Stripping 2nd Mortgage in Chapter 7?

[spidge]

My investor isn't fannie/freddie (someone in the UK/Libor world). I'm calling my bank's bk dept today for their opinion; hopefully I'll get someone who has a clue.

I'd gladly pay 10% and take a 1099 to get rid of my 39k 2nd. ( I took the 2nd to buy other real estate that tanked..no more real estate and so the 2nd is tough to pay.)

I'm in the same situation and wonder what the 1st lender would or could do for me.

I would also rather pay the taxes and remove the lien to.

[chad9162]

So like Overmylimit, does paying every third payment really keep you in pre-foreclosure?

@lizebe....I'm also think about not paying my 2nd because its gonna take years for me to break even....about $120,000+ underwater. Could you PM me the lawyer you used?I'm in Sac. Thanks

[Overmylimit]

Yes I am always on the brink with the 2nd, my 1st is current.

[chad9162]

Overmylimit...."on the brink"...??? If you're upside down, do you think the 2nd would foreclose. I heard if they do foreclose they have to pay the 1st and in the end will get nothing (might even lose money). I guess I'm like lizebe....why pay the 2nd at all....

Are you hoping they'll eventually negotiate? Thanks

[laurannm]

I think the big unknown here is down the road when the house re-gains some equity. Even though you no longer owe the debt (assuming no reaffirm), the lien and thus the lender's right to foreclose never goes away. So in theory, lets say 5 years from now you have equity in your house. The 2nd lender COULD foreclose at that point, since the lien never disappeared as part of the Ch 7.

So overmylimit, are they hitting with you late fees every month?

[chad9162]

True...they could foreclose assuming the market does rebound in 5 years....(wishful thinking). Haha.....

So paying every third payment prevents foreclosure???

[Overmylimit]

Overmylimit...."on the brink"...??? If you're upside down, do you think the 2nd would foreclose. I heard if they do foreclose they have to pay the 1st and in the end will get nothing (might even lose money). I guess I'm like lizebe....why pay the 2nd at all....

Are you hoping they'll eventually negotiate? Thanks

Funny you should bring this up today, I owe them 177k I have been 2 months and 20 days behind for months. Just before I get to the 90 day mark (foreclosure) I make the farthest payment back that I owe.

So heres the kicker; they call me today and we go back and forth about whats gonna happen, it was a long coversation but here is the nutshell still kinda long;

They said I asked for help with a loan mod, I said yes 4 months ago (I had turned in all the paperwork and they told me I didn't qualify since I showed I was negative at the end of each month duh!) he said he didn't see all the paperwork that I turned in and said that there wasn't any paperwork in the system to back up my claim, I offered to resend it all with the old dates from 4 months ago. He said he would look at my options for a mod.

They want to roll the loan into a fixed (it was interest only at 4.5 percent) at the same interest rate but the payment would be 900 to 1000 per month, I said no way. He told me that in the computer I had been threatening to file BK for months and asked if I had yet, I said no that the Lawyer was paid in full and it was his call as to when we would file.

He tells me that it's my finances and the decision was up to me when to file...I relpied that my Lawyer knows what the best timeframe is for me to file to benefit me the most since that is what he is being paid for.....he didn't have a rebuttal for that. He asked what chp I was filing and I said I wasn't sure.

I told him if I were to file a 13 they probably wouldn't get a dime due to lean strip, he acted (or maybe not) that he didn't know what a lien strip was..

Here is the kicker...I said and better yet if you guys tried to foreclose on me you wouldn't get a dime....he said they would put a lean on the 1st or buy it out to foreclose....I laughed at him and said "you mean you would spend 630k on top of the 177k to get a house that is worth 350k?!" he said they can and would, I said no way you would..he kept saying the same thing over and over...thay can and they would so finally I said prove it!! I want to see you buy out GMAC for 630k. I said I would even call GMAC for him and tell them they were going to be bought out lol

He didn't say much after that except he was still working on the paperwork ?! I thought he would have hung up...he then says I am writing off 90k of the debt and the loan balance is 87k and the payment is 509.00 per month. I said I would need to see the paperwork 1st so they are mailing it to me now, I asked if they were going to 1099 me and he said yes, I didn't agree to anything but its a start that these banks are starting to cave somewhat.

[jessegirl]

I think the big unknown here is down the road when the house re-gains some equity. Even though you no longer owe the debt (assuming no reaffirm), the lien and thus the lender's right to foreclose never goes away. So in theory, lets say 5 years from now you have equity in your house. The 2nd lender COULD foreclose at that point, since the lien never disappeared as part of the Ch 7.

So overmylimit, are they hitting with you late fees every month?

Why don't you have the lien stripped off? Once the 2nd mortgage is discharge you no longer have an obligation to pay the 2nd. ever..... you will just have a lien. Then why not strip the lien.

[StartingOver08]

Wow! You got a principal reduction on a primary residence! You are good

Let us know if the paperwork he sends you matches what he said on the phone. That would be interesting if the banks actually started to cooperate.

[Overmylimit]

Why don't you have the lien stripped off? Once the 2nd mortgage is discharge you no longer have an obligation to pay the 2nd. ever..... you will just have a lien. Then why not strip the lien.

I think this was a question for me...I still might I havent filed yet so I can't strip the loan yet. Also I am way over on my unsecured so a chp 13 might not happen.

[BKINAZ]

After reading the four pages... a couple questions.

HHM "What we are seeing is the 2nd mortgages being sold to junk debt buyers who can wait it out. However, if you file BK, the debt is basically dead, they can't actually collect it from you, they only have a foreclosure right and their lien right (which could really screw up any future sale of your house).

Yeah that's not right. Unless you want to explain it better? I hope I am wrong but...

-In Chapter 7- That 2nd stays with you and you cannot get rid of it.
-In Chapter 13- It goes "away" in that they can't come after you.

Where am I wrong...please tell me I am wrong on Chapter 7.

Overmylimit ""I have been 2 months and 20 days behind".....does that mean you pay every 3rd payment which resets the clock?"

In your shell game...I'd let it go 5 months 20 days if you are under water with your first. The2nd won't file on you. I haven't paid since December and they are still talking to me. BTW it's Compass bank and they are very difficult to deal with. The lack of common sense on their part bugs the heck out of me.

[chad9162]

Overmylimit...that's great news....can you clarify what you mean by "I have been 2 months and 20 days behind".....does that mean you pay every 3rd payment which resets the clock?

I have Navy Federal for my 2nd and heard they suck at loan mod. I plan on Chap7 and will not reaffirm the 2nd and will probably stop paying...They would have to spend $314,000 to get $46,000. I'm hoping they negotiate since I won't owe them anything. If they foreclose in 10 years when I have equity (over $120,000 under water) then I'll move. I'm not that attached to my house. I'm just curious why you're paying every third payment, knowing they're not going to foreclose on you anyways....

Thanks for the insight

[Overmylimit]

I know I have been gambling here but when I got the statement for the 3rd payment that will be due in a few weeks I pay the oldest bill I have. So yes I pay the oldest bill just before the 3rd payment comes due. But I always make sure to pay the oldest 1st.

[Overmylimit]

After reading the four pages... a couple questions.

HHM "What we are seeing is the 2nd mortgages being sold to junk debt buyers who can wait it out. However, if you file BK, the debt is basically dead, they can't actually collect it from you, they only have a foreclosure right and their lien right (which could really screw up any future sale of your house).

Yeah that's not right. Unless you want to explain it better? I hope I am wrong but...

-In Chapter 7- That 2nd stays with you and you cannot get rid of it.
-In Chapter 13- It goes "away" in that they can't come after you.

Where am I wrong...please tell me I am wrong on Chapter 7.

Overmylimit ""I have been 2 months and 20 days behind".....does that mean you pay every 3rd payment which resets the clock?"

In your shell game...I'd let it go 5 months 20 days if you are under water with your first. They won't file on you. I haven't paid since December and they are still talking to me.

No you are right in a chp 7 it remains but it can be negotiated if they are willing.

[laurannm]

So are you getting nailed with late fees every month?