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  1. #1
    Join Date
    Aug 2010

    Foreclosure Consequence of 2nd mortgage after bankruptcy?

    Live in NC. I was discharged from chapter 7 bankruptcy >1yr ago that included the 1st & 2nd mortgage, plus credit card debts from failed business. I have re-built my credit and have been keeping up with both mortgage payments as the result, but in a few months the 1st mortgage interest rate will be adjustable from the “power option or option payments” plan, currently 6.8% and the 2nd mortgage is fixed at 12.8% (which was part of the 80/20% original loan).
    I’m afraid I cannot afford both mortgages with the high 2nd mortgage after the adjustable rates. I tried to do loan modification prior and after the bankruptcy with the 2nd mortgage but told I “made” too much money (debt:income) to qualify but they don’t take the entire picture into consideration like I only could afford the minimum payment or interest only payment option of the 1st mortgage.
    I would like to keep the house if the mortgage payments are affordable…But I feared soon, it won’t be… but I’m in acceptance of what’s so.
    Can’t refinance b/c of the bankruptcy and depreciation in home value. My thoughts are:
    - Stop making payments to the 2nd mortgage co. hoping that I may work out a reasonable interest rate like 3-4% b/c it seemed like “they” won’t work with you until you’ve “drowned” (while still making payments to the 1st mortgage as long as I can afford it…)
    -Are there any consequences that I need to be aware of with this plan?
    -Will the “foreclosure” be on my credit report if I foreclose on the 2nd and/or 1st mortgage (meaning I have to restart building my credit from ground zero again or the bankruptcy took care of this)?
    -Can the 2nd mortgage co. foreclose on the house even if I’m current w/ the 1st mortgage?
    -If they are not willing to work out an affordable payment option; I will probable con’t to stop payment (2nd) indefinably.
    Will I still be responsible for all the accumulated “late payments, late penalties, & forclosure fees of the 2nd mortgage,etc).
    -Can the 2nd mortgage co. sue me for “taking” advantage of the bankruptcy protection?
    -Any thoughts of being able to negotiable a reasonable fix interest rate with the 1st mortgage co. from the adjustable rate given my history?
    -Is there any professional I need to hire to help me negotiate with the 1st or 2nd mortgage (I don’t mind the “hard work” if I could get good results but also won’t mind paying if I could get better results?)
    -I work in the medical field-nurse. If I were find work in a different hospital where they check your credit history and background hx-no problem here, can I be turned down for the position solely on my hx of bankruptcy and/or foreclosure? I also “heard” that the employer couldn’t discriminate you from bankruptcy b/c of the bankruptcy protection law…is this true?

    Appreciate any advice or experiences. Thanks!!!

  2. #2
    Join Date
    May 2001
    First things first.
    Did you sign and have a properly filed reaffirmation agreement on the mortgages as part of your bk?
    If so, you can be sued for any deficiency balance.

  3. #3
    Join Date
    Aug 2010

    No reaffirmation agreement signed

    Thank you for helping me through this. I didn't sign any reaffirmation agreement...just usual bk filing paperworks...and I think I heard the bk attorney said during the bk process that if the mortgages (1st & 2nd) were included in the bk, then I would have more options/protection in the event I can't afford payments to walk away/foreclose w/o being liable thereafter as best I can understand. The mortgage statements from 1st & 2nd does mention that they only have the right to the lien if I don't pay. But my husband thought he heard that the bk only apply to the 1st mortgage only...not 2nd. I (we) just want to make the best decisions of the situation on hand. Again, much appreciation for your assistance...any idea about the other questions/points.

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