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Ask Terry L. Your Own Question
Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2815
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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Lien Stripping. I am currently in Chapter 13 and will reaffirm

Customer Question

Lien Stripping. I am currently in Chapter 13 and will reaffirm my mortgage. I had an appraisal done on my home which come back at $178,000. We owe $188,000 on first mortgage and $73,000 on second mortgage. I realize the second mortgage is unsecured and can be stripped and treated like any other unsecured debt ie, credit cards. I asked experts on this panel last month and was informed that the second mortgage company would not fight this since it was a certified appraisal of todays market value. Yesterday, my attorney informed me that the second mortgage lender would probably fight the stripping and order a new appraisal to try and bring the value above the $188,000 making the second mortgage have some secure interest so as it could not be stripped. The property tax assesed value of my home is $200,000 and I am aware that the appraisal will over rule this figure. My question is, will the second mortgage lender fight this and order a new appraisal or let it go.
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 6 years ago.
Hi and thanks for your question. The answer is --it is up to the lender!
I would assume they may try to object, if the value is close, since they can be out thousands of dollars otherwise. What would happen is that they would get an appraisal, then at your motion (or adversary depending on your judge) they will review the 2 appraisals and make a ruling as to what the court believes is the accurate value. If wholly unsecured, it will be stripped and paid as such, if not, then you would just pay it as is, and the plan will cover the rest of the debts and/or any mortgage arrears. Thanks for your question, but the only way to know is by trying.
Customer: replied 6 years ago.
I know that appraisals are subjective. If the second lenders appraisal comes back at $189,000 this secures interest on the second mortgage. How do you think the court will rule? I know for a fact the house would not sale for more than $200,000 based on sales in this area and if I did not reaffirm they would still be out about $60,000. How would you rule in the case?
Expert:  Terry L. replied 6 years ago.
There are no reaffirmations in chapter 13, you can choose to keep the home or walk away, that's it. I would suggest getting 1 or 2 more appraisals, that way you can show the court 3 independent appraisals, and the judge can rule on them. The more in your favor, the better. I think the judge will average out the appraisals, for comps, they toss the high and the low, then average the rest for the fairest decision. Good luck.
Terry L. and 4 other Bankruptcy Law Specialists are ready to help you
Customer: replied 6 years ago.
Thanks, XXXXX XXXXX help!
Expert:  Terry L. replied 6 years ago.
I hope you win! I've been seeing more and more lately
good luck