Home apprasial over 1st loan & 2nd won't be dropped

[BBNLB]

I'm in oregon and we are trying to scrub second, my realtor came in under first amount and lendor on the second had a realtor price come in over first (what a suprise). We had a licensed appraisal done and it came in over first loan value also but nowhere near banks realtor value. We just completed our 341 meeting and all good there but the second (US Bank) filed protest. My attorney is telling me if the apprasial is one dollar over my first loan we cant fight and scrub second.
My question is cant we go to court and present to the judge the first is say 150,000 and the apprasial is 175,000, Ok, we will put 25,000 on or plan for repayment to the second US Bank. Wont the judge make any adjustments. US Banks realtor number is 250,000 just alittle differant.

[NoTomatoCan]

Unfortunately no. BK judges do not have the authority to adjust home loans like that. Either the 2nd is wholly unsecured and you can lien strip it, or (as your attorney stated) if it is even $1 over the value of the first you are out of luck. Sorry.

[BBNLB]

OK, this makes no sence to me, First is 150, appraisal 175, The first will sell the house at what it can get above the loan 150, even if it sells for above appraised value the buyer will half to come up with the above appraised value 150 which will be hard to find, but say they do and sombody buys for 180 it will still be split up between ALL creditors. Where is the seconds thought here??? Dont understand where the second thinks they are going.

[LadyInTheRed]

OK, this makes no sence to me, First is 150, appraisal 175, The first will sell the house at what it can get above the loan 150, even if it sells for above appraised value the buyer will half to come up with the above appraised value 150 which will be hard to find, but say they do and sombody buys for 180 it will still be split up between ALL creditors. Where is the seconds thought here??? Dont understand where the second thinks they are going.

If the 2nd is not stripped and the 1st forecloses, no other creditors get any proceeds of the sale unless the 2nd gets paid in full first. Only if the 2nd is stripped does it get treated the same as unsecured creditors.

[NoTomatoCan]

To further elaborate on what Lady said...

Remember, in a successful lien strip (which doesn't look possible based on your numbers), you would be keeping the home and the 2nd would get paid a pro rata share based on how much you are paying unsecured creditors in the plan. Let's call this scenario 1. In this scenario the 2nd mortgage only gets the same % of payback that your general unsecured creditors receive. That is about the worst that any creditor can do in a CH13 BK plan.

If the lien strip is unsuccessful, then two things can happen: You keep the home or you surrender.

Lien strip unsuccessful, you surrender - Let's call this scenario 2. In this scenario the house will be sold. The first will get paid first then any thing left over after that debt is paid in full goes to the 2nd. It is not split up between all creditors as you claim in your post - the remaining proceeds from the sale (if there are any) goes to satisfy the 2nd mortgage. THEN any deficiency amount that remains will be treated as unsecured debt in your plan and will be repaid on a pro rata basis consistent with your other unsecured creditors. So the worst case that happens for the 2nd mortgage holder here is that they get exactly what they would get if you lien strip - house sells for less than what is owed on the first and they only get a pro rata share based on what you are paying unsecured creditors . However, they have the potential to get more if the home sells for more than what is owed on the first.

Lien strip unsuccessful, you keep the house - Let's call this scenario 3. In this scenario you keep the house and are contractually obligated to pay both your first and second mortgage. The 2nd mortgage gets paid in full. Obviously this is a great deal for the 2nd.

So the worst scenario for the bank is Scenaro 1 - a successful lien strip. In that scenario they only get a pro rata share, with no possible upside. So that is why the 2nd is trying to fight the lien strip. It puts them in the worst possible position if they did not.

[Cristo]

Yes, the second has nothing to lose by fighting it. Have you already filed the appraisal with the motion to strip the second? You might want to try to get another one if you think it's close. Did your lawyer recommend the appraiser? You should tell the appraiser that you want the "quick sale" value. Your lawyer should have explained all this to you before you filed........?

[BBNLB]

we got the quick sale price on the apprasial, apprasial was 175, the first loan is 150, so we offered the second 25,000 to be added to our 13 for them. So say the house is sold for apprasial amount 175, the first will get fully paid 150 there is 25,000 left it would go to the second, so why would they not accept our offer??? Do they really think this house apprassed for 150 will sell for 230 to fully cover the second, NOT EVEN! so there going to loose something on this second amount which is 80k. If we walk the house will sell for close to apprased value in this market so they will get the same value as we offered them??? 25k

[momofthree]

They're gambling on you staying in the home. If they foreclose, they're looking at around $25k. You're offering $25k settlement, but they're hoping you'll stay in the home, which means they'll get all their money. They have no reason to accept your offer. Now, if they were completely unsecured and you offered a settlement, then they'd be much more likely to accept (you'll see quite a few people in the ch.7 forum attempting settlement on completely unsecured 2nd mortgage debts and even then, the lenders are still aggressive at times).

Good luck and keep us posted on the progress of your case.

[NoTomatoCan]

If we walk the house will sell for close to apprased value in this market so they will get the same value as we offered them??? 25k

Therein lies the problem. What is their incentive? They get the same amount either way, with zero upside if they take the $25k. As momofthree states - they are banking on you sticking around in the house. That deal may benefit you, but has no additional benefit for the lender.

[momofthree]

Not to mention, when most people settle, they are offering a lump sum of cash to be paid immediately. You're offering to pay it back over 5 years. Not nearly as enticing, especially given the failure rate of ch.13s...