Can Lien Stripping be done on a first mortgage?
My mortgage is 300,000 but my house is only worth $260,000. Can lien stripping be done on the $40,000 difference?
Attorney answers (5)
Dmitry Lev
Reputation Level 7
Answered over 2 years ago.
Bankruptcy Attorney in Boston, MA.
No. Simply put, you are only allowed to strip the lien of a wholly unsecured mortgage and only in a context of a Chapter 13 bankruptcy proceeding. Here, even though the mortgage is UNDERsecured, it is still secured to the tune of $260,000. If you had a second mortgage on top of the $300,000 one, that second one would be wholly unsecured and may be stripped off. Congress attempted to pass legislation that would allow bankruptcy judges to do just what you are asking, but the legislation did not pass.
Theodore John Koban
Reputation Level 13
Answered over 2 years ago.
Bankruptcy Attorney in Attleboro, MA.
Sorry to have to say "No." If there is one dollar of equity in the realty that is available to the mortgagee then then entire mortgage cannot be touched. Usually, mortgage stripping, for a resdience, can only be done in a Ch 13 and customarily involves totally unsecured second mortgages or home quity lines.
Dmitry Lev
Reputation Level 7
Answered over 2 years ago.
Bankruptcy Attorney in Boston, MA.
No. Simply put, you are only allowed to strip the lien of a wholly unsecured mortgage and only in a context of a Chapter 13 bankruptcy proceeding. Here, even though the mortgage is UNDERsecured, it is still secured to the tune of $260,000. If you had a second mortgage on top of the $300,000 one, that second one would be wholly unsecured and may be stripped off. Congress attempted to pass legislation that would allow bankruptcy judges to do just what you are asking, but the legislation did not pass.
1 person marked this answer as good
Dmitry Lev
Reputation Level 7
Answered over 2 years ago.
Bankruptcy Attorney in Boston, MA.
No. Simply put, you are only allowed to strip the lien of a wholly unsecured mortgage and only in a context of a Chapter 13 bankruptcy proceeding. Here, even though the mortgage is UNDERsecured, it is still secured to the tune of $260,000. If you had a second mortgage on top of the $300,000 one, that second one would be wholly unsecured and may be stripped off. Congress attempted to pass legislation that would allow bankruptcy judges to do just what you are asking, but the legislation did not pass.
William J Mcleod
Reputation Level 11
Answered over 2 years ago.
Bankruptcy Attorney in Boston, MA.
No can do. Section 1322(b)(2) of the Bankruptcy Code prohibits modification of loans secured solely by the principal residence - but read what I said here. If the loan secures something other than your principal residence, such as another piece of real estate, than the anti-modification provisions of 1322 do not apply. Check your mortgage documents.
In addition, if this is a multifamily home, than 1322 will also not apply - but the note and mortgage must have been for a multi-family home. So if you have added an apartment (such as in the basement), you are not necessarily going to be able to modify this loan.
Talk to a bankruptcy lawyer - let them review the documents - and let them give you a better opinion that you can actually rely on.
Good luck!
Bill McLeod
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