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Irwin Law
Irwin Law, Lawyer
Category: Real Estate Law
Satisfied Customers: 7160
Experience:  Lawyer- Broker 30+years - foreclosure, short sale, liens, title attorney.
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We filed a chapter 7 Bankruptcy 3 years ago. We have a home

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We filed a chapter 7 Bankruptcy 3 years ago. We have a home with a 1st and 2nd mortgage. We stopped paying on our 2nd 4 years ago. Now we know the 2nd is not discharged through the bankruptcy and we still reside in our home and had the 1st modified. However, I contacted the bank to try and get a loan mod on the 2nd (Wells Fargo) and they said that it's technically been "charged off" but if we want to pay on it all monies would go towards the principal balance but they do not do loan mods on this due to the BK. This was 2 weeks ago I made this phone call.
Oddly, I get in the mail today the following dated over 2 months ago but just finally mailed out from the county recorders office
Substitution of Trustee
Full Reconveyance

It "appears" the debt has been released from the property. However, why in the world would this be done and how do I find out specifically if that is the case and the 2nd lien has officially been removed?

Was the reconveyance to you and your spouse, as the owners? The debt of the 2nd trust deed loan was discharged in bankruptcy, but technically the lien of the trust deed remains against the property. Apparently, since they cannot pursue the debt except to take the property, which they don't want because the first is still ahead of them, so they have elected to simply close their books on the loan completely. You can have a title attorney review the documents and tell you where you stand, but unless you are planning to sell or refinance, it shouldn't make much difference either way. I think it's safe to say that the result of the reconveyance is that you now have just your first mortgage to deal with.


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