2ND Lien stripping Hi Ive heard of sommething called lien stripping
I have a condo valued at 660,000 according to a recent tax assesment/value
I have a Chase/Wamu first 650,000 + 30,000 past due/modification fees payments 680,00 total, and a 100,000 CWBC heloc.
If I file CH13 can I strip the second lien?
I may have to file, because I believe Chase will deny my modifivcation anyway.
Thanks in advance
Those values are a close call and it's possible the 2nd mortgage might challenge your stripping-attempt in court.
Your second needs to be completely unsecured in order for the lien to be stripped. If you have no choice, I would have a professional appraisal conducted and see if you can't make that $700,001 mark.
what are the requirements for the second lien to be "stripped" by filing chapter 13 ?
You have to be completely underwater with the first. I.e. if you have a single $1 dollar of equity in the second they cannot "strip" it.Originally Posted by urgent
The second loan needs to be entirely unsecured. Basically you owe more on your first mortgage than your home is worth. I don't know what I was smoking when I typed that other response - I should have said $650,001.
Here is some good info - Mortgage Bankruptcy | Lien Stripping Your Second Mortgage With a Chapter 13 Bankruptcy | LoanWorkout.org
Couple things to note.
1. Yes, it must be completely underwater, best case is simply get a BPO (will cost you maybe $100 or less) and confirmed by your recent tax assesment if you have it. The tax will be the first thing the lender looks up after receiving the petition, likely if it confirms below (your estimate in the petition) they will stop right there. If not then you will have to use the BPO and possibly go for an appraisel if they fight.
2. The lien strip is actually an avoidance. Something that is not always mentioned. This means that the lien will remain (likely even after the discharge) and you will use the response judgement (of your lien avoidance petition) along with the discharge papers to 'avoid' the 2nd lien when selling, paying off the mortgage, or refi. You can always attempt to force a reconveyance from the lender after the discharge, but be prepared to hire an attorney (as many don't even reconvey after you pay the loan off normally). Rest assured though, the lien is void and you will not have to worry (the docs you need are all recorded so no worry of loosing them either).
On a last note, you will need to have a resolution to the lien strip petition typically before the trustee will confirm your plan. This allows them to determine how the 2nd will be treated (as secured or unsecured) in the plan. This is just an FYI as I spent time worrying that they could fight later in the BK period, but actually it is resolved up front (and you will have the judgement to that petition prior to going in). This allows you emotionally to move forward knowing that the second is now gone.
Good luck!
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