Mortgage Debt | Matt Berkus

Archive for the ‘Mortgage Debt’ Category

Settling a Second Mortgage, What Should I Watch Out For?

Friday, November 4th, 2011

Question:

Hello Matt, I discharged both my first and second mortgages under chapter 7 bankruptcy in 2009 and I did not reaffirm those debts. I wanted to keep the house, so I kept paying on both loans. House is worth about $150,000; the first mortgage is $151,000 and the second is $70,000. I stopped paying on the second 6 months ago and they sent me an offer to settle the $70,000 for $7,000. The letter states upon receipt of the funds, the lender will release its lien and cancel the agreement. This is such a great offer but I wanted to ask a few questions. When they receive the money, do they send me back the original loan papers? How do I ensure they remove their lien? Will I have do follow up with them to make sure they don’t double cross me? Any help is appreciated. Thanks. (more…)

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Will I Lose My House In Bankruptcy If I Keep Making The Payments?

Friday, July 15th, 2011

Question

Can you list the 2^nd mortgage on my house and re-confirm the first mortgage in a Chapter 7 bankruptcy and still keep and live in the house as long as you continue to make payments?

Answer

Short answer: probably, but it depends!

Realize that for secured debt (e.g. a mortgage) a bankruptcy only eliminates (discharges) the debtor’s personal responsibility for the debt, but the security interest remains intact notwithstanding the bankruptcy. So even though you will discharge the mortgages in your bankruptcy as to you personally, the mortgage lenders will still have their security interest in your property (the house) and all associated rights (e.g. the right to foreclosure for non-payment). (more…)

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By Bankrupting my 1st Mortgage, Can I Force Them To Do a Short Refinance?

Thursday, July 14th, 2011

Question:

I received a chapter 7 bankruptcy discharge last year. I did not reaffirm my first or second mortgage. I stopped paying the second mortgage as soon as I received my bankruptcy discharge. I owe $146,000 on the first and $30,000 on second. I am trying to settle the second now. Is it possible to force the first mortgage into a short refinance after I settle second? My homes current value via Zillow is $78,000. I am also considering walking away once I can qualify for a new mortgage in another year. Since the mortgage is discharged would a foreclosure now, hurt my ability to qualify for a new mortgage? (more…)

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Short Sale After Bankruptcy, What Should Be On My Credit Report?

Saturday, June 18th, 2011

Question:

We filed Chapter 7 bankruptcy almost three years ago and have stayed in our house. All mortgages were included in our bankruptcy; we are now in the process of a short sale and our question is this: can the banks make an entry on our credit for the short sale even though our debt was discharged. There have been no monthly updates since that date and all accounts show as closed.

Answer:

Although there is some gray area with your question; in general, the answer is no. (more…)

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2nd Mortgage Lien Strips, It’s All or Nothing in Chapter 13 Bankruptcy?

Sunday, May 15th, 2011

Underwater mortgages (house is worth less than the amount owed) are hovering around 25% of all homeowners; yet individuals, and debtor advocates, are perplexed by the rules surrounding inferior mortgages on primary residence in chapter 13 bankruptcy. Chapter 13 bankruptcy allows a debtor to remove the 2^nd mortgage (or 3^rd, or 4^th mortgage) so long as the 2^nd mortgage has no secured value. But if the inferior mortgages have so much as $1.00 of secured value, the debtor is stuck with the entire 2^nd mortgage; hence, all or nothing.

So, to remove a 2^nd mortgage, i.e. 2^nd mortgage lien strip, the home (primary residence) must be worth less than the amount owed on the primary mortgage. (more…)

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Converted Primary Residence To Rental, Is That Mortgage Now Non-Consumer Debt?

Thursday, April 14th, 2011

Question:

How do I determine if rental property qualifies as non-consumer debt? We have read that it is the “intent” of the mortgage that matters. We rented out our former home, but refinanced before doing so. We had to use our Veterans Administration loan privilege to refinance since it was the only way to refinance and then rent out without living in the property for a specified term. We have the rental application signed before the refinance, and then a rental agreement signed 3 days after refinance. Will this fact allow our mortgage to be classified “non-consumer” debt?

Answer: (more…)

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I Thought Chapter 7 Bankruptcy Stopped Foreclosure, But The Bank Foreclosed?

Tuesday, April 12th, 2011

Question:

I filed for chapter 7 bankruptcy and it was discharged 11/08. I had four mortgages (owned investment property). I surrendered the properties and did not reaffirm the mortgage debt. My problem is the mortgage companies foreclosed on me even though I filed for chapter 7 bankruptcy. Now I not only have bankruptcy listed on my credit, I also have foreclosures listed. Is this standard? I thought they had to cease when the bankruptcy petition was filed. (more…)

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Can I Do a Deed In Lieu of Foreclosure During My Bankruptcy?

Sunday, March 27th, 2011

Question

Can I do a deed in lieu while my bankruptcy is pending?

Answer

First, let’s back up. A deed in lieu is a transaction whereby a homeowner signs over their home’s deed to their mortgage lender. A deed in lieu is a way for the homeowner to voluntarily surrender the house to the mortgage lender when the homeowner can no longer afford the home. However, there is a catch, the mortgage lender must agree to the deed in lieu; most of the time, the mortgage lender will not do so. There are various reasons why lenders do not accept deeds in lieu, but that topic is better served in a different post. The country is experiencing record foreclosures, not record deeds in lieu; that should give you some idea how rare it is for the bank to accept a deed in lieu. (more…)

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Archive for the ‘Mortgage Debt’ Category

Settling a Second Mortgage, What Should I Watch Out For?

Will I Lose My House In Bankruptcy If I Keep Making The Payments?

By Bankrupting my 1st Mortgage, Can I Force Them To Do a Short Refinance?

Short Sale After Bankruptcy, What Should Be On My Credit Report?

2nd Mortgage Lien Strips, It’s All or Nothing in Chapter 13 Bankruptcy?

Converted Primary Residence To Rental, Is That Mortgage Now Non-Consumer Debt?

I Thought Chapter 7 Bankruptcy Stopped Foreclosure, But The Bank Foreclosed?

Can I Do a Deed In Lieu of Foreclosure During My Bankruptcy?

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