The 1st and 2nd lien holder is the same company. I know the lender in 2nd position can't typically do much but does this change since it's the same company? The 1st mortgage is $280,000 and the HELOC is $70,000. My house is currently worth about $320,000. The Heloc has been in default for about 6 months and I initially received a letter that if I didn't get current they could foreclose but I haven't heard a peep since. I've continued to pay the 1st. What happens if they don't foreclose and I go full term (30 yr loan) on the 1st? If I want to sell the home in the future can I just payoff the 2nd and the lien will then be removed? Can I refinance this in the future combining the loans if home prices go up?
Thanks!I forgot to mention the bankruptcy was discharged about 5 1/2 years ago
If they haven't tried to foreclose, they probably won't. But instead of trying to predict the future and fix something that isn't broken right now, why not wait and see? Especially since it sounds like you don't have the income to cure the default on the HELOC. In other words, if you're powerless to affect events, there's no point in worrying about what may happen.
As long as you did not reaffirm the debts and they were from before the bankruptcy filing, they were discharged. If the first forecloses, anything remaining from sale goes to the second, then the third and so on down to you. If there is nothing left from the first, then there is nothing left. All junior liens are wiped out. There is no need for a junior lien holder to do anything.
The liens, if you keep the property, must be paid off in some way to be removed.
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If you did not reaffirm the debt there is no personal liability but the lien remains in place. Why they have not foreclosed could be for a number of reasons, one of which is that in order to foreclose they would have to pay the first off. I feel a little different in terms of when this should be addressed. My experience is the long you wait the worse it gets.
If the mortgage company is the same as the first then there is more risk that they file a foreclosure. A second mortgage can foreclose if there is a default the question would be would they? The answer in general is that no they generally won't because they wont get any money since the 1st mortgage company will get the property and the 2nd would be unsecured and likely get nothing. If you ever sell the property the lien is still valid and must be paid. If you didn't reaffirm either loan and filed a Chapter 7 your personal liability was extinguished on the loans, but the liens are still valid. Since you have the some mortgage company there is more risk here that they file a foreclosure on the 2nd loan and name themselves on the 1st forcing you to get current on the 2nd mortgage.
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