With property values dropping, many homeowners are now “upside-down” on their home mortgage loans and are looking for a way out. Many homeowners are unable to make the payments on their mortgages and are making the decision to walk away without ever exploring ways to save their home.
Wouldn’t it be much easier to save your home if you only had a first mortgage? What if you could effectively wipe out $10,000, $50,000 or $100,000 of what you owe and essentially start over?
If your home has significantly decreased in value, and you have a second mortgage or home equity loan, we may be able to remove that lien and strip off the second mortgage by filing a Chapter 13 reorganization bankruptcy. If the present market value of your home is less than or equal to what you owe on your first mortgage, the second mortgage is no longer considered a secured debt and can often be removed in a Chapter 13 bankruptcy.
We convert your second mortgage or home equity loan to an unsecured debt. You can discharge this unsecured debt by paying pennies on the dollar over the next 3 to 5 years. The remainder of the debt would be discharged at the completion of the chapter 13 plan.
For example: You owe $300,000 on your first mortgage. You owe $50,000 on your second mortgage or home equity line of credit (HELOC). The present market value of your home is only $250,000. Lenders are only secured up to the value of the property. In this example, the first lender is secured by the property value. However, the property has declined in value and is worth less than the amount secured by the first mortgage, so the second lender has nothing securing their lien. In a Chapter 13 bankruptcy, you may be able to “lien strip” the second lender. The second mortgage holder would be treated as an unsecured creditor, and would not be able to collect on the second mortgage or HELOC after the bankruptcy discharge. You keep the first mortgage and keep the house.
Feel free to call me, even if you have recently gone through a bankruptcy to discuss your options.
Mark McClure
253.631.6484
mark@northwestbk.com
www.northwestbk.com
