.

Be very careful of the debt limits when cramming down or lien stripping mortgages. You could VERY VERY VERY easily be over the $336K limit for unsecured debt.

I am VERY VERY VERY close to that limit right now as we speak. I'm actually praying that my last 6 creditors don't file a claim within the next 28 days!!! It's THAT close.

I have some wiggle room, if I withdraw my motion to value on my motor vehicles. That's the only thing that will save me from exceeding the unsecured debt limit if all my unsecured creditors file a claim.

Even worse, some of my secured creditors are filing as unsecured. Totally messing me up!