Q: what happens to my second lien if both my wife and i are on the second lien and she filed for chapter 7 bankruptcy? will they go after me now? My wife was laid off last year and was living on unemployment for while. now there is no more unemployment money. the mortgage and second lien depended on both me and my wife to pay. now its all on me and we are in trouble. i have wife and child with another baby on the way due beginning next year in addition with another family member living with us. i am sole provider. The second lien was not part of a typical 80/20 loan instead we used second lien money towards house improvements since it was crappy house. we cannot afford attorney to give us any legal advice. we got loan modification for second lien and they are pressuring to sign that before we are even approve to loan modification on first lien. what if we decide to short-sale or foreclosure, will they go after me due to second lien? HUD counselors are useless and bank is all about taking all they can. thank you, Mike
A: Mike, your question is “what if we decide to short-sale or foreclosure, will they go after me due to second lien?” The answer is, it depends.
If you decide to short sale, the second lien will require some type of payment towards allowing the short sale. The second lien holder will decide what their terms are. Sometimes they want as little as 10% of the balance owed and sometimes as much as 3% of the purchase price. What you can also definitely count on is that they will continue to pursue you for the deficiency.
If you foreclose, the second lien goes away, however the senior does not.
Your initial question re bankruptcy sounds like she may not have filed yet, and that you are investigating your options. May I suggest Norm Schriever, a debt counselor, with Unity Financial Solutions. Tell him I referred you and he will give you a free one hour consultation.
He is also affiliated with the Law Office of Kristin Marshall who is a real estate attorney. Unity Financial specializes in Credit Card Settlement, Debt Management and Bankruptcy. Most recently they have been assisting homeowners who have concerns with their mortgages and need options on what to do. The company will review your loan documents free of charge and advise you free of charge. Their goal is to help individuals in the long run to clear up their debt and begin again as quickly as possible.
They work in conjunction with the law office should the need arise for bankruptcy or court matters. They are also members of the BBB and have been featured on msNBC, CNNMoney.com, New 10, SacBee and are on Facebook.
Norms contact info is below:
Unity Financial Solutions
Let me know how it goes.