Current on 1st Mortgage, Not on 2nd

[AlmostAmos]

Hey everyone. I have a question about my mortgages & planning my CH 7. We're not filing until June/July...

If I am current on my 1st but not my 2nd at the time of filing, what are the possibilities? I was/am planning a ridethrough but can only afford my 1st mortgage. BOTH mortgages are with the same company - CitiMortgage. The house is worth 50k LESS than the first is for. So, the 2nd is worthless. Thoughts?

I'd like to stay in it & keep paying the first as the 1st is about the same as I would pay in rent...

[bcholka]

I'd be curious to get some advice on this too. Anyone??

[CCsAreEvil]

Don't know what to say. When it's the same lender, that's always a stick, extra complication. Maybe this is a lessoned learned for everyone to always get a 2nd through a different lender. :P

If I were in your shoes, I'd probably walk away. Or, if you really want to stay where you are, I'd pay both. However, that does not make a lot of sense financial-wise.

[bcholka]

Actually, my first is with Citi and my second with a local place, Associated. Additional thoughts?

[mtbc]

You may want to consider if there's some way to use chapter 13 to strip the lien or see if after the actual loan is discharged in chapter 7 you can pay them a bit of money to remove the lien from your underwater property. Otherwise, personally, if I was stuck with much on the second mortgage, I'd walk away from the negative equity -- even if the second don't yet foreclose because they wouldn't get anything from the sale anyway, in the longer term once property prices are higher and you've paid off more of your first, they could still do it years later.

[AlmostAmos]

Well, I guess I wasn't clear enough. I'm filing Ch 7 & was hoping to stay in the house (paying on the 1st) but wasn't sure what would happen if the 2nd was behind when I filed/discharged. I'm not reaffirming either & only wanted to continue paying the first as it will not cost much more than renting (and I won't have to move!). I was hoping to live there (paying the 1st) for a year or so. The second wouldn't really exist anymore as it would be discharged... ?

[mtbc]

You'd be free from them trying to collect on the debt, but probably the 2nd would still have a lien against your property. I suspect they wouldn't bother to foreclose while it was still so underwater, but there's no guarantee; still, that process can take a long time anyway, so I'd expect that your plan would probably work out.

[liboton21]

I filed in SoCal with both mortgage to BofA. I was late on the 2nd since Aug 2008 and one month late with the 1st when I file BK7 but prior to filing I was working for a loan mod thru NACA. But when I started to be late two-months late on the 1st BofA ask for an authorization letter from my lawyer then after a month I was approved for 2% on the 1st and 3.25 on the 2nd with 1st payment on May. Since property is way underwater in my district trustee is living it to the bank. I did not reaffirm instead opted for "retain and pay". Trusted did not even mentioned my mortgage during my rescheduled 341. I think it varies between district and how underwater you are. After discharge my plan is to negotiate my second mortgage with BofA.

[ItsJustMe]

We have a little bit of equity in our 2nd (so they think LOL. My house is on a really crappy street and not very comparable to the same floorplan elsewhere in the neighborhood), but they *are* pursuing foreclosure. NOD after 3 months of non payment.

[themeis]

Have related questions; can i reaffirm my 1st mortgage and not reaffirm my second (heloc) in chapter 7? 1st Mortgage is a VA mortgage...do I have to reaffirm?

[ItsJustMe]

I can only imagine that would be a BAD idea. If the 2nd did decide to pursue foreclosure, you'd be obligated to the debt on the first. If you don't reaffirm and the 2nd forecloses, you can just walk and be done.

[CCsAreEvil]

We have a little bit of equity in our 2nd (so they think LOL. My house is on a really crappy street and not very comparable to the same floorplan elsewhere in the neighborhood), but they *are* pursuing foreclosure. NOD after 3 months of non payment.

Really? I wonder if they are bluffing or do you have a legal NOD which says you must vacate is 30 days or something? How much was your 2nd?

[ItsJustMe]

Looks perfectly legal to me LOL. Says Notice of Default and Intent to Accelerate. Says to expect sale notice in 90 days, then 23 (ish?) days to vacate. It's $93,000. 1st is $298,000. Reasonable sale price will be in the low $300s. Homes are going in the high $200s on my block, but mine is larger than most.

[CCsAreEvil]

Well that sucks. The only reason I can think of is I hear the gov't is bailing out the banks. So, if they lose the money on the 2nd that you have with them, the gov't will pay them the difference. If this is true, we are all screwed.