Here is the Question from Avvo.com: I am current on my first mortgage with Chase, my taxes are current. My 2nd mortgage with OCWEN is in default can they foreclose?
My 1st mortgage 406,000
My 2nd mortgage 60,000
Our current home value 362,000.
My Answer:
Legally, yes, your second mortgage holder can foreclose. But, they will not because they would have to pay off the first mortgage. And, because your house is worth much less than what you owe, they wouldn’t get any money for the 2nd mortgage debt as a result. But, they can sue you directly on the note (the debt itself), and try to garnish your wages, or sieze your bank accounts, or both. You do have several options, and it depends on whether you want to save your house or not.
You could file Chapter 13 Bankruptcy and pay the 2nd mortgage at a percentage. That is called a”strip down”. You could surrender the house to the bank, file Chapter 7 Bankruptcy, and owe nothing on the deficiency. Short-selling the house would be next to impossible because you’d need to get approval from both the first and second mortgage holders.
It is important that you call an attorney who is experienced in both foreclosure and bankruptcy issues and discuss your full financial situation. Your options depend on your family income, expenses, and assets. Then, the attorney should be able to help you make the best decision.
It is best to set up a free consultation to discuss your full situation.
Daniel J. Winter
BankruptcyLawChicago.com
djw@DWinterLaw.com
312-789-9999
Offices in Chicago, Oak Lawn, Gurnee, and Skokie, Illinois
