Questions about 2nd Mortgage after 7

[tiger4life]

Ok I am sure this has been asked but I don't know if they had same scenario:

Filed Chapter 7 in May 2010 and discharged in August of '10
1st mortgage BoA and did not reaffirm / Balance $200,000 I am current , 2nd mortgage with ** and did not reaffirm / Balance $120,000 I am current and my wife is on the second but was not in the BK
Home now would sell for $350,000 mater of fact we had a buyer but could not get financing due to late payments on 2nd mortgage so we have decided to try to work on the mortgages. Today I have a great job and with paying $2,500 in mortgage payments it is just something that I can not do anymore and mainly don't want too, we are house poor since my business closed in '10.
I did talk to the 2nd mortgage company twice and they did bring up that I could offer a settlement amount and was sort of shocked the third time I told them I would settle for 2% but they quickly said that would not fly (not shocked). I do have a family member that has already agreed to help me if we could settle.
Should I get a lawyer or someone to help me, this whole thing is a little scary to me and what is the chances they would actually settle on an amount. I talked to my original BK attorney and she was no help at all, I could never talk to her and her assistant would just tell me she does not do that.

A few questions:
If all mortgages are kept current would either foreclose if equity goes higher or is that even possible? This worries me the most!
Is it possible now to modify the 1st and 2nd after BK if no settlement on 2nd?
If Mod is possible which one first?
What would I look for when searching for an attorney?


Thanks in advance for any help on this.

[btbeme]

A few questions:
If all mortgages are kept current would either foreclose if equity goes higher or is that even possible? This worries me the most!
Is it possible now to modify the 1st and 2nd after BK if no settlement on 2nd?
If Mod is possible which one first?
What would I look for when searching for an attorney?

Thanks in advance for any help on this.

Answer to question #1: Any mortgage that is late can file for foreclosure if they feel that is in their best interest. They must follow your state's laws (which vary widely from state to state), but if you are now "positive equity" I would be concerned about being late on any mortgage. So if you are not current and wish to keep the house, I recommend you get current. If you are current, it is almost impossible for a mortgage company to foreclose.

#2: Highly unlikely. Unless they are both with the same bank this is all but impossible. Strike that - it IS impossible.

#3. Nobody will mod a 1st if the 2nd is hanging out there. No one will mod a 2nd, period. There may be anecdotal exceptions to this, but I'd bank on positive proof of Bigfoot before I'd bank on this. Your 2nd must pretty much be gone and your 1st underwater before you can hope for a mod, at least under the current market.

#4. A fool. Sorry to say, but if you are positive equity on the house (as you say) then you are in the crosshairs for a foreclosure unless you stay current.


Your ONLY chance would follow this path: Settle with 2nd - pay off 2nd settlement in full - appraise house for less than amount owed on 1st - show qualified reason that you deserve a loan mod on the 1st - get a loan mod on the 1st.

P. S. Go Tigers!

[tiger4life]

Answer to question #1: Any mortgage that is late can file for foreclosure if they feel that is in their best interest. They must follow your state's laws (which vary widely from state to state), but if you are now "positive equity" I would be concerned about being late on any mortgage. So if you are not current and wish to keep the house, I recommend you get current. If you are current, it is almost impossible for a mortgage company to foreclose.

#2: Highly unlikely. Unless they are both with the same bank this is all but impossible. Strike that - it IS impossible.

#3. Nobody will mod a 1st if the 2nd is hanging out there. No one will mod a 2nd, period. There may be anecdotal exceptions to this, but I'd bank on positive proof of Bigfoot before I'd bank on this. Your 2nd must pretty much be gone and your 1st underwater before you can hope for a mod, at least under the current market.

#4. A fool. Sorry to say, but if you are positive equity on the house (as you say) then you are in the crosshairs for a foreclosure unless you stay current.


Your ONLY chance would follow this path: Settle with 2nd - pay off 2nd settlement in full - appraise house for less than amount owed on 1st - show qualified reason that you deserve a loan mod on the 1st - get a loan mod on the 1st.

P. S. Go Tigers!

Well I have been talking to the 2nd on settlement and started off low and I am now up to 25%.
I have been current on first and plan on staying but we have missed a few payments on 2nd but since have paid every payment except the ones we missed. I did get a response from one person that said they may except 50% of what equity they think is in the house which is $73,000 so the least they will except is $36,500.

[justbroke]

You can modify a first if the 2nd will subordinate itself to the modification. As bcohen eluded in a round-about way, the change of getting the 2nd to subordinate itself is of a very low probability. I was able to do this, but my servicer, for both loans, was through BofA.

Again, as bcohen wrote, if you actually have "equity" over the 1st, then the 2nd will want some of it. Also, again as bcohen wrote, if you are behind in payments be careful. You actually have equity and your asset looks juicy to even the 2nd at this point!

[brokehmowner]

You can modify a first if the 2nd will subordinate itself to the modification. As bcohen eluded in a round-about way, the change of getting the 2nd to subordinate itself is of a very low probability. I was able to do this, but my servicer, for both loans, was through BofA.

Again, as bcohen wrote, if you actually have "equity" over the 1st, then the 2nd will want some of it. Also, again as bcohen wrote, if you are behind in payments be careful. You actually have equity and your asset looks juicy to even the 2nd at this point!

BoFA's permanent mod papers said a subordination agreement would be required, but there was no other paperwork included regarding the sub agreement. When I asked my rep about it she wasn't familiar with the requirement and told me to go ahead and complete the papers and send them in and if it was indeed necessary, I would probably be contacted. I never heard another word about it but was really worried about my 2nd (which was about 2 years delinquent) gaining 1st lien position whenever the mod was recorded. Green Tree never even contacted me about the delinquent 2nd until a couple months ago when they offered a complete extinguishment of the 2nd. It's been done and recorded. I went to land records and printed the recorded mortgage release and that's that for my 2nd. I really think they offered extinguishment because they considered their chances of collecting after my chapter 7 discharge were slim to none.

[justbroke]

BofA's paperwork will say that, in the cover letter to the mod agreement, that it is the homeowner's responsibility to get the subordination. In my personal experience, I didn't do such a thing and BofA still accepted the mod. Your mileage may vary.

(What technically happens is that BofA actually does an in-house modification but never records the new mortgage/note because that would subordinate the first lien to all the other junior liens. That is how they "fix" the problem. I do not know if this jeopardizes their legal position as the superior lien. I didn't ask any questions.)

[brokehmowner]

BofA's paperwork will say that, in the cover letter to the mod agreement, that it is the homeowner's responsibility to get the subordination. In my personal experience, I didn't do such a thing and BofA still accepted the mod. Your mileage may vary.

(What technically happens is that BofA actually does an in-house modification but never records the new mortgage/note because that would subordinate the first lien to all the other junior liens. That is how they "fix" the problem. I do not know if this jeopardizes their legal position as the superior lien. I didn't ask any questions.)

Well, then, this is probably what happened in my case too. I'm going to look it up in land records; I only was looking for the 2nd mortgage info the first time I looked. I suspect, though, that the 2nd would never know there has been a mod and that the 1st has lost position, if the mod is never recorded.

[justbroke]

Well, then, this is probably what happened in my case too. I'm going to look it up in land records; I only was looking for the 2nd mortgage info the first time I looked. I suspect, though, that the 2nd would never know there has been a mod and that the 1st has lost position, if the mod is never recorded.

Exactly. I looked mine up many times, and they have never recorded the new "Mortgage" because it would be subordinate to a "weak" second.

[brokehmowner]

Exactly. I looked mine up many times, and they have never recorded the new "Mortgage" because it would be subordinate to a "weak" second.

Yep, mod never recorded. Wonder if this could ever get sticky?

[LadyInTheRed]

When a first mortgage is modified, it remains in position as long as it does not put the junior lien in a less favorable position. There is usually no need to record a modification because it is the note that is modified not the mortgage or deed of trust that was recorded. If the lender requires a subordination agreement from the 2nd, it is either because there is something being done that affects the 2nd's security interest, like adding to the principal balance or increasing the interest rate, or the lender is being cautious by having the 2nd basically confirm the facts so that their is no possibility the second will later claim that the nature of the modification prejudiced the 2nd. If paperwork from the lender said that a subordination agreement was required, but then modified the loan without an agreement, somebody probably looked at the modification and decided that there could be no arguement that the modification put the lender on the 2nd in an inferior position that before the modification.

[justbroke]

Exactly LITR. The subordination was required, in my case, because the "investor" required it. It was not legally required because my Mortgage was not modified; only the promissory note was modified. (At the time of my modification in 2010, the balance was increased.)

[tiger4life]

Thanks but one more question

Ok thanks for all the replies, I am still getting a vibe that the 2nd will settle but with a little nudge. I talked to a lady and they turned down my offer of $25,000 on the $118,000 but she eluded too the $73,600 of equity they think is there, I just know there is not that much equity there but I am sure they figure it different.
BoA $180,000 -+
Suntrust $118,000 -+
Total $298,000 +-
The house on the market would fetch $340,000-+
I know there is equity but after all lawyer fees and realities not much.
I would like to know if I quit paying 2nd and put back payment in an account then if foreclose was started would I have time to pay it up and stop foreclosure. My main objective is to try to make them settle if even to a higher amount. I can go to about $50,000-+