Can BK save our home?

[bobsalas]

What is the name of your state (only U.S. law)? Oregon

I am upside down in my mortgage. My house is worth about $130,000. I have a first mortgage for $117,000 (BofA) and a second for $32,000 (HFC).

I have been trying to renogotiate my first with BofA for the past year. About 6 months ago they said it was at the underwriter's office and we would have an answer in 3 months. Each month they list my home for sale on the 10th, when I make my payment, they push the sale date out to the 10th of next month.

Someone suggested we file for BK. My question is if we do this, can we save our home?

I have thought about just walking away from the house but what about our second mortgage, will we be stuck with that for the next 25 years?

Is our case hopeless.

 

[FlyingRon]

Bankruptcy isn't a single item thing. It's a process that looks at all of your debts versus all of your assets. It's not supposed to be just a bargaining chip to coerce a lender to negotiate lower terms.

If you file bankruptcy, any foreclosure action will be stayed, but only until the discharge happens or the lender convinces the court (usually not hard) to lift the stay.

I'm confused. Why are you not able to make your agreed upon payments. You're not THAT upside down ($19,000). If the second was not created at the same time as the first, they do have recourse against you.

 

[bobsalas]

Good questions

I was unemployed for 27 months and we got10 months behind in our mortgage. I finally found a job in Mar 2011 and began negotiations with the bank at that time.

Does the fact that we refinanced the home in 2005 and took out 100% of our $150,000 equity ($117,000 1st & $33,000 2nd)?

We have been thinking about just walking away from the house, but were afraid of the 2nd mortgage haunting us forever.

Just trying to figure our options.

 

[FlyingRon]

I don't thing the Oregon antirecourse requires it to be strictly purchase money (it can be a refi) but it does require that if you want the second to be considered non-recourse it has to be taken out on the same day as the first (i.e. it covers things like 80/20, but not HELOCs taken separately).

 

[despritfreya]

You DO have exposure on the 2nd.

1. Chapter 13 will only allow you to cure the default (both 1st and 2nd) and will require you to resume the regular monthly payments after filing bk (1st and 2nd)

2. If you walk away and the 1st forecloses the 2nd will have the right to sue you under the note you signed. I also assume that the 2nd can “waive its rights to the collateral” and sue under the note at any time, assuming you are in default.

3. If, at some point, the 2nd goes after you, you can consider filing bk or try to negotiate a cash settlement to avoid bk (assuming there is no other reason to file bk).

Des.

 

[bobsalas]

Thanks Des.

Much to consider.

Thanks.

 

[nextwife]

In a CH13 plan, you can have your pre-petition arrearages paid off through the plan, and resume your monthly payments, stopping the foreclosure, unless you fail the plan. Are you now back to work?

 

[bobsalas]

After 26 months of unemployment I found a new job in March 2011.

Unfortunately, after my wife lost her job 2005, we filed for Ch13 and just completed it when I lost mine in 2009.

I do not think BK is an option for us.

We are totally at the mercy of BofA at this point.

 

[despritfreya]

Unfortunately, after my wife lost her job 2005, we filed for Ch13 and just completed it when I lost mine in 2009. I do not think BK is an option for us.

The 2nd was incurred sometime after you filed the 13? (You said you refied in 2005.)

Regardless, if you are thinking no 13 because you completed one in 2009, your thinking would be wrong.

11 USC 1328(f) states, in part, "the court shall not grant a discharge. . . if the debtor has received a discharge. . . in a case filed under chapter 13. . . during the 2 year period preceding the date of such order".

Since you completed and presumably obtained your 13 discharge in 2009 more than 2 years has gone by. Not only can you file a 13, you are entitled to a discharge upon completion of the plan.

Further, while a Chapter 7 will not help save the home, and assuming the 2nd was incurred after you filed the 13, you are also eligible for a Chapter 7 discharge - if you otherwise qualify.

11 USC 727(a)(9) states, in part, "The court shall grant a discharge unless. . . the debtor has been granted a discharge under section. . . 1328. . . in a case commenced within 6 years before the date of the filing of the petition. . .”.

You filed your 13 back in 2005, more than 6 years ago. You are entitled to a 7 discharge if you otherwise qualify for a 7.


Des.

 

[davidmcbeth3]

Banks don't care if you go into BK...

 

[bobsalas]

Thanks for the info despritfreya.

I misspoke. We refinanced in 2004. Did a 80/20, first and second.

My wife lost her job in May 2005 and we entered Ch13 to save our home. I lost my job in Jan 2009 just before our Ch13 was discharged in March 2009.

I know davidmcbeth3 is correct. banks do not care if we file BK. But if it will save our home....

Fortunately we have been living pretty lean. We have almost no debt other than our cars and about $2000 in medical bills.

We just need a mortgage modification to save our home.

Not sure what our options will be if we cannot get the mod.

 

[despritfreya]

We refinanced in 2004. Did a 80/20, first and second.

Ok, so your 1st and 2nd were pre filing debt which may or may not have been discharged. You now need to find a copy of your confirmed Chapter 13 Plan and/or the Order Confirming it. Once you do, please quote the language used as it pertains to your mortgage lenders. Depending upon how it was worded you may or may not have discharged the personal obligation to pay the debt - however, the lien still exists therefore if you do not pay the loan the lender does have the right to foreclose.

Bottom line. . . if you can afford to save the home under “cure and maintain” a new 13 will work. If you cannot afford to save the home and the debts were not subject to the 13 discharge, if you otherwise qualify, you can file a Chapter 7 - if and when the need arises.

Des.