Settling 2nd: Just got Notice of Default... revised Strategy suggestions?

[hammerman]

Hi and thanks for the reply... At this time, we are current on the first mortgage, taxes are behind almost 2 years. I did try to handle the first as recommended by you in the strategy but that part made no sense to me....

I called Bank Of America regarding the 1st and they said they could do a refinance to a fixed rate, new loan of which we would be now liable for and have to pay $2800 in closing costs/fees. As you know, both the 1st and 2nd were discharged in a chapter 7 and neither were reaffirmed..

Now, if I were to do the new 1st mortgage and never could get the 2nd to agree to a settlement, I could then be foreclosed up perhaps by the 2nd and then be subject to liability on the first since it is a new loan and I am no longer safe from the chapter 7 on it.

It is my thinking that I need to settle the issues with the 2nd and then I am free to tackle the 1st and then be good with a single mortgage at an affordable rate.
Am I correct or is there something that I am missing?

I appreciate your help...

[Ready2Run]

hammerman

Seems logical to me. Just realize that any monies spent on settling the 2nd might be for nothing, if you later can not adjust the 1st.

Just one additional note though. If the 2nd were to foreclose they would have to pay off the 1st in order to do so. Therefore foreclosure of the 2nd would never lead to a liability on the 1st.

[hammerman]

I get it, sort of.... If I somehow cannot get the second paid off to release the lien, we can walk away from it all with no liability because of the BK 7..
Now if I settle first, spend money on it doing so and then establish liability, I will be stuck with that new liability AND an unpaid 2nd of $170,000 that I will never be able to pay off in full.
I could now not be able to walk away free of liability...

If I stay in the house paying on the new 1st and the 2nd decides to wait and not settle, then once the 1st balance becomes lower, the 2nd could decide they can recoup most or all of the $170,000 by then foreclosing... At that point, I could be wasting years and money paying on the first and not get anything out of it all.

Can you point out where that thinking is warped?
THanks...

[hammerman]

Mr. Eason, can you please help explain why it is considered vital in the strategy to permanently handle the first before taking on the second? I have read post #1 of the strategy and see that but is there clear cut reason why ?
Thanks for your time and effort!

[TomEason]

Mr. Eason, can you please help explain why it is considered vital in the strategy to permanently handle the first before taking on the second? I have read post #1 of the strategy and see that but is there clear cut reason why ? Thanks for your time and effort!

Thanks for your post. As Ready2Run stated, any money you pay to your 2nd lender will likely be $$ thrown down a rat hole. However your situation has been complicated by your BK. Please know I'm not a BK expert. Methinks you best consult with an experienced financial advisor or BK lawyer or both.

[hammerman]

Would a 1st mortgage holder (Bank of America) actually provide a new loan or restructure a loan that was not reaffirmed in BK AND with a 2nd position lien on the house?