Please help

[subking]

Hi all I need an answer please.

I'm post chapter 7 in Michigan, my wife and I didn't reaffirm our 1st or 2nd mortgage but have continued to pay both but over the past few months we've been unable to keep up on the second were always a month or more behind. Heres my question and please please post the best knowledge you have.
1st - owe about $130,000 payment $800 BOA
2nd - owe about $40,000 payment $450 Green Tree

We want to keep our house but cannot afford to pay the 2nd anymore. If we do not pay the second mortgage but stay current with the first can the second kick us out of our home or force the 1st to foreclose?? Or does the second only have a lein on my property until I sell or die.

[ryan]

Subking, a lot of second mortgage holders are negotiating better terms with borrowers.
Sometimes, no interest payments can be worked out, or a longer payback period, or a principal reduction for instance.

Is there any equity in the property, since you're in Michigan?...if not, the 2nd is unlikely to FC. They would not gain anything.

[subking]

Well the only way the first or second will discuss any reduction or change of terms they (the bank) would want us to sign a reaffirmaton (making us agian liable for the loan, this we do not want to do) both were discharged in chapter 7, our lawyer says since we did not reaffirm (which he strongly advised against doing) then either the first or second can foreclose at anytime, he then advised that if we wanted to stay in our home then contiune to make the payments but he said remember they can foreclose at any time even if all payments are current, his advise was to give up the home. Ok this I understand.

We have no equity beacuse I could not sell the house for what I owe on the first (about $130,000) I would be lucky in this market to even get $75,000 and thats probablly a huge stretch, plus I owe the 2nd about $40,000. So I'm upside down no doubt, plus the home needs tons of repair.

[Pandora]

.... both were discharged in chapter 7, our lawyer says since we did not reaffirm (which he strongly advised against doing) then either the first or second can foreclose at anytime, he then advised that if we wanted to stay in our home then contiune to make the payments but he said remember they can foreclose at any time even if all payments are current, his advise was to give up the home.

Uhm... I think your lawyer is incorrect. They cannot "just foreclose at any time" just because you didnt reaffirm - did you mark the box "retain and pay" or "surrender"? As long as you pay the mortgage and marked that little box, they should not be able to foreclose if you are current. ETA: Naturally the 2nd has a right to foreclose but they'd have to get the 1st to release their rights, pay them off, and if anything is left over...then the 2nd would get leftovers...

Of course, I could be wrong...but...... I've never heard of a mortgage company foreclosing on a retain and pay "just because"

[subking]

They can foreclose at any time because we didn't reaffirm the loan, in most cases a first wont foreclose as long as the payments are made but they can if they desire to thats what we were told.

Can anyone expalin to me how the process will work now that we've decided not to pay the second anymore. Is there anyway the second can get us out of our home other then buying the first.

Please help were scared and very stressed. The second Green Tree called my wife last night and asked if it was our intention to keep the home. She didn't answer and said she couldn't talk.

Are we stressing over nothing? Will the second be able to get us out of our home? We have always been current with the first BOA but the second has us scared.

[justbroke]

Well the only way the first or second will discuss any reduction or change of terms they (the bank) would want us to sign a reaffirmaton (making us agian liable for the loan, this we do not want to do)

If they actually told you that, and your post-discharge, then they are in willful violation of the permanent discharge injunction! You can't reaffirm a loan post-discharge and any pressure to make you do that, is a very clear violation and subject to all sorts of penalties that you get to personally recover!

There's a reason they call it "stay and pay". If you don't pay, you can't stay. I like the idea that you should be negotiating with the second lienholder. You legally owe them nothing and if your home is worth less than the value of your first mortgage, all they have is a worthless lien.

Also, there is no way a lender can foreclosure if you are paying on-time.

That's just the law in every State. There are certain parameters that must be passed before a foreclosure can even begin. The only way to be in "default" on your loan, is to either not carry insurance or not pay. In cases of the former, the lender just "force" places insurance. Same goes for property taxes. However, if you don't pay, then they'll enforce their rights under the Mortgage or Deed of Trust through a foreclosure.

I don't know why your attorney told you otherwise.

[subking]

Sorry if I didn't explain it right. The second will not modify a loan discharged in BK, the only things they will do is accept payments as per the statements (sent only for informational purposes), or reapply for new 2nd (of course were not doing that) but theres no asking us to reaffirm the discharged loan, sorry if I misspoke.

I guess my question is since I can't sell my home for what I owe on the first, what will the second do??

So as long as were current on the first can the second force foreclosure and force us out of our home??

[justbroke]

I guess my question is since I can't sell my home for what I owe on the first, what will the second do??

They will sit around and wait until you sell, or wait until your home actually earns enough equity to make it worth their while to foreclose. However, be very aware of mortgage insurance that is paid for by the lender! Some lenders purchase this, or hide it in the interest rate, so that if they do foreclose, they are made whole, and lose no money.

In rare circumstances, if the second is a hard money lender, they may actually foreclose on the property so that they can take it back. Many times these hard money lenders will just rent it out and wait out the market.

So as long as were current on the first can the second force foreclosure and force us out of our home??

Since you're not in a "strict" foreclosure State, I won't delve into that rabbit hole. The second can always do a foreclosure. However, foreclosure requires an auction and for the property to be sold. The second would have to at least pay off the first lienholder in order to win. This is because the first lienholder will definitely be at the auction and will bid with "funny money" up to the value of their lien! (Funny money allows a lienholder so-called "Monopoly" money that they can use to bid. Since they'd be paying themselves, the first lienholder has money up to the value of their lien. They do not need to go out of pocket for this.) This puts a second lienholder at a disadvantage unless they want to actually buy the home.

Having wrote all that, most 2nd mortgages are actually some sort of a Line of Credit and "not" a traditional mortgage loan. They were geared to allow access to equity. As such, they are sometimes treated more like unsecured debt, even though they are secured debt. That is, that when you're 90 days late, they usually just start high-pressure collection and eventually just write the loan off. It usually never comes to foreclosure, unless you have equity in the property, or the value of the home is worth more than the first lien.

If you just want out... you could go for a short sale.

[subking]

In this market most houses here in Michigan aren't worth anything. Theres no mortgage insurance on the statement we recieve every month and we never purchased that either so thats not an issuse, but thanks for the heads up.

So my understanding is the 2nd MUST pay off the first to foreclose on me correct??
Is it posible the 2nd could negoatate a deal to purchase the first at a reduced price from them in order to obtain our home??

Well we don't want out right now, we wish to stay but theres no money to pay the 2nd, we'll be two months behind next week. They can't bother us to pay because it was discharged, so collection is not an option for them.

[subking]

We are now 3 months behind on payments to Green Tree our second mortgage, they have been calling my wife at work asking when were gonna pay?? Can we give then a post dated check?? Do we want to keep our home?? Their not suppossed to call us, but during the first call they asked my wife if it was ok that they called her, she said yes, so I guess they took that to mean they can cal her every few days, which they do.

I'm so scared right now, we really have no choice but to stay right now. We feel like their gonna kick us out of our home. We've always been curent with the first but theres no way we can come up with enough to cover the second anymore.

If anyone has advise or knowledge it would help. Are we worried needlessly or are we screwed??

[Pandora]

We are now 3 months behind on payments to Green Tree our second mortgage, they have been calling my wife at work asking when were gonna pay?? Can we give then a post dated check?? Do we want to keep our home?? Their not suppossed to call us, but during the first call they asked my wife if it was ok that they called her, she said yes, so I guess they took that to mean they can cal her every few days, which they do.

I'm so scared right now, we really have no choice but to stay right now. We feel like their gonna kick us out of our home. We've always been curent with the first but theres no way we can come up with enough to cover the second anymore.

If anyone has advise or knowledge it would help. Are we worried needlessly or are we screwed??

There is a 99% chance your 2nd will NOT foreclose - they'd have to pay off your 1st before they could. It's a scare tactic and no..you shouldnt give them any money at all (or at least I wouldnt) - pay your 1st as they are first in line.

You filed CH. 7, were discharged and didnt reaffirm either mortgage - so why are you worried about the 2nd at all? You've thrown away money for the past year paying it when you could've saved it up and tried to settle with them to release the lien. 18months @ $450 = 8100. If it were me, I'd stop paying them and tell them to pound sand at this rate, your debt has been discharged 18 months ago, you're under no obligation to pay them.

Re-read the comments by Justbroke in this thread...

[subking]

Thanks for support. We're just sick over this. When they called yesterday they told my wife they want an answer now if and when their getting the payment or they will seek the colleteral.

[Pandora]

"...they will seek the collateral" LOL! Ouch..my side hurts

I know its scary but really - it sounds like scare tactics. Tell them to put that threat in writing and you'll see them in court. Better yet - tell them you're recording the call (and make sure you do it) at the beginning - With them calling you telling you that you have to pay "or else" its a clear violation. You were discharged - you have no responsibility to the debt.

[subking]

Thats what they tell her and the statements say the same thing, if payment is not recieved they will seek the collateral. Since we were discharged could anyone explain what will happen next??
We are not gonna pay the second because the house isn't worth what we owe on the first and is need a alot of repairs and we'd be throwing money away repairing a house that we can't even sell for what we owe on the first.

But if anyone knows what I can expect to happen please tell us.

[Pandora]

subking

so you're receiving statements requesting payment from a 2nd that was IIB and discharged? Does it state " for informational purposes only - this is not an attempt to collect a debt" or something else? Are you 100% certain that you didnt reaffirm?

I'd call your attorney (yes even though it was 18 months ago) and see what he/she can do to assist you, if anything. Pull out your BK paperwork and discharge notice as well, make sure everything is as you think it is and correct.