Home Equity Loan Discharged - Do I Still Have To Pay?

[sisterwolf]

What is the name of your state? VA

My Ch7 was discharged in Oct 2007. Up until a few weeks ago, I'd been dutifully paying my monthly Home Equity Loan bills. Last month I checked my credit reports and found that my Home Equity Loan, along with the Mortgage, were listed with the bankruptcy.

I disputed and last week the results came in.

Mortgage = Status: Open/Never Late
Home Equity Loan = Status: Petition for Chapter 7 Bankruptcy/Paid,Closed. Monthly Payment = $0 Recent Balance = $0

I called my home equity loan lender to find out why it was still listed as such. It turns out that I hadn't signed a reaffirmation statement prior to the discharge and that the results would stay as is. I read the investigation results back to them and asked for help in the matter. They said, "You'll need to contact your attorney. Good-bye". I'm still waiting to hear back from my attorney (been almost a week). I don't want to continue making payments on a discharged loan if I don't have to, especially if it no longer benefits my credit report/score. However, I would like to have this issue resolved before doing anything too rash.

My questions:
1- Am I in the clear with the monthly payments?
2- Can the company do anything to me if I stop making payments? Will I lose my house?
3- Will I have to repay the loan when I eventually sell the house?

 

[gawm]

If you want to keep the house, you still have to make the payments. Otherwise they can and will foreclose. You don't have to reaffirm the loan.

 

[CameronNewport]

My questions:
1- Am I in the clear with the monthly payments? Yes, you no longer have a legal responsibility to pay the loan.
2- Can the company do anything to me if I stop making payments? Will I lose my house? Yes, you will lose your house. You cannot be sued for any deficiency after the foreclosure sale, however.
3- Will I have to repay the loan when I eventually sell the house? No, but if you don't then the lien will remain attached to the house, which will make finding a buyer extremely difficult considering that the new owners would need to continue paying on the loan in order to avoid foreclosure themselves.

In sum, you personally no longer owe the money, but the loan is still secured by the house. This means that the house can be sold to satisfy the debt if it is not repaid voluntarily.

 

[2kountry]

lost home

If you sell you home the equity loan will be taken from the sale. If your first forcloses the amount will be added in. If the equity loan gets pissy they will start forclosure proceedings, auction your home to push your first mortgage to cover. Been there, done that and it is how I lost my home. My first was current. Equity loan pushed for auction and sold the home. I was removed from the home with an unlawful detainer and then the first went into forclosure and forced the people that purchased the equity loan to assume the entire loan. Now the loan on the home is more than the house is worth after you add all of the legal fees.

 

[sisterwolf]

Even if I'm paying my home equity loan lender regularly (ie monthly) or possibly semi-regularly (ex. every 6 weeks), is there still a possibility that the lender would try to foreclose on the house. And if so, is that legal?

 

[gawm]

In all likelihood, they won't foreclose as long as you are still making payments. It is easier and cheaper for them to get the money through your voluntary payments than a foreclosure.

 

[2kountry]

Even if you are making payments they can forclose on you.

Ocwen

I did not have an escrow account on the loan. I had overpaid on several payments to try and get ahead. Instead of going to the principle as I had indicated it went to an escrow account. When I discovered this I requested the amount be applied to the next payment and I paid the difference. Ocwen did not accept this. Accounted the payment as "short" added late fees, processing fees etc that equalled to a payment. They then reported me two payments late and started forclosure proceedings. They refused the next payment and that put the mortgage 3 payments late. At that time I had enough in my savings to pay three payments at once plus attorney fees.

Rapid Equity.

I was in an auto accident and could not work full time. I got behind on the equity loan. My first current but recieved notice that Rapid Equity was forclosing, sale pending. I tried to renegotaite the loan, I tried a forebearance agreement. Both were rejected. They sold my home at auction. I went to court to have the sale "set aside". The judge said the house was "sold as is". My first mortgage was current. I was continuing to pay on the mortgage. I was removed from my home by sheriff. When I spoke to my first lender on my mortgage they claimed that "I abandoned my home" . I had to "allow my first mortgage to slide into forclosure to force the people that purchased the home on auction to take over then first mortgage as well.

The loan was against me and against the home.

Yes I had an attorney.

Bottom line---If they want your house they will take your house. As long as your are making payments to a lender you do not own your home! A non-judicial forclosure has no rules and is not governed by the court! All they have to do is refuse payments and you have lost your home! The only legal correspondence with you lender is in WRITING phone calls do not count. Verbal agreements do not count.

 

[CameronNewport]

Even if I'm paying my home equity loan lender regularly (ie monthly) or possibly semi-regularly (ex. every 6 weeks), is there still a possibility that the lender would try to foreclose on the house. And if so, is that legal?

The lender can only foreclose if you default on the loan. If you continue to pay it, then you shouldn't have a problem. Most mortgages have a provision stating that the debtor defaults if he files for bankruptcy, but the bankruptcy code makes that provision illegal, so it can't be enforced. Also, even if you did default, if you are not in arrears and the lender has been accepting your payment, then it has probably waived its right to foreclose based upon that particular default.

2kountry's situation is clearly different than yours.