changing from chapter13 to 7, Do to second loan wont dismiss

[BBNLB]

We tried to do a 13 and home second lender would not dismiss the second loan. our realtor price was 148, second lender realtor was 249, so we had a appraisal and it came in at 175, we offered US bank to add 25,000 to our chapter 13 loan for them they did not accept. I dont understand why they would not accept???
If we roll to a 7 and walk the first lender will sell at cheap (over there price 150) the second wont get anything more since anything over will go to ALL lenders cards, banks, cars,ect... I dont understand what the seconds thought is here, They wont get more, the appraised value is going to be close to a selling value in this market, We our in Oregon and I know everybody is in bad shape but oregon is at one of the bottom states. I dont understand the thought of the second lender???

[Chowder]

Why wouldn't any residual proceeds from the sale go to the second mortgage holder?

[wipetheslate]

It's how the game is played. There's almost no chance the second mortgage holder is going to see a penny either way, so why should they waste their employee's time drafting up a bunch of paperwork?

Someone with more knowledge might chime in here--but just because you're going Chapter 7 doesn't mean you have to walk away from your house. You can potentially have the second mortgage stripped if you owe more than your house is worth.

[debee]

I think the Supreme Court ruled that you can't strip a second mortgage in a Chapter 7.

...just because you're going Chapter 7 doesn't mean you have to walk away from your house. You can potentially have the second mortgage stripped if you owe more than your house is worth.

[Chowder]

No, the second only gets stripped in a 13.

The OP indicates any residual would go to "ALL lenders cards, banks, cars,ect.." before a second mortgage holder would receive any proceeds.
I do not believe that is correct. I was interested in why they thought that would be the case.

[debee]

The OP indicates any residual would go to "ALL lenders cards, banks, cars,ect.." before a second mortgage holder would receive any proceeds.
I do not believe that is correct.

I agree. Proceeds from the sale of the house would go to the lien-holders (first mortgage first, second mortgage second and so on), not to any unsecured creditors (unless there are leftovers after vultures 1&2 get their fill) or creditors whose interests are secured by other property.

[tcreegan]

Hi BBNLB,

My brother Eds law probably applies: Never attribute to malice things adequately explained by incompetetence

why they would not accept??? the second wont get anything I ran into this same type of problem with GMAC mortgage, found out later (too late) that they had set formulas they used to make all decisions. The person(s) we talked/wrote to didn't have the authority to actually change terms of the loan or have any leeway in making decisions. And they didn't let you get to anyone in authority, no phone #, no address, no name, nothing. They were so effective I gave up and let them have the house, they will probably lose 40% on the deal. At one point I was trying to find out who the investors were that held the note (GMAC is just a servicer) so I could take my case to them, and blocked at every step by GMAC.....one manager actually told me that the investors wouldn't care about taking a 40% loss b/c they expected losses when investing in real estate.

However, now I am REALLY glad I didn't get what I wanted, have a MUCH better deal w/ some very friendly local folks.

Everything works out I guess,

Tom in Colo