2nd mortage on home

[psx402]

I have my 1st meeting with a lawyer today to talk about going into chapter 7. I am currently up to date on one mortgage with BAC, however I am behind 2 payments on 2nd. I did an 80/20 loan on the home in 2006. My question is the 20% is unsecured, If I filed chapter 7 would I loose my home? I want to reaffirm my BAC loan. I am about 20 grand below the state median based on the means test.

[newbie2]

Don't reaffirm either mortgage. The 2nd would be considered "unsecured" if the value of your home was less than the balance of the first mortgage. You could strip the lien from the 2nd in a Chapter 13 plan, but with your income I wouldn't even consider it. Please do a search here for others who have been in the same situation and how they worked things out. (Many filed for Chapter 7, had their mortgaged discharged, and got rid of the lien for the 2nd by settling with the lienholder post discharge.)

Please please PLEASE don't reaffirm either mortgage.

Read this thread about reaffirming mortgages: http://www.bkforum.com/showthread.ph...-very-bad-idea.

[tobee43]

Don't reaffirm either mortgage. The 2nd would be considered "unsecured" if the value of your home was less than the balance of the first mortgage. You could strip the lien from the 2nd in a Chapter 13 plan, but with your income I wouldn't even consider it. Please do a search here for others who have been in the same situation and how they worked things out. (Many filed for Chapter 7, had their mortgaged discharged, and got rid of the lien for the 2nd by settling with the lienholder post discharge.)

Please please PLEASE don't reaffirm either mortgage.

Read this thread about reaffirming mortgages: http://www.bkforum.com/showthread.ph...-very-bad-idea.

i totally agree with newbie...and also it may be a good idea for your to do a quick comp search in your area this morning prior to going to the atty so you have a good idea of what the houses are selling for...

actual comp sites like Realtor.com or zillow.com will have some comps so you can get an idea of where your house stands in as much as how much equity it may have. your 2nd...may just be SOL....one hopes!

let us know how you make out!

[psx402]

If i am current would i have to bring the house into the chapter 7? in summary could i keep the home and still file chapter 7?

[iv65536]

You would have to include the house and the mortgages in your BK - you are required to list ALL assets and ALL debts. In most cases, you can keep your home after a 7, but it depends on your circumstances.

[tcreegan]

Hi psx42,

You put everything in BK and if you want to keep the house you stay current on the 1st......the 2nd maybe/maybe not...depends the equity in the 1st

BUT...reaffirming only makes sense if you have a good chunk of equity or have really great terms, say less than 5% interest, fixed

BUT....if you have a good chunk of equity, the 2nd will want to get paid. (The unsecured goes away in the BK, but not the secured)

With no equity in the 1st, the 2nd becomes essentially worthless and you settle for pennies on the dollar.

....another option to consider is stop paying both mortgages and put the money in the bank for a downpayment on a home selling low b/c of the market. Foreclosures in some places have been taking 2 yrs or more, multiply your payment by 18, 24, possibly 32, and see how much $$ you are talking about.

....if you still want to shoot yourself in the foot and reaffirm, remember that the lender has restrictions on contacting you during the BK so you have to contact them. They may cut off online access, stop sending statements, have payments go to another dept. You need to contact them and figure out how to pay during the BK

Good luck w/ your filing,

Tom in Colo

ps: be sure to shop around for attorneys, many, many posts on the forum from folks who regret not looking for an attorney who was a good fit for them.

[psx402]

Well Meeting went well, after the butterflies in my stomach settled down. The attorney told me that I would be crazy to reaffirm any mortgage in the state of Michigan unless you have equity in the home. So with that said I have decided that reaffirming 2 mortgages is NOT in my best interest and will not do so. However I still have some question that I didn’t think of asking the attorney. Maybe some on here can answer them, so here I go.

1) Let’s say I don't reaffirm and stay current on my home, will I receive the tax benefits of writing off interest on my AGI at the end of the year?

2) What happens to escrow account, will the mortgage company still make payments for the taxes?

3) Since the house after discharge is no long my legal obligation, say I walk away after two years once I have found a home to purchase. Will there be a black mark on my credit report for foreclosure if I walk after two years?

4) Will I still receive monthly statements from the mortgage holder?


Thank a ton to all. This has been a humbling experience for me.

[newbie2]

Yes, you will still be able to write off the taxes you pay. Yes, the mortgage company will stay pay your taxes and insurance out of your escrow account.

Yes, you can walk away at any time without having the obligation to pay. (You will be released from the note in bankruptcy, the lien remains) You will have a foreclosure noted on your credit report, but your credit report should note that the note was included in bankruptcy with a zero balance to you.

The lender can stop sending monthly payment notices, in fact most do unless you call them (after your discharge) and ask them to resume them.

Kudos to you for not reaffirming!

[psx402]

will there be an impact on my credit score if i walk away in 2 years?

[tobee43]

will there be an impact on my credit score if i walk away in 2 years?

well i do know that the state our house is in it goes this way:

if you file a chapter 7 and stay in your house and keep it....whether you reaffirmed or not...you didn't list the mortgage since you were staying.....or you did, but stayed....in that state, the bank can and will then foreclose and you will be charged fees (this state is one of the only ones that has NO foreclosure fee limits) from 50k-100k alone in fees.........THEN....when and if it sells at the sheriff's sale....in the state we were from YOU are responsible for the different...i.e. the mortgage owned the bank is 250k....house sells for 150k...you owe the bank and are responsible for the difference.

it would go on your credit report as a foreclosure and then most likely the bank will sue you for the fees and the deficiency on the sale. but that's JUST the state i came from. some have "caps" on foreclosure fees etc.

this is why we opted out and surrendered the house....KEEP it...i'm not going thru all that!

so i would say a YES...it will effect your credit score in the negative. BIG negative.

[Freddy03]

well i do know that the state our house is in it goes this way:

if you file a chapter 7 and stay in your house and keep it....whether you reaffirmed or not...you didn't list the mortgage since you were staying.....or you did, but stayed....in that state, the bank can and will then foreclose and you will be charged fees (this state is one of the only ones that has NO foreclosure fee limits) from 50k-100k alone in fees.........THEN....when and if it sells at the sheriff's sale....in the state we were from YOU are responsible for the different...i.e. the mortgage owned the bank is 250k....house sells for 150k...you owe the bank and are responsible for the difference.

it would go on your credit report as a foreclosure and then most likely the bank will sue you for the fees and the deficiency on the sale. but that's JUST the state i came from. some have "caps" on foreclosure fees etc.

this is why we opted out and surrendered the house....KEEP it...i'm not going thru all that!

so i would say a YES...it will effect your credit score in the negative. BIG negative.

I'm confused - the OP said they were not going to reaffirm the house just stay for 2 years. If they did not re-affirm how can the bank sue for the difference?

[newbie2]

I'm confused - the OP said they were not going to reaffirm the house just stay for 2 years. If they did not re-affirm how can the bank sue for the difference?

The bank can't sue for the difference. The OP is not going to reaffirm their mortgages, and will "pay and stay" as long as they can. If they leave they can walk away without owing the mortgage lenders one dime.

[psx402]

if you walk away after 2 years of a discharge on your home is there hit on your credit report?

[Freddy03]

if you walk away after 2 years of a discharge on your home is there hit on your credit report?

From my understanding - if you walk away after 2 years you still have to go thru the foreclosure process. You won't be able to buy a house right away but you won't be responsible for the difference.

[Freefinder]

I already had my discharged on CH 7 bankruptcy. I want to get my name off the deed and the bank hasn't even started foreclosure yet. I am trying to do a short sale. Does the 2nd mortgage still have rights to this property in such that I would have to contact them and try to negotiate(send the ss package) with them, or because the debt was discharge, does this only go the the first mortgage, with the second being charged off?