Here is the situation
Just married my wife 9 months ago and we are selling her home that she had with her deceased husband. Here are the particulars.
1. They filed Chapter 7 BK in 2005
2. They did not reaffirm mortgage or second mortgage
3. They did a loan modification in 2010 to reduce their payment.
4. Her late husband told her then (at time of modification) that 2nd mortgage was paid for. It was one of those situations that he took care of everything and she knew nothing.
5. She has not received any correspondence since re: 2nd mortgage, no bills or phone calls so she believed it was paid.
6. He passed away in 2011
7. We put the house up for sale in late 2012
8. We have sold the house. Accepted an offer, had inspection, gave info to title co. for payoff
9. Title co. found a lien, the 2nd mortgage. It has stopped all momentum until lien is resolved.
We want to sell the house even though we can walk away. We would like to buy another house. Can we negotiate with Wells Fargo for settlement of 2nd without it being a short sale? In order to remove the lien and the sale can proceed. I am not able to be on the new mortgage due to damaged credit from a divorce. I would welcome help or suggestions with open arms.
If both the 1st and 2nd were claimed in BK7, with no reaffirmation, I'd walk away. She no longer owes the debt. If 2nd NOT included in BK, I'd try to settle with lender.
Full disclosure. I am a loan collector