Pic-a-pay=unrealized gain?

[spidge]

Would it be possible that under Ch13 or any other BK rules that unrealized gains from negative amortized loans be considered differently than secured? For instance if a loan started out at $300,000 and through negative amortization the loan ballooned to $350,000 could the additional $50k be separated from the original balance and be considered unsecured?

[justbroke]

Well, this answer is simple if a.) you're talking about a Chapter 13, b.) you're trying to cramdown or modify the loan, c.) this is your principle residence, and d.) this is a first position lienholder. The answer is simply no. You are not allowed to modify the rights of a creditor with an allowed claim against your primary residence. (For junior mortgages, you may be able to strip them off, but that's for junior mortgages.)

Remember, in your Mortgage (or Deed of Trust), you pledged the collateral as security for the Promissory Note (loan). Just because the balance on the Note increases, doesn't mean that increase is unsecured debt.

[catleg]

Ah yes pick a payment. Classic predatory lending. This enabled banksters to book as interest income the increase in your loan balance and pay themselves bonuses on it. Sadly while your instincts are right, the law is exactly as justbroke states.

[justbroke]

I know that Wall Street made a lot of money during the boom. However, I made a lot of money too! We all rose and fell with the boom; albeit, some got out early.

[spidge]

Thanks for your responses. Just spit balling here.