Mortgage

discharge of a 2nd Mortgage straight through episode 13 Bankruptcy

Chapter 13 Bankruptcy offers an important, and often unknown, choice to consumers who have residential real estate mortgages. Namely, removing a junior lien possessor or "2nd" from your debt. Since the value of real estate has decreased, a coarse complaint I hear is, "I cannot believe I am paying more than my house is no ifs ands or buts worth."

If you purchased a home in the past three to four years and financed with 80/20 mortgages, or if you refinanced your home and took out a second mortgage, chances are you can completely remove that second mortgage and other junior liens from your home.

Mortgage

Imagine...file a lesson 13 Bankruptcy to eliminate all your reputation card debt, cut your car payments, cure the back payments on your first mortgage and now, entirely remove your second mortgage.

In addition, if your house value bounces back, that equity is yours to keep.

It is important to perceive that the removal of a 2nd mortgage is ready in a lesson 13 bankruptcy only. The ideal candidate for this process has a 2nd mortgage on a home that is no longer appraised at or above the amount of the 1st mortgage. It is important to acquire comps for the asset and an estimate to design your the fair shop value of the home.

If the fair shop value works, a request for retrial to get court approval will need to be filed. The mortgage enterprise may oppose this motion. This will then need an evidentiary hearing and perhaps an adversary complaint. If the court decides that the fair shop value of the home is below what is owed on the first mortgage, the second mortgage is "stripped" from the home and the debt related with the second mortgage is made an unsecured debt (essentially being treated like reputation card debt). Typically, in a lesson 13 bankruptcy, a small division of the unsecured debt is paid, if at all.

Once the request for retrial is approved, you will need to make all plan payments (over a 3 to 5 year period) and acquire your discharge. Once the debts are discharged, the second mortgage is completely gone.

Under existing Bankruptcy laws, debtors are not able to force a first mortgage to modify the terms of the mortgage on loans for their traditional residence. Many lenders who perceive the alarming state of the cheaper are willing to negotiate a modification of their mortgage, allowing a debtor to lower their monthly payments. This is a relatively modern change for many lenders who had previously refused to adapt such requests. Such a modification may drastically help a homeowner who wants to keep their home but who is suffering from a allowance in revenue and home value. This benefit is even more obvious when used in conjunction with the removal of a second mortgage for debtors who have both a first and second mortgage.

Further, modern legislation was introduced in Congress in the first week of 2009 that would now allow Bankruptcy judges in lesson 13 cases to modify first mortgages by:

-reducing the amount of the secured claim (i.e. Lowering the balance on the mortgage/deed of trust that is secured by the home);
-changing the interest rate of the loan or modifying the adjustable highlight of confident loans; and/or
-changing the term of the loan.

This bill, if enacted, would finally provide some relief to homeowners. In the past, the mortgage lenders have vehemently opposed such a change. However, this time may be different. News reports indicate Citigroup has already recommend that it would maintain this legislation with some minor revisions, one of which is to need that a homeowner first endeavor to modify the loan directly with the lender(s) before the loan can be modified by a Bankruptcy judge.

discharge of a 2nd Mortgage straight through episode 13 Bankruptcy

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