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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2888
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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We got a Chap 7 discharge in Dec 09. We have 2 mortgages which

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We got a Chap 7 discharge in Dec 09. We have 2 mortgages which were discharged. At present, our home is worth less than the first mortgage and the bank is trying to modify the first loan to which we have paid 3 of 4 trial payments (probationary). We can afford the new payment on the first but not the second. If we stop payment on the 2nd, would the bank foreclose even though they would get nothing and can't legally bother us for payment? Should we stop paying both to avoid a new loan commitment w/ the modification and if we could lose the house anyway for not paying the 2nd? In the Loan Mod. Trail period plan it states " The Servicer will suspend any scheduled foreclosure sale, provided I continue to meet the obligations under this plan, but any pending foreclosure action will not be dismissed and may be immediately resumed from the point at which it was suspended if the Plan terminates, and no new notice of default, notice of intent to accelerate, notice of acceleration, or similar notice will be necessary to continue the foreclosure action, all rights to such notices being hereby waived to the extent permitted by law." California ,USA
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 7 years ago.
Hi and thanks for your question. Since the bankruptcy discharged both loans, you need to work with your lenders if you want to keep the property. Sounds like you have a loan mod in progress, and they are in the trial period. While a 2nd mortgage usually will not foreclose, it is not a certainty. They would need to recover enough proceeds to pay off the first, any taxes, foreclosure costs, and then still have enough money left to pay off the second. It wouldn't be economical to do so. Therefore, you can work with the first lender to keep it out of foreclosure. You can always cover the 2nd on a refinance, or when you sell it too. They cannot request payment, and would sit and wait to see if the value shoots up drastically (doubtful) or if you walk away and the 1st forecloses. That is the likely outcome. Thanks for your question and good luck.
Customer: replied 7 years ago.
Does it make any difference if both mortgages are held by the same bank? In this case BofA. If we accept the loan mod. chap 7 no longer applies, correct? I agree that it would be a surprise if they foreclosed only on he 2nd, which is worth nothing but there's really no way of knowing. I may be forced to leave the property anyway. What would yoo suggest?
Expert:  Terry L. replied 7 years ago.
Arguably yes, but each bank has their own regulations, you should ask the representative who is handling the loan modification to determine any likelihood. Thanks.
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