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Home Depreciation

Do you actually need your second mortage?

Millions of American homeowners are now upside-down on their home mortgage and they are looking for a way out. For many homeowners, between their first and second mortgages, they owe more money on their home than what it is currently worth. Homeowners have seen values drop 30-50% and many are making a “business” decision to walk away without ever exploring ways to save their home.

Wouldn’t it be much easier to save your home if you only had a first mortgage and no other payments? What if you could effectively wipe out $10,000, $50,000 or $100,000 of what you owe on your mortgage?

Is your home suffering?

If your home value has suffered a decrease in value, and you have a second mortgage or home equity loan, we can explore removing that lien by filing a Chapter 13 reorganization. How it works is, if your home is only worth what you owe on your first mortgage, the second mortgage is no longer considered to be a "secured" obligation and can be removed in the Chapter 13 program. Our firm will basically convert the second mortgage, home equity loan or other lien to an unsecured debt. You will only have to pay back what you can afford to pay back. If you cannot afford to pay any back then the debt will just be discharged. This process is called "Lien Stripping " and has many benefits:

This will lower payments going toward your monthly mortgage obligation.

Any money paid toward the stripped lien would be paid at 0% interest and most times paid at pennies on the dollar;

At the successful completion of the chapter 13, documents are filed with the register of deeds to legally remove the secondary loans or liens from your property and any unpaid balances are eliminated or discharged.

Lien Stripping Example:

The first mortgage is $200,000.00

Home is worth $199,00.00 (less than the first mortgage)

A second mortgage exists.

Lenders are only secured up to the value of the property. In this case the first lender is secured by the property value.

The second lender has nothing securing their lien. They are unsecured because the property has no value left over from the first lien. In a Chapter 13, you can lien strip the second lender.

The second lien will be treated as an unsecured creditor.

The second lender will not be able to collect on the mortgage after the bankruptcy discharge and the homeowners will still get to keep the house.

The homeowner would not have to pay the lien when they sell the house either.