Stripping 2nd Mortgage in Chapter 7?

[BKINAZ]

Late fees Pfft...try finance charges on $80k...it's so sad, it's funny.

[BKINAZ]

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

I think you guys addressed this...in 7 it can be negotiated? I'm not waiting that long, just for clarification.

[lizbebe]

BKINAZ,

I think, in the end, it maybe a question of negative equity (as stated by others).

If there is negative equity in the home (primary = 356K, second = 66K, current value 298K), I don't see what advantage the lenders have in pursuing foreclosure. The debt is still considered valid -- you are right. But the holder cannot pursue you *personally* for this debt. They can foreclose or they can sell the loan and that third party can then pursue you.

My second mortgage company (Citi) has this loan in charge off and that is why I am expecting a debt collecter to follow-up at some point. Alternatively, Citi maybe waiting for the federal government to buy my crappy loan. Who knows? They don't communicate. Haven't made a payment on this loan since Oct 08.

Perhaps my understand of this is wrong, but I am going on legal blogs/opinions where this issue has been discussed, along with the issues of recourse vs. non-recourse.

Anyone else have some insight on the subject of Chap 7, second mortgages and foreclosure vs. debt collectors and negative equity?

[BKINAZ]

That's the way I understand it as well. With that said I am still talking to the owners of the first...but since they have charged you off...what is your plan? Are you looking to walk away from your house or keep it?

My perfect world would be to get a modification on the first ($2,600 per month down to $1,500-$1,700 per month) and then settle with the 2nd for .10-.15 on the dollar...I don't think my second cares what I want...I may be wrong...but I doubt it.

On a side note my account told me about her recent client that had a $400k second and they settled for $40k. So there is hope on some fronts...

[albacore44]

Dont forget, if you strip the Lein, the amount of that payment would go into your plan for 5 years in addition to the amount of your disposable income. Thats what the one attorney told me. he also said your in for a hell of a fight as they will probably fight you over the appraisal. Now this guy may have been a bit cautious, but he was a BK atty and that is all he does.

Im thinking more about staying current through BK, then stopping paying on the 2nd after discharge and see what they do. my 1st is $417k and 2nd a whopping $240K at 4.5% int only for now, untill the Fed starts raising rates. i'm upside down at least $100K probably more...........who knows ??. i see neighbors homes hitting the forclosure list every day.

[chad9162]

BKINAZ I think Lizbebe is trying to the same as you.....

Overmylimit....thanks for the clarification....So it appears you are not pay every thrid payment but just carrying the loan past due under 90 days. I don't think it matters if you pay the oldest statement as long as they get a statement. Personally from what I've read, if you're under water it wouldn't matter if you paid at all. The 2nd isn't going to foreclose if they have to pay out the 1st.

[chad9162]

albaacore44...that's my plan too!

[justbroke]

he also said your in for a hell of a fight as they will probably fight you over the appraisal. Now this guy may have been a bit cautious, but he was a BK atty and that is all he does.

My lender didn't fight me at all. Not a peep. I filed pro se, had my own appraisal down, wrote my own Motion to Avoid Lien, wrote my own Order granting motion, and served it on a local attorney and the lender.

Not a word. No objection. Went through without a single question or response. The firm that represented the lender is known to be a very aggressive firm which does foreclosures and bankruptcies specifically for the lenders. This is all they do all day.

I'm also in a 0% plan, so you'd think they'd at least respond to the Motion.

Your mileage may vary.

[Overmylimit]

BKINAZ I don't think it matters if you pay the oldest statement as long as they get a statement.

Well it did matter in my situation, the 2nd which is an interest only varies each month as to the payment. One month I had sent in like 750.00 that was the current payment not the oldest. I thought they had applied it to the balance but when I called a few weeks later they said they showed 750.00 sitting in an account of theres waiting to be applied to the bill??

They take the farthest amount that was owed; so that payment was 675.00 I think, since I over paid by paying 750.00 they didn't apply it towards any payment....I know screwy to say the least

As for late fees I thinks its 25.00 if its late and they caharged me for an appraisal 100.00....I'm sure they loved seeing that when it cam back....

[relief13035]

OK - I want in on this too....hehehehe

So you suggest that I call my 2nd and try to negotiate??? Is that where I start or do I just stop paying?

[BKINAZ]

I don't think I said anything about paying the "newest" payment. My point was to pay after 5 months not after 3 like he (I assume) currently is.

OK - I want in on this too....hehehehe

So you suggest that I call my 2nd and try to negotiate??? Is that where I start or do I just stop paying?

You have NO negotiating power if you are current. You have very little if you are late (lol), but you have a lot more the later you are starting at 90 days. I am told between the 5th and 6th month is when you have the best power. Although...I am not sure that is true on a 2nd vs a credit card...I'm going to test it pretty soon.

BUT...I can tell you I just had a phone call with my Chase Credit card ($46k owed) and they have been at 85% settlement forever...(2 months ago) 60 days later (5 months total) she offered me 45% (5 minutes ago) and even though I told her I would consider it and see if I could get a loan (still too much btw I won't settle at 45%) she lowered herself down to 35%...in the same call! So I believe in that 160-180 day time line.

If you care...they told me 60 days ago their policy is they don't go below 35%, and she repeated that today. Has anyone heard that? Are they like...35% and if they don't settle they send it to a bill collector?

[albacore44]

OK - I want in on this too....hehehehe

So you suggest that I call my 2nd and try to negotiate??? Is that where I start or do I just stop paying?

Hi Relief. I assume you did a ride through on your 2nd. I think it'a a gamble to stop paying 2nd, but if your upside down, my gut feeling says the 2nd wont forclose and buy the 1st. they will sell to a JDB after 6 months and then you can try to negotiate with the JDB for a lesser amounr to release the lien. I wish there were more examples of this so we have a path to follow.

BTW- I sent you a PM

[Overmylimit]

OK - I want in on this too....hehehehe

Me Too!

I'm not saying it will work for anyone, I'm just telling it like it happened. The thing is you have to remember I haven't filed yet so it still could get stripped away or if I have to do a chp 7 I will still owe this...


BKINAZ; I could have went 5 or 6 months behind however even though I think they would never be stupid enough to foreclose I didn't want to chance it, I want to keep the house. I think where the (power) comes from is once he knew that I knew what I was talking about they realize they could lose all of it, so why not try to move me into a lower payment and reduce the balance....or do me a favor as they see it lol

[Overmylimit]

I think we are talking about two different things here, I (if I do it) got loan reduced BEFORE BK and I think some of you have already filed a 7 and are wondering what to do with the 2nd, HHM any ideas?

[relief13035]

I'm not late on either.

If there was even the slightest chance that I could get rid of that 2nd or settle on it I would pursue every avenue.