Does anyone know much about lien strips?

[Ren430]

Chapter 13 may be my only option to resolve a horribly ugly mortgage. I have a house that I bought as my primary residence back in 2006, and kept after a divorce. After my divorce I started renting it out. I am now remarried, living at my husband's home...still renting out my house. Its in CA, worth $340k. the first mortgage is $428k and the second is $89.5k. Does anyone know much about the rules behind primary residence, etc, or how this might pan out in a chapter 13?

[13in2010]

I'm no expert by far, but my attorney told me that if your 2nd mortgage is $1 or more above what your home is worth, it can be stripped. Correct me if I'm wrong, everyone, but he told us to get a CMA b/c ours is close.

[justbroke]

Chapter 13 may be my only option to resolve a horribly ugly mortgage. I have a house that I bought as my primary residence back in 2006, and kept after a divorce. After my divorce I started renting it out. I am now remarried, living at my husband's home...still renting out my house. Its in CA, worth $340k. the first mortgage is $428k and the second is $89.5k. Does anyone know much about the rules behind primary residence, etc, or how this might pan out in a chapter 13?

Even with stripping the second, you're looking at the first being being $90K or about 25% underwater. That's a situation you should run, not walk, away from.

Besides, since it is not your primary residence, it would be treated as investment, and the Trustee may want you in a higher percentage plan. This could make keeping it, impossible.

Of course, I speak primarily based on how things work in Florida, but most Chapter 13 Trustees are peculiar about keeping investment property at the detriment of your unsecured creditors. Even if the debt is 100% covered by rent payments (principal, interest, taxes, insurance, maintenance, other costs associated with being a rental), you may still have issues. You really would need to have about 120% of the costs covered by rent (known at the debt service ratio) for a ratio of 1.2:1 at a minimum.

[Ren430]

The problem I have is that I'd probably be subject to a deficiency judgement if I walk away, and still have to pay the underwater amount. Its no longer a purchase money loan since I had to refinance it into my name when I got divorced. The lender won't work with me...I also have a huge pile of student loans which I know won't be discharged. Yeah, this pretty much sucks. I don't know what to do anymore.