Bankruptcy, foreclosure and 2nd mortgage?

[Bobby B]

Jurisdiction

Minnesota

Hello,

In 2005 I filed a chapter 13 that was later converted to a 7 that was discharged in 2009. I have not made a payment on my 2nd mortgage since June of 2005, my 1st is current and in good standing. The 2nd was taken out in 2004 with the final payment due January 1 2020, I have gone over the loan docs several times now and no where does it clearly state a maturity date for the loan. I have not heard from my 2nd until yesterday when I received a Notice of Default and Notice of Intent to Foreclose it was sent pre sorted mail(shouldn't that have been sent certified or something). Last year my 1st mortgage was sold to the company that has my 2nd. I live in Minnesota. Is the letter I received just a scare letter, on the back of the letter it has the standard bankruptcy statement. When I 1st filed for my BK I contacted both my 1st and 2nd to try and work out a payment, my 1st was very helpful and rewrote the note at a rate and payment I could make. The 2nd started laughing at my when I asked then hung up, I tried several more times to contact them and as soon as I would say who I was they would hang up.

Any thoughts/advise will be appreciated.

Thank you

 

[army judge]

Any thoughts/advise will be appreciated

Contact the attorney you retained to complete your BK.

Otherwise, consult an attorney of your choosing.

Big problems are brewing, pal, very big problems.

You require REAL legal help, help beyond the capabilities of volunteer internet strangers!

 

[adjusterjack]

I have gone over the loan docs several times now and no where does it clearly state a maturity date for the loan.

The maturity date is the date the loan would have been fully amortized (paid off). It's going to have to be recalculated and it's probably far beyond what the original pay off date was because the interest was added to the unpaid balance every year that you didn't pay.

Understand that the debt was discharged, you don't have to pay it, the lender cannot ask you for it. However, the lender is still entitled to the house. You can voluntarily pay the balance if you want to.

I received a Notice of Default and Notice of Intent to Foreclose it was sent pre sorted mail(shouldn't that have been sent certified or something).

Not necessarily. Notice is designed to notify you of something. You've been notified. If there is a different notice required for a court proceeding, the lender will get that done when the time comes.

Beyond all that, I agree that you should be talking to any attorney.

The 2nd started laughing at my when I asked then hung up, I tried several more times to contact them and as soon as I would say who I was they would hang up.

Not really relevant to your current situation.

Your options:

1 - Find the money to pay off the loan.
2 - Sell the house and hope the current equity pays off the loan.
3 - Let the house go back to the lender, who will pay off your first mortgage when the house is resold.

You could ask for a payment plan but I don't see it happening since they laughed off the idea back then, especially since home prices are high these days and it'll be an easy resale.

 

[flyingron]

I presume that while you were under chapter 13 you didn't take steps to strip the second's lien and make them an unsecured claim. If not, then AdjusterJack gave you the options. They are still entitled to their security interest in the house even with your personal liability discharged.

 

[Bobby B]

Thanks for the replies and I have reached out to the attorney that handled the BK he is apparently very busy so while I'm waiting I thought I would get others opinions and thoughts on the matter.

My reason for mentioning the maturity date is I read an article called Why Minnesota Mortgages Contain Maturity Dates and it stated that:

"The time within which such action may be commenced begins to run from the date of the mortgage, unless the time of the maturity of the debt of obligation secured by the mortgage is clearly stated in the mortgage."

"Accordingly, the maturity date of the mortgage should be clearly stated in Minnesota mortgages (as opposed to a maturity date that is referenced only in the promissory note). If there is no clearly stated maturity date in a mortgage, the 15 year statute of limitations on the right to foreclose the mortgage will begin to run on the date of the mortgage."

I could not find any mention of a "maturity" date in the loan docs the only thing close was the listing of the final payment date of January 1, 2020. So I looked up the statue the article referenced:

541.03 FORECLOSURE OF REAL ESTATE MORTGAGE.

Subdivision 1.Limitation.

No action or proceeding to foreclose a real estate mortgage, whether by action or advertisement or otherwise, shall be maintained unless commenced within 15 years from the maturity of the whole of the debt secured by the mortgage, and this limitation shall not be extended by the nonresidence of any plaintiff or defendant or any party interested in the land upon which the mortgage is a lien in any action commenced to foreclose such mortgage, nor by reason of any payment made after such maturity, nor by reason of any extension of the time of payment of the mortgage or the debt or obligation thereby secured or any portion thereof, unless such extension shall be in writing and shall have been recorded in the same office in which the original mortgage is recorded, within the limitation period herein provided, or prior to the expiration of any previously recorded extension of such mortgage or debt, nor by reason of any disability of any party interested in the mortgage.

Subd. 2.When time begins to run; commencement of proceedings.

The time within which any such action or proceeding may be commenced shall begin to run from the date of such mortgage, unless the time of the maturity of the debt or obligation secured by such mortgage shall be clearly stated in such mortgage. Any action or proceeding to foreclose a real estate mortgage, whether by action, by advertisement, or otherwise, commenced within the period of limitation herein provided, may be prosecuted to completion notwithstanding the expiration of the period of limitation, and proceedings to foreclose a real estate mortgage by advertisement shall be deemed commenced on the date of the first publication of the notice of sale.



Again thanks for the replies.

 

[adjusterjack]

None of that says that the words "maturity date" have to appear in the mortgage contract.

In fact, 12 USCS Section 1707(c) (Title 12. Banks and Banking Chapter 13 defines mortgage maturity date as:

"the date on which the mortgage indebtedness would be extinguished if paid in accordance with periodic payments provided for in the mortgage."

Jan 1, 2020 was your mortgage maturity date according to that statutory definition.

The lender has 15 years from that date to foreclose and appears to be well within the time limit.

Check with your attorney and see if that's right.

 

[Zigner]

Adjusterjack wrote a nice post, but I just wanted to reiterate the following point:

I could not find any mention of a "maturity" date in the loan docs the only thing close was the listing of the final payment date of January 1, 2020.

By definition, that's the maturity date.

 

[despritfreya]

"I could not find any mention of a "maturity" date in the loan docs the only thing close was the listing of the final payment date of January 1, 2020."

Not only do the others have it correct that January 1, 2020 was the maturity date, the reason you have been recently contacted is that there is now sufficient equity in the property to justify the foreclosure by a junior lienholder.

Borrowers who simply ignored and/or failed to pay their junior lienholders during the years since the mortgage meltdown are going to be in for a rude awakening now that property values have skyrocketed across this Country. Unfortunately, it appears you fall into this category.

Des.

 

[Bobby B]

Hello,

I have a couple of questions that I'm hoping someone can assist me with, as I'm attempting to resolve the "Notice of Intent to Foreclose" started by the loan servicer for my 2nd mortgage.

Three months ago I requested for the loan servicer to provide me with the identity of the 2nd mortgage holder. I have made multiple request for this information and have yet to receive it. My understanding is that they are required to provide it once a request has been made, am I correct in that and what is my recourse if they continue with not providing it?

The loan servicer has also stated that they can not reply/discuss the on going foreclosure matter via email that is must be done over the phone, is this a true statement? This strikes me as odd as they send me email with official documents all the time. I have sent multiple emails requesting information and attempts to negotiate with them that they have ignored. To date I have only had 6 phone conversations with them. Only 1 of those calls was identified as the mortgage servicer in the caller ID, 3 of the calls were calls I initiated, the other 2 calls were identified as "scam likely" by caller ID and only answered them as I thought I recognized the number. When they call they don't identify who they are(other than 1st name), who they represent or what company they work for, they flat out refuse to provide that information and will hang up if you don't provide the information they request. They state that before they can tell me anything I have to provide personal information and identify who I am. In todays world of scammers and identity theft I am VERY reluctant to talk with, let alone provide information to someone that hides who they are, I have noticed that their calls come from different numbers. Do I have to accept calls if they won't identify who they are without me providing them my information?

They have also said that a short sale is approved but will not provide me with and detail, such as how much or what amount they will accept in the short sale. I'm not sure how I can agree to sell my home if I don't know what amount to sell it for. I have sent multiple emails requesting that they provide that information, they have not responded. Are they required to provide that information to me?

I have reached out to the attorney I hired initially to review all the docs and provide me with options when this all started back in February. However he on vacation for the next to weeks and I'm not sure if I can even afford his fees as my income was reduce by 82% this month. So I appreciate your thoughts and comments on this matter.

Thanks

 

[adjusterjack]

My understanding is that they are required to provide it once a request has been made, am I correct in that and what is my recourse if they continue with not providing it?

Your recourse, obviously, is to go to court and have a judge order the lender to comply.

The loan servicer has also stated that they can not reply/discuss the on going foreclosure matter via email that is must be done over the phone, is this a true statement?

They are telling you what they want to do. They are free to ignore any other method of communication that you attempt. Unless, of course, you send an email saying you have the money to pay off the balance. Otherwise, they don't care what you have to say or how you say it.

Do I have to accept calls if they won't identify who they are without me providing them my information?

No, you don't have to accept any calls. You can just wait until the house gets taken and do nothing.

They have also said that a short sale is approved but will not provide me with and detail, such as how much or what amount they will accept in the short sale. I'm not sure how I can agree to sell my home if I don't know what amount to sell it for. I have sent multiple emails requesting that they provide that information, they have not responded. Are they required to provide that information to me?

Again, they don't have to provide you with anything except the official foreclosure documents when the time comes.

It typically up to the home owner to arrange for the sale of the property and submit the contract to the lender if the sale proceeds won't cover the balance.

I'm not sure if I can even afford his fees as my income was reduce by 82% this month.

Then I suggest you talk to a realtor about putting your home up for sale and see if the equity will cover the balance.

You don't have many options here.

1 - Pay the balance.
2 - Sell the house.
3 - Lose the house to foreclosure.

 

[army judge]

You don't have many options here.

1 - Pay the balance.
2 - Sell the house.
3 - Lose the house to foreclosure.

There MIGHT be one additional option worth investigating.

The OP might wish to consult a bankruptcy attorney regarding a Chapter 7 bankruptcy filing.

Otherwise, you're correct, OP'S options are few.

 

[Bobby B]

Your recourse, obviously, is to go to court and have a judge order the lender to comply.



They are telling you what they want to do. They are free to ignore any other method of communication that you attempt. Unless, of course, you send an email saying you have the money to pay off the balance. Otherwise, they don't care what you have to say or how you say it.



No, you don't have to accept any calls. You can just wait until the house gets taken and do nothing.



Again, they don't have to provide you with anything except the official foreclosure documents when the time comes.

It typically up to the home owner to arrange for the sale of the property and submit the contract to the lender if the sale proceeds won't cover the balance.



Then I suggest you talk to a realtor about putting your home up for sale and see if the equity will cover the balance.

You don't have many options here.

1 - Pay the balance.
2 - Sell the house.
3 - Lose the house to foreclosure.

I appreciate the reply, the only thing I would add is I am not personally liable for the 2nd mortgage. They have a lien on the property.

 

[adjusterjack]

I appreciate the reply, the only thing I would add is I am not personally liable for the 2nd mortgage. They have a lien on the property.

How are you not personally liable?

Who has the lien?

What kind of lien and how did it get there?

Seems to me that you become indirectly personally liable if the consequence of not paying is losing the house.

 

[despritfreya]

OP (Bobby B) is not personally liable as he discharged the debt in a Chapter 7. But, as we all know, that discharge did not get rid of the lien.

OP's loan matured on January 1, 2020. He could file a Chapter 13 and provide for full payment of the balance due (lien amount) with interest over a 60 month Plan - assuming he can afford it.

Des.