http://www.nationalbankruptcyforum.com/chapter-13/stripping-mortgage-liens/ Bankruptcy Attorney Blogs and Directory Tue, 07 Feb 2012 19:52:12 +0000 hourly 1 http://wordpress.org/?v=3.3.1 http://www.nationalbankruptcyforum.com/chapter-13/stripping-mortgage-liens/comment-page-1/#comment-1040 Why Chapter 13 Bankruptcy Has Your Second Mortgage Lender Feeling “Undersecured” | National Bankruptcy Forum Wed, 30 Dec 2009 02:46:59 +0000 http://www.nationalbankruptcyforum.com.php5-8.dfw1-1.websitetestlink.com/?page_id=21#comment-1040 [...] In Nobleman v. American Savings Bank the Supreme Court refused to apply this standard to situations in which the security interest is the debtor’s principal residence, hence the current push for bankruptcy reform. However, the Nobleman decision does not prevent second and third mortgages from being modified when those mortgages are completely “undersecured”, meaning the mortgage amount totally exceeds the home’s value. For example, if your home is worth $350,000 and you owe $360,000 on your first mortgage and owe an additional $50,000 on a second mortgage, the second mortgage amount exceeds the value of your home (when the first position mortgage is factored in). In situations like this it is possible to “strip” the second mortgage from the home completely and pay out the debt, often at pennies on the dollar, over the life of the chapter 13 plan. Stripping of a second mortgage in this way operates as a judicially imposed mortgage modification. [...] [...] In Nobleman v. American Savings Bank the Supreme Court refused to apply this standard to situations in which the security interest is the debtor’s principal residence, hence the current push for bankruptcy reform. However, the Nobleman decision does not prevent second and third mortgages from being modified when those mortgages are completely “undersecured”, meaning the mortgage amount totally exceeds the home’s value. For example, if your home is worth $350,000 and you owe $360,000 on your first mortgage and owe an additional $50,000 on a second mortgage, the second mortgage amount exceeds the value of your home (when the first position mortgage is factored in). In situations like this it is possible to “strip” the second mortgage from the home completely and pay out the debt, often at pennies on the dollar, over the life of the chapter 13 plan. Stripping of a second mortgage in this way operates as a judicially imposed mortgage modification. [...]

]]> http://www.nationalbankruptcyforum.com/chapter-13/stripping-mortgage-liens/comment-page-1/#comment-597 H.R. 4173: Congress Proposes Bankruptcy Mortgage Modification Legislation…..Again | National Bankruptcy Forum Sat, 12 Dec 2009 21:00:12 +0000 http://www.nationalbankruptcyforum.com.php5-8.dfw1-1.websitetestlink.com/?page_id=21#comment-597 [...] Many will remember that a similar effort spearheaded by Senator Dick Durbin failed earlier this year after the proposed bill took heavy fire from the banking lobby. H.R. 4173 is very similar to Senator Durbin’s earlier reform proposals which were first introduced in 2007. Ironically, the resurgence of bankruptcy reform legislation has been caused by a complete unwillingness on the part of banks and servicers to modify mortgages. Under current law, lenders are not required to modify first mortgages on borrower’s primary residences in bankruptcy. However, borrowers who owe more than their home is worth may be able to have second or third mortgages modified. Current bankruptcy law does allow for second and third liens to be stripped from borrower’s ho... [...] [...] Many will remember that a similar effort spearheaded by Senator Dick Durbin failed earlier this year after the proposed bill took heavy fire from the banking lobby. H.R. 4173 is very similar to Senator Durbin’s earlier reform proposals which were first introduced in 2007. Ironically, the resurgence of bankruptcy reform legislation has been caused by a complete unwillingness on the part of banks and servicers to modify mortgages. Under current law, lenders are not required to modify first mortgages on borrower’s primary residences in bankruptcy. However, borrowers who owe more than their home is worth may be able to have second or third mortgages modified. Current bankruptcy law does allow for second and third liens to be stripped from borrower’s ho… [...]

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