Chapter 13 and 2nd Mortgage

[beaverblvr]

What is the name of your state? Oregon

We are about to file for Chapter 13.

We have a second mortgage that we owe $52k. The principal on our home is around $113k. When we applied for our 2nd mortgage, the finance company did an online valuation of our home which was the amount that was given to us for our equity loan.

The valuation came in at about $165K but the homes in our area that are the same size are only selling for around $145k. There is no way we could get $165k for our small house.

I have read that you can have the 2nd mortgage "stripped off" if there is no money above the principal owed to secure the 2nd mortgage.

How do the courts evaluate how much your house is worth, because between the Principal on our house and the equity loan, we owe $165k.

We would like to keep our home but cannot afford to pay the $600 per month on top of our mortgage to pay our 2nd.

I guess I just need to have a better understanding of how this works, and if it is possible to keep our home without the equity loan?

[moburkes]

Originally Posted by beaverblvr

What is the name of your state? Oregon


The valuation came in at about $165K but the homes in our area that are the same size are only selling for around $145k. There is no way we could get $165k for our small house.

So you knowingly accepted a loan knowing that your house wasn't worth enough to pay back the loan, and now you don't want to pay off the loan?

[beaverblvr]

"So you knowingly accepted a loan knowing that your house wasn't worth enough to pay back the loan?"

Yes. We were having problems paying our credit card debt and decided to consolidate with an equity loan. Then we could make the payments, but since then have accrued over $10 in medical costs which poses us major problems.

"and now you don't want to pay off the loan?"

It's not a case of not wanting to, it a case of not being able to.

[bigun]

What does your lawyer say?