Reaffirmation second mortgage

[kuuipo1119]

My husband and I have filed Chapter 7 in WI and have already had our 341 hearing. We signed reaffirmation papers for our first and second mortgage. A letter came from our attorney stating that reaffirming our second mortgage isn't in our best interest. If we don't reaffirm this debt, don't we lose our house.

[StartingOver08]

Your attorney is right! DON'T REAFFIRM THE SECOND mortgage it is not in your best interest. If you keep making the payments there is no issue with keeping the house.

There is even a strategy of dumping the 2nd mtg after you are discharged from your Ch 7 BK, but it really only works if you are upside down on your home. How much are each of your mortgages? What is the current actual market value of your home if you were to sell it within 30 days?

[justbroke]

The strategy is this. If you're underwater and owe more on your 1st mortgage than your home is even worth... there is absolutely no reason in the world to reaffirm the 2nd. Of course, by doing this, you put yourself at risk of foreclosure, but no 2nd lienholder in their right mind -- with the exception of some hard money lenders -- would foreclose, because they'd be even more out of pocket (in order to pay off the first lien holder).

[logansdad]

what about the bank being the same for both I have a first for 137k and a 2nd for 37k
174k total
house appraised for 172k what are your thoughts?
I was going to reaffirm the 1st but not the 2nd.

[justbroke]

If it's the same bank (not servicer, but same actual bank holding the note), then it does them absolutely nothing to foreclose on the 2nd. Now, would some bank do that... you never know. The realty is, that most banks are just writing off the 2nd mortgage as a regular loss and selling the debt to other companies. My 2nd is held by my lender and they never proceeded to foreclose on the 2nd, even when I stopped paying it. They had only written it off... nothing more.

[hamburgervol]

My attorney advised me not to reaffirm my second also. He even called them while I was in his office via speaker phone and asked them their policy on us not reaffirming and what their intentions would be if we didn't sign. The said they only wanted us to continue to pay and if we didn't sign the reaffirmation "they understood".

[famlena]

my 1st & 2nd mortgages are both owned by chase. i owe on my 1st $623k & 2nd $161k. chase sent an appraiser out & appraise my house at $654k. the 2nd has foreclosed on me and there's an auction date set for dec 8th.

i also, thought that the 2nd would never foreclose but i was wrong. i just don't understand why the 2nd would do that.

[justbroke]

my 1st & 2nd mortgages are both owned by chase. i owe on my 1st $623k & 2nd $161k. chase sent an appraiser out & appraise my house at $654k. the 2nd has foreclosed on me and there's an auction date set for dec 8th.

i also, thought that the 2nd would never foreclose but i was wrong. i just don't understand why the 2nd would do that.

Because... your second mortgage is "partially" secured. They are hoping to get something out of it. Now if you came here and stated that the appraisal came back at $600K, you probably wouldn't have been foreclosed by the 2nd lienholder.

Additionally, your second mortgage may have had private mortgage insurance (PMI). This means that they would get paid the full balance of your mortgage less any amount recovered from the foreclosure.

It's always taking a chance when you are behind on your 2nd for foreclosure. You must be prepared to walk.