What happens to my 2nd mortgage on an underwater house if I stop paying it, but its owned by the same company that owns my 1st mortgage?

This is a very interesting foreclosure and bankruptcy question. If you have to mortgages on a home, which is under water (or not) and you stopped paying on the second mortgage, the bank can still foreclose the house based on the second mortgage. Especially if the bank for your first and second mortgage is the same bank, they will most likely foreclose because they'll get the first mortgage paid and will claim a loss to the IRS on the second mortgage, which is essentially the same thing as the bank being paid. If you were to file either a chapter 7 bankruptcy or a chapter 13 bankruptcy, then you could file what is called a motion to avoid lean. Essentially what this does is take into account your Homestead exemption and the actual value of your home, and if the second mortgage or a lean were to compromise your Homestead exemption you could have that mortgage or lean removed within bankruptcy. This is essentially a mathematical equation, and if the math works you can simply remove the second mortgage. This is huge for most of my bankruptcy clients. When they come to may because they're having trouble paying their bills, I discharge their unsecured debts such as credit cards and medical bills and with a motion I stripped the second mortgage from the property so once bankruptcy is over the only mortgage my clients need to pay is their first mortgage, their second mortgage completely disappears. The second mortgage is even removed from the Registry of Deeds, so when you refinance you need not deal with the second mortgage at all or if you sell the home, the second mortgage does not need to be paid back. I have responded to your inquiry according to the laws of Massachusetts, where my firm is located. Laws can vary significantly from state to state and cases tend to be rather fact-specific, so you are best served by consulting with a knowledgeable attorney in weighing your options. Email messages/Online Correspondence are akin to conversations and do not reflect the level of analysis applied to formal legal opinions. Email/Online responses do not form an attorney-client relationship.    Joseph F. Botelho, Esq. BOTELHO LAW GROUP Attorneys At Law http://www.fallriverbankruptcyattorney.com/ 901 Eastern Ave.  Unit 2 Fall River, MA 02723  Office:  888-269-0688 FAX:    877-475-8147 #bankruptcy  #lawyer  #FallRiver  #Chapter7  #chapter13  #debt  #debtsettlement  #foreclosure  #attorney   #cantpaybills  #lawsuit  #court  #bankruptcycourt  #eviction  #lostmyjob, #student, #loans, #education, #IRS, #taxes