Bankruptcy Won’t Void Your Second Mortgages for Underwater Homeowners

Bankruptcy Won’t Void Your Second Mortgages for Underwater Homeowners

Posted by on Jun 2, 2015 in Buying Homes, CA, Chula Vista, Community, coronado, Distressed homes, Gaslamp, Golden Hill, home inspection, Investment, Mission Hills, Mission Valley, mortgage, North Park, Palm Springs, Point Loma, Real Estate FAQ, San Diego, Selling Homes, Slider, South Park, Uncategorized, University Heights

Bankruptcy Won’t Void Your Second Mortgages for Underwater Homeowners
New Bankruptcy regulations could have financial disaster for home owners.  Are you underwater in your mortgage?  Call Chris Spade @ 619-320-5467

New Bankruptcy regulations could have financial disaster for home owners. Are you underwater in your mortgage? Call Chris Spade @ 619-320-5467

A sweeping ruling by the United States Supreme court. The court gives a big win to banks this week.  The court ruled that homeowners, who are underwater, can’t get rid of their second mortgage by filing for bankruptcy protection.

A debtor in a chapter 7 bankruptcy proceeding may not void a junior lien on the property when the debt owned on the senior lien is less than the total value of the home.

Two Florida homeowners tried to cancel their second mortgages with Bank of America. The bank fought back!  During bankruptcy proceedings a second mortgage gets paid only after the first.  Lenders said no way fighting that the debt could someday be fully paid once property values rise.

The justices took the shifting real estate market into consideration when making it’s decision.

Those fighting against the ruling look at it as a blow to the financial recovery of many americans.

Nationally, in 2014, there were more than 900,000 people who filed for bankruptcy protection.  That’s down from just over a million in 2013.  Chapter 7, the most common, allows a trustee to sell a person’s property to repay debts and cancel the rest.

If you have questions about your home loan or second loan or are interested in the value of your home, call us at 619-320-5467.  Even if you’re in another state we can refer you to an agent that can answer questions you may have.

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