relief from stay

[halomom]

First I want to say how helpful this forum has been to me the last few months. Thank you for being here.

Today is the first time I've had a situation that I haven't been able to find an answer already posted and I'm hoping you all can help.

I started a business last year and when I ran into a cash crunch took out a second morgage. All my other creditors (which I was current with) suddenly decided I was a bad risk and sent all my interest rates into the stratosphere. Payments that were $400 suddenly went into the thousands and I ended up closing the business and in BK.

I filed Chapter 7 the end of November, had the 341 in December and everything seemed to be going along fine, except that the lawyer forgot to list a creditor and that caused some delay.

Now for the problem. Somehow even without permanant employment I managed to keep current on the $1,000/month first mortgage, as well as the $220 second mortgage.

However, in February something happened with my second mortgage payment. I either turned in a cash payment without a loan coupon and it didn't get posted, or I had a senior moment and forgot to pay it.

My attorney and I received a letter from the bank in mid-March asking if I was surrendering the house. My attorney called them and said it was just an accidental missed payment. However, two weeks later I received a Motion for Relief From Stay that only referenced the original loan amount, nothing about the second mortgage, and made much mention about being behind on payments and that I don't have any equity in the house.

The attorney said this was triggered by the missing payment, and that I just need to go to a hearing and say there is equity and I want to keep the house.

I am now totally current on the account. I started permanant full time employement March 3 (Yeah!) and won't have trouble making the payments. But I'm very nervous because I just can't believe a company would spend all this money just over a missed $220 payment.

Here are my questions:

1. Can I actually lose my house over this?

2. Can they force me into another mortgage(s) that might have unfavorable terms?

3. I have a paper trail for all my first mortgage payments that shows they were paid on time. Should I take them to the hearing? (I wasn't as careful with the second mortgage receipts because they were only for $220--I never dreamed I'd have problems with it! But I do have most of them as well.)

3. How much sleep should I be missing over this???

Any explanations that would let me know what to expect at the hearing would be especially welcome. Thank you!

[lrprn]

1. Can I actually lose my house over this?

Although you've opened the door, chances are good your lawyer is right. You just need to explain yourself so the judge won't grant the mortgage company's request to lift your stay.

2. Can they force me into another mortgage(s) that might have unfavorable terms?

No. They might offer a renegotiation, but you have no obligation to accept it.

How much equity do you have in your home? Enough to pay off the second mortgage if the house is sold? I'm trying to understand why your second mortgage company would file to force a foreclosure - most won't do this because they can't get all their money paid back because the first mortgager gets all their money paid back in full first.

3. I have a paper trail for all my first mortgage payments that shows they were paid on time. Should I take them to the hearing? (I wasn't as careful with the second mortgage receipts because they were only for $220--I never dreamed I'd have problems with it! But I do have most of them as well.)

What matters are the second mortgage payment receipts. Can your bank help you? The payments you made should appear on your monthly account records.

3. How much sleep should I be missing over this???

If your lawyer doesn't feel there will be an issue, then since he's most familiar with the court personnel and your specific situation, I'd place my faith there and try to get some sleep.

[halomom]

lrprn, thanks for the reply. It just seemed like such a drastic and expensive course of action for the bank to take that it made me very nervous. I appreciate your reasurance.

Since the real estate market has taken such a tumble the last year I'm probably just about even without a lot of leftover equity. That was the other thing that seemed strange to me, with what seems like every other house for sale in my city and no buyers I wouldn't think the bank would be in a hurry to take on another property, especially one that doesn't have a lot of equity at this time.

I have my first and second mortgages with the same bank and even called the department that services the first in case they had somehow applied the payment there instead. I've also spoken with the head teller to see if they had any extra payments that were unaccounted for. All my other receipts are available except for the February one I really need (of course!)

Like everyone else here it has just been a roller coaster and I was looking forward to crossing the finish line. I guess this is just more, and hopefully last, bump in the road. Thanks again for your input!

[FreshLikeADaisy]

Halomom, because your first and second mortgages are from the same bank, they can foreclose if you default on either, depending on how your mortgages were written. If it were two different banks instead of the same one, a default on a second loan wouldn't jeopardize the house, because the first bank would have to foreclose AND recover the entirety of their debt before the second bank saw a red penny of it. But since they are both with the same bank, it's a little more vulnerable.

But Lrprn is still right, your attorney can help you work this out. Because you're in bk already, and have options that are defined by law, you're not at the mercy of whether or not the bank will work with you. I honestly suspect that some lenders are still secretly waiting for a government bailout, because it is otherwise unimaginable that they are refusing to work with homeowners, but there you have it: some still are flatly refusing to modify or forgive any part of a loan, even when the homeowner wants the house and is willing to continue paying.

Fortunately, you are actually in a better position to deal with it by being in bk and having an atty to help you. Be sure to understand thoroughly the ramifications of a reaffirmation before you sign one, and have your atty object to the Motion for Relief of Stay so that your wishes can be known; don't let it just go through and then assume that a lender won't foreclose, fight it now. Good luck!!!

[halomom]

Fresh,

That's what's so weird to me...I stayed absolutely current on the $1,000 first mortgage and the $220 second all this time. And just because of a lost/missing $220 payment they are going to all this legal fuss. I have to say I'm with you in feeling like they have some sort of ulterior motive. That was part of my motivation in posting this because it feels so excessive to me. That, and it seems like everyone else who posted this type of situation was ultimately planning on surrendering, and I wanted to hear from the perspective of keeping the property.

I just still get mad and nervous whenever I look at the document where they insist I haven't made ANY payments. I guess I keep hoping when I walk in with a year of paid receipts the judge will hit them with his gavel and chastise them for wasting the court's time. Well, I can dream, right?

Thanks for responding. This forum is a lifesaver!

[FreshLikeADaisy]

No problem. I wish you every success!!!

[halomom]

Just wanted to share my happy ending and say you were right not to stress!

I was just on PACER at 4 p.m. Friday afternoon to look for something else and noticed a new Withdrawn file. I called the attorney and she said she had called Wachovia yesterday to see if they really wanted to go through with the hearing but they never called her back. We were glad it got noticed because otherwise we would have both shown up at the courthouse on Monday!

Wachovia had filed on the 59th day, so now that this has gone away my discharge is finally in sight!!!

Thanks again to you all!

[FreshLikeADaisy]

Oh, that is AWESOME news!!!! Congratulations and good luck!!!