Discharged second mortgage question

[toughtimes08]

Hi all,

I wanted to find out if anyone out there is familiar with this situation:

Our first and second mortgage was discharged in a bk7 late last year. We modified our first and still live in our house. Our second mortgage holder held a mortgage insurance policy and filed a default claim after the loan was discharged. The mortgage insurance company paid the claim and our second mortgage was paid in full, and I have received the cancelled and satisfied security deed from our second mortgage.
The mortgage insurance company contacted me to arrange payment, stating that they are the new mortgage servicer. They have told me that the "promissory note" transferred to them when they paid the insurance claim, and that I understand. However, I am begining to think that no security interest actually transfers to them. As I mentioned the original security deed has been returned to me as cancelled and staisfied, and after fourth months now no additional security lien has been filed at the courthouse showing the mortgage insurance company has a security interest in my home.
If the mortgage insurance company has no lien interest then they should not be able to collect because the loan was discharged in the bk7. Has anyone else dealt with this situation?? What are your thoughts?

[jadams]

Interesting. Just to clarify -- no reaffirmation?

Off the cuff, I would think that you discharged your obligation in the CH 7. All that remained was the lenders lien against the property. If they chose to release that, cool.

I would question the mortgage insurers ability to have a lien on the property post-CH 7, but I could understand it. Maybe the lender assigned their prepetition lien to the insurer, or something like that. Placing a new lien post discharge for a pre petition debt would smell fishy.

But asking for payment? I would be rather sure you have no debt or obligation with them. They could probably pursue a foreclosure (though likely not beneficial for them), but you made it sound like they're asking you to pay in the loan.

Any chance a lawyer helped you with your BK? There's a possible discharge violation here (in my opinion, based on what you've said). Sometimes they will pursue it on contingency.

[walkthaplank]

They cannot attempt to collect this debt. I would fax them a copy of your discharge and inform them that they are in violation of a federal court order for them to continue to attempt to collect this debt.

Now, if it ends up that they DO hold a lien on the property, it is time to negotiate for them to release their lien. If not, time to tell them to pound sand and if they continue in their violation of a federal court order of discharge, you will be more than happy to bring them before a US Bankruptcy Court judge so that they can explain why it is they shouldn't be sanctioned and pay your legal fee's as well as penalties.

[catleg]

I'm in agreement with the others. Your personal liability was extinguished by BK, and if you got a lien release from the original lender then they shouldn't have a leg to stand on.

I think maybe somebody goofed here, but it's to your benefit. Enjoy.

[toughtimes08]

Jadams:

You are correct, there was no reaffirmation, the second mortgage was discharged. The pre petition lien for my second mortgage was returned to me as cancelled and satisfied after the mortgage insurance company paid the mortgage off after the claim was filed. That was about 4 months ago and I have seen nothing else filed at the courthouse showing that the insurance company has any lien interest.

Thanks all for the feedback. Last week I sent the mortgage insurance company a letter, with a copy of the discharge order, letting them know that the loan was discharged and to please produce legal proof that they hold lien interest in my home. Furthermore, I let them know if they did not have any lien interest in my home they need to cease all collection activity because they are in violation of the discharge order. I will get my bk lawyer involved if they try to fight this with anything that does not sound remotely legal and valid. I will let you know how they respond for the benefit of anyone else who runs accross this situation.