1st&2nd mort w/ same lender; bankruptcy discharged, can they foreclose on me if I stop paying the 2nd

KnowledgeSeeker

LoanSafe Member
Aug 6, 2020
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Hi. I have a 1st & 2nd mortgage with the same mortgage company. I have a bankruptcy that has discharged over 10 years ago. I’ve always paid both on time all the time. Our financial situation has changed with the pandemic and I’m struggling to keep paying the 2nd. I wrote in 3 times about asking for a settlement for the 2nd mortgage. I’ve gotten back letters stating that I’m in a bankruptcy. I’m not it’s been discharged over 10 years. It’s as if they don’t want to settle with me because I have discharged bankruptcy. I still have not missed a payment but will not be able to make this months payment on the 2nd and going forward. I will be able to maintain my 1st mortgage that I have with them. If I stop paying the 2nd mortgage and keep paying the 1st are they able to foreclose on me? I don’t want to lose my home.
 
C

Chasegame two

Guest
Each are separate loans so the fact that they are both with the same lender doesn't matter. The bankruptcy prohibits them from suing you, if the loans were included in your bankruptcy filing. But it doesn't prevent them from foreclosing if they see a benefit in doing it. That's the key. If there is little to no equity in the home the chances of them foreclosing on the second are minimal. You can get a TON of information about this on this website's thread 'Strategy for Settling Seconds' (or similar title). Keep in mind this is an old thread, but you'll learn a lot about how most lenders think and how you can use your situation to evaluate some what if's.
 

KnowledgeSeeker

LoanSafe Member
Aug 6, 2020
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Thanks for the reply. I do have about $100K in equity in my home. I’m just not able to continue paying the 2nd with my husband no longer working and me having to take a pay cut. I know it’s a risk to not pay the 2nd and they begin foreclosure proceedings but I have been a good paying customer all these years even after the BK discharged. Yes both my 1st & 2nd mortgage were part of the bankruptcy. I want to retain my home of course but just can’t keep paying the second with my new financial situation. I will write to them again and ask if they are willing to agree to a settlement. Praying they will work with me. This will be the first month I wound be able to make the 2nd mortgage payment.
 

KnowledgeSeeker

LoanSafe Member
Aug 6, 2020
6
0
1
Each are separate loans so the fact that they are both with the same lender doesn't matter. The bankruptcy prohibits them from suing you, if the loans were included in your bankruptcy filing. But it doesn't prevent them from foreclosing if they see a benefit in doing it. That's the key. If there is little to no equity in the home the chances of them foreclosing on the second are minimal. You can get a TON of information about this on this website's thread 'Strategy for Settling Seconds' (or similar title). Keep in mind this is an old thread, but you'll learn a lot about how most lenders think and how you can use your situation to evaluate some what if's.
Thank you.
 
C

Chasegame two

Guest
Thanks for the reply. I do have about $100K in equity in my home. I’m just not able to continue paying the 2nd with my husband no longer working and me having to take a pay cut. I know it’s a risk to not pay the 2nd and they begin foreclosure proceedings but I have been a good paying customer all these years even after the BK discharged. Yes both my 1st & 2nd mortgage were part of the bankruptcy. I want to retain my home of course but just can’t keep paying the second with my new financial situation. I will write to them again and ask if they are willing to agree to a settlement. Praying they will work with me. This will be the first month I wound be able to make the 2nd mortgage payment.
Just an FYI- As a general rule, lenders couldn't care less about you being a loyal customer. They'll probably be nice to you on the phone but that's not the person making the decision to begin foreclosing or not. I'm pretty sure most regular contributors on this website will concur that the bank/lender is not your friend. In fact, when you stop making payments, they become the enemy.

Also, from a negotiating standpoint, your repeated reaching out to them and your comment (at least here) you 'want to retain your home' are hurting your chances for them to agree to any settlement. Again, take the time to read the thread 'Strategies for settling Seconds'. The best approaches are usually to do the opposite. Appear disinterested in keeping the home, refer to it as a 'house', not a home and keep your communication very limited and only in writing.

Lastly, you say your home has about $100k in equity. Did you do the math from your own perspective or from your lenders perspective? Your lender will add up your 1st plus your 2nd, then they will add in a realtors commission (5-6%) that they'll have to pay to sell your home, if they obtain your home by foreclosure. In addition, they'll normally add at least $25,000 as guesstimated fix up costs they will incur before they can sell it. That's how they determine actual equity-before deciding if its worth it for them to foreclose.

Maybe they'll offer some sort of forbearance plan, but from what I've seen of those so far, they are dangerous, vague, and inconsistent.
 

KnowledgeSeeker

LoanSafe Member
Aug 6, 2020
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1
I used my tax appraisal to determine the equity. I will read as you have suggested and remain quiet and pray. Not sure what foreberance is. I’ll read on that also.
 

KnowledgeSeeker

LoanSafe Member
Aug 6, 2020
6
0
1
Just an FYI- As a general rule, lenders couldn't care less about you being a loyal customer. They'll probably be nice to you on the phone but that's not the person making the decision to begin foreclosing or not. I'm pretty sure most regular contributors on this website will concur that the bank/lender is not your friend. In fact, when you stop making payments, they become the enemy.

Also, from a negotiating standpoint, your repeated reaching out to them and your comment (at least here) you 'want to retain your home' are hurting your chances for them to agree to any settlement. Again, take the time to read the thread 'Strategies for settling Seconds'. The best approaches are usually to do the opposite. Appear disinterested in keeping the home, refer to it as a 'house', not a home and keep your communication very limited and only in writing.

Lastly, you say your home has about $100k in equity. Did you do the math from your own perspective or from your lenders perspective? Your lender will add up your 1st plus your 2nd, then they will add in a realtors commission (5-6%) that they'll have to pay to sell your home, if they obtain your home by foreclosure. In addition, they'll normally add at least $25,000 as guesstimated fix up costs they will incur before they can sell it. That's how they determine actual equity-before deciding if its worth it for them to foreclose.

Maybe they'll offer some sort of forbearance plan, but from what I've seen of those so far, they are dangerous, vague, and inconsistent.
Thanks much. Taking your advice.
 
S

Smile Back

Guest
Knowledge Seeker,

Chasegame is right about the bank NOT being your friend. You really need to stop reaching out to them until you've got a plan

Besides you mentioned you want to SETTLE, instead of PAYING 2nd monthly payment? I don't mean to sound judgmental, as we understand your position to keep your house & enjoy the equity when you sell them. We all do. I just want you to consider, just like what Chase advised, " when you sop making your payment- they become your enemy". Maybe this is NOT the time to be delinquent? i don't know, but we just want to EXPAND your OPTIONS, especially this next WAVE of foreclosures, due to Pandemic and Millions have been delinquent due to loss of jobs. You don't want to be part of this, since bank already ID you.

Also, the bank may think, " If you CAN settle for thousands, why you cannot pay for your 3 or 5 hundred on your 2nd?". Remember, we are you allies here, and THIS time, we want HOMEOWNERS to WIN and NOT the banks, so Hang in there, ok?
Just give this a second thought, besides reading some forums detailing experiences of others. Hope this helps. Good luck.
 

KnowledgeSeeker

LoanSafe Member
Aug 6, 2020
6
0
1
Knowledge Seeker,

Chasegame is right about the bank NOT being your friend. You really need to stop reaching out to them until you've got a plan

Besides you mentioned you want to SETTLE, instead of PAYING 2nd monthly payment? I don't mean to sound judgmental, as we understand your position to keep your house & enjoy the equity when you sell them. We all do. I just want you to consider, just like what Chase advised, " when you sop making your payment- they become your enemy". Maybe this is NOT the time to be delinquent? i don't know, but we just want to EXPAND your OPTIONS, especially this next WAVE of foreclosures, due to Pandemic and Millions have been delinquent due to loss of jobs. You don't want to be part of this, since bank already ID you.

Also, the bank may think, " If you CAN settle for thousands, why you cannot pay for your 3 or 5 hundred on your 2nd?". Remember, we are you allies here, and THIS time, we want HOMEOWNERS to WIN and NOT the banks, so Hang in there, ok?
Just give this a second thought, besides reading some forums detailing experiences of others. Hope this helps. Good luck.
Thanks. I’m taking the advise and making no more contact. We will see what happens. Praying they won’t go through foreclosure proceedings.