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First post so please be gentle!
We did a Chapter 7 BK in 2010 and did not reaffirm either our 1st or 2nd mortgage and have remained current on both payments to this date...
With our house worth $394k and our 1st at 264K with the 2nd at 170K, we are just a bit underwater by 40,000.. We like our house and have been pondering whether to stop making payments on the 2nd in the hopes they might settle with us eventually...
Being that the 2nd is underwater by 23%, do you think they will pony up the funds to pay off the first, spend all the money for foreclosing, and sell the house at a foreclosure sale for less than market price? Or will they just sit there waiting for either the balance on the first to go down or the value of the house to go up and then foreclose?
First post so please be gentle!
We did a Chapter 7 BK in 2010 and did not reaffirm either our 1st or 2nd mortgage and have remained current on both payments to this date...
With our house worth $394k and our 1st at 264K with the 2nd at 170K, we are just a bit underwater by 40,000.. We like our house and have been pondering whether to stop making payments on the 2nd in the hopes they might settle with us eventually...
Being that the 2nd is underwater by 23%, do you think they will pony up the funds to pay off the first, spend all the money for foreclosing, and sell the house at a foreclosure sale for less than market price? Or will they just sit there waiting for either the balance on the first to go down or the value of the house to go up and then foreclose?
Need some tips please!!
So you have the ability to pay, but just don't want to?
The second mortgage payment is overwhelming at this time... Both loans were discharged during the Chapter 7 but we are still paying on both. We can walk away from the house at any time but we like it here and really can only afford the payment of the first mortgage.
The second mortgage payment is overwhelming at this time... Both loans were discharged during the Chapter 7 but we are still paying on both. We can walk away from the house at any time but we like it here and really can only afford the payment of the first mortgage.
Then why did you borrow so much money in the first place?????
The issue in your case is that you did not reaffirm the balance owed on the house. A reaffirmation agreement is a legally enforceable contract filed with the bankruptcy court, which states your promise to repay all or a portion of a debt that may otherwise have been subject to discharge in your bankruptcy case. Some lenders demand you sign this agreement and will not send you statements or report payments to the credit bureau without the court-approved agreement. In many instances, lenders consider it a breach of the terms of your home loan and will foreclose if you fail to sign the agreement.
Without the reaffirmation, the lender does not want to report post-filing payments. You cannot get credit for the payments, but you are also protected in the unfortunate event that you cannot make payments anymore.
Also without reaffirmation, your making payments on a house that cannot be re-sold. Your basically paying the bank to live there, like a landlord, but the bank owns it. You are not receiving credit for making the payments since you discharged the debt and did not reaffirm. Your just giving the bank money.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I would think that your only alternative to stay there is a complete new refinance of the 1st and 2nd, which you are not likely to get without a big down payment sine it's not worth that much.
The bank can now sell it any time they want, if you stop paying on either loan they will evict
you. It sounds like you are now paying higher than market rent and would be better off finding
another place to rent.
399083453, that is correct. The first is sending statements and the balance is going down...The 2nd is not sending anything and the payment is an interest only payment, the balance is not going down. Looking at the situation, I am thinking of stopping payments on the 2nd mortgage and perhaps they will eventually settle on it and release the lein on it... By then, perhaps I can refinance the first and be done with it all...
The first is sending statements and the balance is going down
It may appear that the balance is going lower, but its not. It stopped the day you declared bankruptcy and did not reaffirm. If you owed $100k on the house the day of bankruptcy, $100k is still owed. Doesn't matter what you have been paying.
The banks are backlogged with too many foreclosures. They will get to you and kick you out. Just a matter of time.
Last edited by 399083453; 04-16-2012 at 08:13 AM..
The first has gone down from $272K to $264K from last year to this year.. BOTH the 1st and the 2nd were not reaffirmed in the BK7 in 2010...
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