Stripping 2nd Mortgage in Chapter 7?

[chad9162]

@BKINAZ..For clarification I didn't actually say

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

I was misquoted. That was meant for Overmylimit.

As for your comment....

"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."

I thought HHM was clear. The 2nd will be discharged and you will not be personally liable. The lien survives but they can only foreclose.

[chad9162]

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?

Overmylimit....I think its very similar in that.....Before BK you get a 1099 and taxed on income......after BK no 1099 and no additional tax. I would think the BK would help you more since you are no longer personally liable...can't get a judgement or garnish your wages.

In your case NO BK, the 2nd could theoretically wait....If they get nothing from the sale of the house they'd become an unsecured loan and can seek a judgement and garnishments as their "One Action".

Since your 2nd is willing to work it out sooner that's great but my bank won't and would wait and sue me....they are the largest Credit Union so I guess they can hold on to debt for a long time.....

[Overmylimit]

Thats too bad, so I guess you have tried then? BKINAZ was right about the part of you have to be behind fro them to work with you.

[spidge]

.....Before BK you get a 1099 and taxed on income......after BK no 1099 and no additional tax......

Isn't there also mortgage debt relief up to $250,000(couples) for tax purposes?

Meaning if you were sent a 1099 for mortgage debt writ-off you would not have to pay any tax because it is mortgage related.

[chad9162]

Overmylimit.....I tried a loan mod and Navy Fed is dragging their feet but I read on other post they don't really care or do anything for you. My thinking is...if I BK and no longer liable (can't garnish me) it puts me in a better position. It forces them to either wait or negotiate. If they wait, oh well. It'll be at least 5-10 years before they could foreclose...I doubt houses will rebound anytime soon. I'll just move...

The way I see it, I'll still be ahead $20,000 to $40,000 by not paying them....If I pay them there's no guarantee I will ever see a return on my payments. I don't feel bad for doing this either since THE BANKS caused the problem. They showed no restraint in lending and caused inflated prices and now the downturn....

spidge I don't know about the exemptions......

[BKINAZ]

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.

Again, like I had said...my accountant told me of her client this year settling a $400k second for $40k. So there seems to be a chance...but like you...I'd like to hear more success stories.

[albacore44]

one of the reasons these banks may be willing to deal is I believe a loan that is not fully secured (the value of the asset is less that the loan balance) falls into the catagory of a "toxic Asset". It's a requirement of the sarbaines/oxly act to disclose . So they are anxious to get these off the books so there balance sheet looks better. problem is, many of our mortgages are held by foriegn banks and are not subject to the same rules. friend of mine ran into that problem. He got behind on his Mortgage to Indybank. Well the FDIC took them over, and started helping people out doing modifications. Well he was told he coulden't be helped, as Indymac was just the servicer, and Deutch bank owned the loan, and they aren't doing mods.So he was SOL and is now going into CH 13.

HHM can probably explain all this better than I did.

[Overmylimit]

Thing is I should be happy they were willing to wipe away 90k but I just don't feel that great over it. It isn't going to change the fact that I am going Bankrupt and it doesn't change where this is all headed..I guess my glass is half empty today lol

[BKINAZ]

falls into the catagory of a "toxic Asset". It's a requirement of the sarbaines/oxly act to disclose . So they are anxious to get these off the books so there balance sheet looks better.

Interesting. So how does the relaxing of Mark to Market help them? Sounds like it aids the bank in toxic assets...which hurts us?

OVER...you know...your new mortgage wouldn't help us at all...so like you just mentioned I think we would still have to file BK and using the same percentage, we'd probably have to let the house go. Are you sure there isn't anything else you can do to get it lowered more? I have heard several people in here mention that they went to the top of the chain (had names and numbers even provided to us) when they had trouble with their mods. (btw you have mail)

Maybe you could refile again in however many months and have less "assets"? Or is it the company you are dealing with?

Bottom line though...if it helps you enough to where you can keep your house and that was a goal. It doesn't matter what anyone including myself thinks. If we could save enough to keep our house and would still have to file bk...it's a win.

[albacore44]

Interesting. So how does the relaxing of Mark to Market help them? Sounds like it aids the bank in toxic assets...which hurts us?

Yes. By relaxing Mark to Market they would not have to write down assets to what todays value is. example= your house is worth $200K but your loan balance is $400K. now it might go back up in the future as real estate is a cycle, but no guarntee's , so they have to declare what the asset is worth today, not what it was when the gave the loan. The law was passed to protect share holders so they can have a better knowledge of a companies true worth.

[lizbebe]

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?

I have always planned to stay in my home. I won't leave, unless they want to drag me out dead.

From what I know, if the loan remains marked as a charged off (which is the last news I received from Citi about Feb 09), I expect the debt to be sold or returned to the owner.

Then I will wait to hear from Fannie Mae (who owns the loan) or a debt collector. I would pay up to 10% just to wipe it off the books (~6600). Perhaps I can do it for less.

It would be a small price to pay. Then I would renegotiate the first with Chase (!). This will be harder since I reaffirmed the first in BK but not the second. I want the principal pushed down as well (~356K to 300K). Wish me luck!

My attitude is that I didn't appraise this home. I didn't hire the appraiser. If the appraisers inflated the value to match the price of the sale, then they failed at their jobs.

[albacore44]

My attitude is that I didn't appraise this home. I didn't hire the appraiser. If the appraisers inflated the value to match the price of the sale, then they failed at their jobs.

In my case the appraisers matched the price of the sales. it's just for me and many others around here, worth 50% less than what it appraised for in 2007 and still sinking. thats a lot to lose in 2 years time.

[hamletsdead]

This is really not that difficult a question . . .

Nor is the proposal overly aggressive. I am waiting for my discharge in Chapter 7, before which I modified the terms of my 1st mortgage, and cut a repayment deal with my HELOC lender (who, because of the timing of filing, is actually my 2nd mortgagor); I also have a 3rd mortgage that is completely unsecured due to the massive drop in our home's value in the last 2 years ($1.1. to current appraised value of $740,000). I stopped paying the 3rd, and have been trying to cut a deal with them since February, but they are retarded and keep shuffling me from person to person, and haven't ever gotten back to me on my loan modification proposal. I'm trying to buy them out of their $230,000 for ten cents on the dollar, but if they don't accept then I plan to file a follow-on Chapter 13 case and strip their lien entirely. There is recent case law out there that lets you file essentially a no-asset Chapter 13 case -- in which the creditors will get nothing -- in order to lien strip. Filing a Chapter 7 then a 13 is commonly called a Chapter 20, and is done in good faith when you couldn't fit into Chapter 13 because of the size of your unsecured debt; the "good faith" argument is that individual debtors should not have to file much more expensive and time consuming Chapter 11 cases.

As far as issuance of the 1099 goes, whether the bank issues it or not is immaterial, as your personal liability --- including tax liability on the deficiency -- is extinguished in the bankruptcy. If the issue arises, all you have to do is tell the IRS you filed bankruptcy on the debt, and that will take care of it. The 1099 is only issued because of "forgiveness" of debt by the bank; once you file, the debt is not forgiven, but expunged.

[Overmylimit]

So the mortgage company that holds the 2nd that was going to write off 90k of my 2nd mortgage called today and they said this perticular investor decided he didn't want to do a balance reduction on the 2nd.....

I told them well it looks like he will get nothing then, they said what do you mean we will foreclose on you if you don't pay...

I again told them; 635k on the 1st 177k on the 2nd = current value 350k

I said go for it but you know you won't...."sir we can and WILL"


So I said bring it!

[StartingOver08]

Remember, they 'loss mitigation' people are really just collections agents working for the OC. They have a script and most of them have no idea about how foreclosures work.

Its frustrating to deal with someone what does not understand that the second can not 'jump over the first' to get equity that is not there!!! LOL

Problem was you are telling them the facts and that part is not in their script!