Waiting for discharge and not paying 2nd mortgage

[oc714]

Does anyone have any idea if this will cause any problems if I filed C7 and waiting for discharge but stopped paying 2nd? Money is really tight and we decided not to pay the 2nd this will be the 1st month.

[btbeme]

If you do not reaffirm your 1st and 2nd mortgages, AND if you are upside down on the house, then not paying the 2nd will have no short-term effect.

If you plan to stay in the house, stop paying, and did not reaffirm, you will eventually have to come to terms with the 2nd mortgage holder, as they have a secured interest in the house and have the ability to foreclose some time after they feel you have equity in the home. In most cases in California, that will be a long time from now.

If you can provide specifics on amounts owed, reaffirmation status, and whether you intend to stay, we can provide a much more concise answer.

[oc714]

If you do not reaffirm your 1st and 2nd mortgages, AND if you are upside down on the house, then not paying the 2nd will have no short-term effect.

If you plan to stay in the house, stop paying, and did not reaffirm, you will eventually have to come to terms with the 2nd mortgage holder, as they have a secured interest in the house and have the ability to foreclose some time after they feel you have equity in the home. In most cases in California, that will be a long time from now.

If you can provide specifics on amounts owed, reaffirmation status, and whether you intend to stay, we can provide a much more concise answer.

I owe 310K on the 1st and 85k on the 2nd did not reaffirm them. We intend to stay but hoping for some kind of loan mod. The 2nd mortgage is at 9.75% . According to zillow the house is now worth 305K and it keeps going lower.

[btbeme]

So, you owe $395k total. If your house is worth significantly less than that amount as your research shows, and you stop paying the second, nothing bad will happen. After a few months (5-6 missed payments) you might try to settle the 2nd for what you can...say, 10-20 cents on the dollar. If they refuse, let them sit for another few months and try again.

The only bad things that can happen are the home's value going up - lets say it goes to $350k and you are 9 months behind on the 2nd. Technically, the 2nd can foreclose, pay the 1st mortgage lender their $310k, and keep the balance for themselves. Unlikely, but it could happen.

If you do a settlement, do your research first. There are some terrific forums here and elsewhere on how to negotiate a settlement on your 2nd, and I highly recommend you have an attorney look over the settlement to make sure there are no trap doors such as tax liabilities, etc.

[Pandora]

If you do not reaffirm your 1st and 2nd mortgages, AND if you are upside down on the house, then not paying the 2nd will have no short-term effect....

That depends - is your 1st & 2nd with the same lender? If so, that may be an issue....and the lender may choose to foreclose vs. settle.

I do agree with btbeme if the lenders are different from one another

[oc714]

That depends - is your 1st & 2nd with the same lender? If so, that may be an issue....and the lender may choose to foreclose vs. settle.

I do agree with btbeme if the lenders are different from one another

No, two different lenders. We are hoping for a loan mod but would prefer a settlement down the road. Will try to save as much money while not sending the payments. If not there is no way we can keep the house with the payments are the way they are. We are left with nothing every month. Thnaks I will do my reserch and see the best solution but will not reaffirm no mortgages.

[2manybills]

OC714, read my threads regarding my 2nd mortgage settlement with Wells Fargo. Also, I'm not sure what or whether your attorney is advising you, but most attorneys are saying not to reaffirm either mortgage. Once your BK is discharged, I would wait about 6 months and start to try to negotiate your 2nd mortgage settlement. Since it is totally underwater, I would begin at 5% and see where it takes you.

[oc714]

OC714, read my threads regarding my 2nd mortgage settlement with Wells Fargo. Also, I'm not sure what or whether your attorney is advising you, but most attorneys are saying not to reaffirm either mortgage. Once your BK is discharged, I would wait about 6 months and start to try to negotiate your 2nd mortgage settlement. Since it is totally underwater, I would begin at 5% and see where it takes you.

Thank you all for your input we will definetely try to settle and hope all goes well for us.

2manybills I will read up on all your threads as I have Wells Fargo too on my 2nd.

[2manybills]

Thank you all for your input we will definetely try to settle and hope all goes well for us.

2manybills I will read up on all your threads as I have Wells Fargo too on my 2nd.

If you want, PM me and I will send you the contact phone numbers for the Liquidation Department of Wells.