2nd security deed discharged in Chapter 7

Ktfrans

LoanSafe Member
My Mother passed away and I have ran into a issue. I have been paying 1st mortgage, I am on the deed and had joint rights of survivorship upon her passing. Well I knew she filed chapter 7 in 2009 after our house went up for foreclosure due to default, as such foreclosure efforts were halted and all debts were discharged. She had always told me the 2nd mortgage was “gone” as I was barely out of high school and didn’t know any thing about anything at that time I completely believed her and never questioned it nor did she receive notification of its existence past bankruptcy to my knowledge. Come to find out that isn’t true because now some servicing company is wanting to foreclose on 2nd deed this coming May. The 2nd mortgage originated from Countrywide now defunct taken over by Bank of America. I found one email she had printed that showed after 2 years after bankruptcy in 2011 negotiations to modify the 1st and 2nd mortgage under Obama’s plan but BofA wouldn’t touch 2nd so it has lingered for now 12 years since default and bankruptcy furthermore 3 times that year in 2011 the home went up for auction at the courthouse and was mysteriously not followed through with. What is any recourse now to tackle this 2nd mortgage? I admit my own naivety in this circumstance and have been talking to a real estate attorney as well as bankruptcy attorney but wanted more feedback or any questions others feel I should ask my attorneys as time is ticking quickly. Also today marks 4 weeks to the day of auction and no notice has been published in the local paper nor is it listed as pre foreclosure on any website.
 

Jzone

LoanSafe Member
My Mother passed away and I have ran into a issue. I have been paying 1st mortgage, I am on the deed and had joint rights of survivorship upon her passing. Well I knew she filed chapter 7 in 2009 after our house went up for foreclosure due to default, as such foreclosure efforts were halted and all debts were discharged. She had always told me the 2nd mortgage was “gone” as I was barely out of high school and didn’t know any thing about anything at that time I completely believed her and never questioned it nor did she receive notification of its existence past bankruptcy to my knowledge. Come to find out that isn’t true because now some servicing company is wanting to foreclose on 2nd deed this coming May. The 2nd mortgage originated from Countrywide now defunct taken over by Bank of America. I found one email she had printed that showed after 2 years after bankruptcy in 2011 negotiations to modify the 1st and 2nd mortgage under Obama’s plan but BofA wouldn’t touch 2nd so it has lingered for now 12 years since default and bankruptcy furthermore 3 times that year in 2011 the home went up for auction at the courthouse and was mysteriously not followed through with. What is any recourse now to tackle this 2nd mortgage? I admit my own naivety in this circumstance and have been talking to a real estate attorney as well as bankruptcy attorney but wanted more feedback or any questions others feel I should ask my attorneys as time is ticking quickly. Also today marks 4 weeks to the day of auction and no notice has been published in the local paper nor is it listed as pre foreclosure on any website.
The first thing I would do, since you are not 100% sure of what happened during bankruptcy, is to either find her discharge paperwork or contact her bankruptcy attorney. Verify what exactly was included and if any debts were not included.

You are probably dealing with a 1st and 2nd mortgage discharge in Chapter 7. That means the debt is gone, but the liens remain on the property. Whoever holds the liens have rights to the property. Liens do not go away after bankruptcy.

Find out what type of foreclosure is done in your state. Its either judicial or non judicial.

Did you have any contact with the 2nd mortgage servicing company before you learned of the foreclosure?

Are you current on the 1st mortgage and what is the balance owed? What is your equity?

If you havent heard from the 2nd in 11 years, thats a good sign. If you have heard from them, but ignored the notices or calls, thats not so good.

2nd mortgages can bring foreclosure proceedings, but will also need to pay off the 1st mortgage. Perhaps the reason they are starting this now, is because you do have equity in your home and they can pay off the 1st, sell the house and still make a profit.
 

Ktfrans

LoanSafe Member
The first thing I would do, since you are not 100% sure of what happened during bankruptcy, is to either find her discharge paperwork or contact her bankruptcy attorney. Verify what exactly was included and if any debts were not included.

You are probably dealing with a 1st and 2nd mortgage discharge in Chapter 7. That means the debt is gone, but the liens remain on the property. Whoever holds the liens have rights to the property. Liens do not go away after bankruptcy.

Find out what type of foreclosure is done in your state. Its either judicial or non judicial.

Did you have any contact with the 2nd mortgage servicing company before you learned of the foreclosure?

Are you current on the 1st mortgage and what is the balance owed? What is your equity?

If you havent heard from the 2nd in 11 years, thats a good sign. If you have heard from them, but ignored the notices or calls, thats not so good.

2nd mortgages can bring foreclosure proceedings, but will also need to pay off the 1st mortgage. Perhaps the reason they are starting this now, is because you do have equity in your home and they can pay off the 1st, sell the house and still make a profit.
Well I dug on PACER as well as spoke to a bankruptcy attorney who verified though her personal liability was discharged the 2 liens do unfortunately remain still. I am current on the 1st and to my knowledge Mom (and I both) never had interaction with anyone concerning the 2nd, it has been through many loan servicing companies through the years and each would randomly send a statement occasionally but no further action such as calls or her reaching out to them ever happened.
What’s owed thus far is below:
1st: $113,000 with maturity date in 2034
2nd: Original debt $53,600 with maturity date of December of this year, with interest and fees now it could be over $76,000 by my estimate but the foreclosure notice only stated the original loan amount not the current.
Totaling those two largest numbers comes to a estimated total of $189,000 and I’m not sure how much equity I have but neighbors have recently sold for at or slightly over $200,000 with of course some renovations and improvements since the homes are all built from 2003-2004 years, I have not done any renovations so it’s all original. So that being said depending on which figure the 2nd is looking at there could be not a whole lot positive equity.
I still have not contacted anyone at the servicing company as I’m waiting to see what my attorney recommends to do, I do have a very small inheritance from my Fathers January passing that I could offer for settlement ($25,000) if they would be willing to settle. And lastly I’m in Georgia, we are a non judicial foreclosure state so my clock is ticking fast. I’ve tried looking up whatever information I can on the “owner” of the note namely BCMB1 Trust but haven’t found much besides they seem to have foreclosed on quite a few other homes recently that also originated from Countrywide which makes me feel uneasy. Thank you for your reply!
 
Top