Can 3rd mortgage lender foreclose the house?

[akim1972]

I have 3 loans on my house. It's long story how I got here.

My BK attorney advised me to include all 3 loans in BK Ch7 and I am planning to do so. 1st and 2nd are with the Countrywide and 3rd is with Bank of America.

I am not going to reaffirm but planning to pay 1st and 2nd to stay in current house since 1st and 2nd payment is about same as the rent rate in my neighborhood.

My attorney told me that even if I don't make the payment for 3rd, most likely Bank of America will have very difficult time foreclosing the house since current value of the house is more than 1st but less than 2nd.

I am going to try to stay in house as long as I can until my credit gets improved little bit after discharge and walk away from the house and buy a new home.

I would really appreciate any feedback on my plan.

[OregonMom]

I was in the same situation you are in, we had 3 loans on a house we couldn't afford and didn't like and that needed major repairs so we let it go. We were given the option of doing a 13 and the lawyer said if the value of the house was equal to or less than what the first mortgage was we could discharge the 2nd and equity loan and keep the house with only the first mortgage.
My husband and I just decided to let it all go since we were only going to do this once. We had lost $70,000 in value of the home in two years, it went from $200,000 down to $137,000. We felt better starting completely fresh and getting out of the house that caused our doom. If we didn't buy it we wouldn't have had to file.

[AngelinaCatHub]

To answer the question, yes, the third mortgage can repossess the house but has to pay off the second and the first to do so. I doubt that would happen. 'Hub

[fltoo]

Sounds like a good plan except be prepared to wait a good amount of years before you can buy a house again.

Here is an alternative. Instead of saving money for a down payment post BK for a house, save the money to negotiate a settlement with BOA to eliminate the 3rd lien. They will take a settlement, sometimes as low as 25% of the loan and remove the lien from your house.

[AngelinaCatHub]

Sounds like a good plan except be prepared to wait a good amount of years before you can buy a house again.

Here is an alternative. Instead of saving money for a down payment post BK for a house, save the money to negotiate a settlement with BOA to eliminate the 3rd lien. They will take a settlement, sometimes as low as 25% of the loan and remove the lien from your house.

Great idea, FL. I would love to have info back if this works. Also, weigh what the house costs, against local rent. Also, contract for Deed on another low price forclosed house. Just thoughts. 'Hub

[OregonMom]

I had some friends who were also going through bk and hadn't made a house payment in 7 months, even had a foreclosure date, when there mortgage holder offered to drop their interest to 4.85%, delete their second mortgage if they paid $3,000 to them and made sure their house payment was something they could afford just so they could stay in the home.

[akim1972]

Sounds like a good plan except be prepared to wait a good amount of years before you can buy a house again.

Here is an alternative. Instead of saving money for a down payment post BK for a house, save the money to negotiate a settlement with BOA to eliminate the 3rd lien. They will take a settlement, sometimes as low as 25% of the loan and remove the lien from your house.

My 3rd is $176,000 so I do not plan to settle. I rather walk away from the house when I need to. Thank you for the tip though.

[NoMoreRed]

I would think that BoA will give you some options since they own Countrywide and are currently transitioning everything to BoA. Otherwise they stand to lose quite a bit since they essentially own the 1st, 2nd and 3rd.

[hamletsdead]

My 3rd is $176,000 so I do not plan to settle. I rather walk away from the house when I need to. Thank you for the tip though.

I'm in a similar situation. My 3rd is completely unsecured ($230,000 out in the wind) and being very uncommunicative with me. I'm current on the 1st (loan mod) and 2nd, but haven't paid the 3rd at all since December. They clearly aren't going to foreclose, since they'd lose even more money (have to pay 1st, 2nd and foreclosure fees), so I'm either going to file a follow-on Chapter 13 and strip their lien or try to settle with them directly -- but there's no way I'd pay 25%, I'm thinking 5%-10% at most, since that's the most they would get if I go strip their lien and treat the $230,000 as unsecured debt. I find it hard to believe that BOA wouldn't settle for far less than 25% if they have no hopes of going after you personally and are looking at you walking away and having the house go into a foreclosure sale where they will recoup absolutely nothing.

[chad9162]

You know hearing that you all have high 2nd and 3rd mortgages is cool. My 2nd is only 50,000....not so bad