Keeping a home after 7 - 2nd mort filing for relief of stay

[shredded]

This seems to be a ton of informed posters here so I hope you can shed some light on our situation for me.

We filed for Chapter 7 relief (basically due to medical bills and unsecured debt). We had our 341 meeting on the 21st (last Wed) and no creditors showed. Today we received a motion for relief from stay from a local lawyer on our second mortgage holder's behalf.

I understand we need to file an answer (and we're waiting to hear back from our lawyer) but honestly, I'm freaked out. We want to keep the home - I spent 8 months going through a 1st mortgage loan modification and don't want to give up now. We owe $206,000 on our first and $49,000 on our second. We were physically appraised at $190k and Zillow (which the lawyers used) says $225k. So, we have no equity any way you slice it.

Do we have grounds to object? Is there any way we can keep the house?
Basically, what does this mean. Will a 2nd buy out a first if there is no equity? They won't realize any proceeds so it seems silly to do so. We have never been in foreclosure so I don't know what that clause about being the successful bidder means. Will the second foreclose and evict us?

Please enlighten me!
Thanks

[albacore44]

Wow.......have not heard of this before. i'm in the same situation, stopped paying the 2nd after the 341. May I ask what Bank your 2nd is with ?? is it a private money lender ??

[shredded]

Wow.......have not heard of this before. i'm in the same situation, stopped paying the 2nd after the 341. May I ask what Bank your 2nd is with ?? is it a private money lender ??

It is a local credit union but the servicer says Dovenmuehle Mortgage, Illinois.

[albacore44]

It is a local credit union but the servicer says Dovenmuehle Mortgage, Illinois.

Ok that explains it. It's a credit union. Credit unions seem to always ask for relief from stay. I doubt they will foreclose though if your upside down. They probably want the stay lifted so they can bug you for payment.

[Mensa1]

Your option here might be to convert to a Ch 13. In doing so the 2nd mtg can be stripped, as long as the appraisal can be verified to be less than what is owed in total on the 1st mtg; (that shouldn't be hard to establish based on the numbers you mentioned). If you went that route then the 2nd mtg would treated as any other unsecured debt and be paid at whatever rate the cc's get. Of course in order to do so you will need to make ch 13 plan pymts over 5 yrs, so you will have to decided which is more important here, keeping the house or taking that chance of losing the house but having debts discharged.

Apparently you need to evaluate the issues here with your Atty and decide which is the best avenue for you and your family.

[shredded]

Ok that explains it. It's a credit union. Credit unions seem to always ask for relief from stay. I doubt they will foreclose though if your upside down. They probably want the stay lifted so they can bug you for payment.

Once I calmed down a bit, I wondered if it was a routine thing. We were told the judge wouldn't approve a reaffirmation on the first mortgage because we were under water. Seems odd the second would want the property if they weren't going to realize any profit. We would gladly enter into a modification agreement with them if they participated in the 2MP program but they don't. Maybe we can do our own mod? Thanks for helping, I appreciate it.

[shredded]

Your option here might be to convert to a Ch 13. In doing so the 2nd mtg can be stripped, as long as the appraisal can be verified to be less than what is owed in total on the 1st mtg; (that shouldn't be hard to establish based on the numbers you mentioned). If you went that route then the 2nd mtg would treated as any other unsecured debt and be paid at whatever rate the cc's get. Of course in order to do so you will need to make ch 13 plan pymts over 5 yrs, so you will have to decided which is more important here, keeping the house or taking that chance of losing the house but having debts discharged.

Apparently you need to evaluate the issues here with your Atty and decide which is the best avenue for you and your family.

We paid $400 for the appraisal because we were going to do a chapter 13 and strip the second. We went to see the lawyer with the intention of doing so but he talked us out of it because we had large tax refunds. He said they would take those and apply them to the debt anyway. In 5 years we would have paid back $30k just from refunds on the $50k we owe. Now I wonder if that was the right move.