Selling Home After 2 Years Discharged..Need some input please

[Ann]

Hi Everyone,

I really need some help with this so anyone who can give me their input I will greatly appreciate it. I will be discharged 2 years in a few months from a chapter 7. My situation is this.. Never reaffirmed both mortgages and only been paying on the first. Quit paying second right after 341. Tried to settle with PNC Bank and they would not settle with my 10% offer. Now I see homes in our area are actually selling better than I thought. If I have equity in my home to pay off the first could I short sell with the second and still have something for a down payment on the next house? Not trying to upgrade either. Just need to move closer to work and would like to down size. I hope I make sense with my question. Really do not want to walk away. Please can anyone tell me if this could be done? Thanks

[HHM]

Sorry, No

The second mortgage still has a valid lien that must be satisfied and released in order to the sell the house. Meaning, it MUST be paid.

If I understand your question, you are asking the following question.

"You owe $150,000 on the fist mortgage, and $50,000 on the second mortgage. You can sell the house for $175,000. So, you are wondering, can I keep the $25,000 above the amount needed to pay the first mortgage?". Answer: ABSOLUTELY NOT. That is a short sale and the second mortgage will have to agree to accept the $25,000. And here is the rub, they don't have to (granted, they probably will), but you are going to walk away with NOTHING....sorry.

To sell the house, the second mortgage will have to consent to the deal. which means you will either need to pay them in full, or reach some sort of negotiated amount the second mortgage is willing to accept to release its lien. In either case it means you walk away with zilch.

[Ann]

HHM, No not quite like that. I wasn't sure if it was possible to pay the first off completely and have the second agree to accept less than what is owed but allowing us to keep a small portion of the proceeds. I wouldn't expect the second to agree to allow us to keep all or even a very big portion of what was left. They would get a whole lot more this way than what they are getting now but I know it doesn't work that way in reality. Just very frustrating to have to worry about them knowing they are the only reason keeping us from really moving forward. Thank you for replying!