Equity Stripping in Chapter 13

[strive8]

I'm getting ready to file a Chapter 13 and need to know when equity stripping the 2nd mortgage do they look at the 1st mortgage that was originally taken out of the property or the current 1st mortgage in place now when determining if the home value is less than the 1st mortgage balance?

When the home was originally purchased in 2003 I had a $212k 1st and $26k 2nd and refinanced a 1 1/2 later. My 1st mortgage balance is now $290,500 and 2nd mortgage is 100k. Will the Trustee use the 290k or the oringal loan of 212k when determining if my home value is less than the amount owed on the 1st mortgage?

Thanks!

[HHM]

It is the "current payoff" amount of the first mortgage that is important.

Also, the trustee really has nothing to do with a lien strip, that is going to be between you and the 2nd mortgage lender. (and the BK court).

[strive8]

So does the CMA or Appraisal get sent to the 2nd lien holder to show them there is no equity in the home so they can say if they argee or not?

[HHM]

This is typically done by motion. You (your attorney...and really, this is something you should hire an attorney to do, too many pitfalls for the unwary) typically file a motion with the BK court and then serve the 2nd mortgage lender. This is all done within the BK. Whether you need to file a motion or simply do the lien strip as part of your plan language depends on the district, but most districts require the debtor to file a Motion to Value and Strip the 2nd Mortgage. You would attach your CMA to that motion and the serve the motion to the 2nd mortgage lender.

[strive8]

I'm going to use an attorney. Thanks this was helpful!

[strive8]

meant to ask you if the current value is really close to the current 1st mortgage balance...Does the lender typically dispute the value and if so...What is typically the best thing to challenge the 2nd lenders dispute?