Mortgage and HELOC not reaffirmed for chapter 7 bk - I have equity now and want to sell

[Anonymous]

Hi all,

First post, so forgive me if this is posted elsewhere, I didn't see it.

I was discharged from BK in 2016 and have been rebuilding my credit. I did not reaffirm either mortgage or HELOC (same company/different "owners" they tell me)

My credit report says both mortgage and HELOC are discharged under Chapter 7

I have been making monthly payments on my mortgage with their "voluntary coupons". I have not made a payment on the HELOC since 2014, and the balance WAS $24k.

I need to sell my house, and there is equity, which I need. I don't see a lien on the house for the HELOC and honestly, I'm scared to call and raise any red flags.

First, do I get to keep the equity in the house when it sells? How can I find out if the HELOC will factor in? Can I just sell through a realtor since it's been 3 years?

In advance, I thank you for your time!!

Kind regards,

Ilene

[FireMedic1]

I would say the $ from the sale of the house would go to pay off the HELOC (since its a lien ) so the buyer would have a clean title.

[Anonymous]

I would think so too, but there is no lien on record and the debt states "discharged"...that's where I'm confused.

[Shooting-For-800]

If you were upside down on the house during BK, the HELOC should have be discharged.

It should be considered unsecured if you were upside down more than the HELOC totalled.

The first mortgage still needs to be paid off.  (applies in Ch 13 but not 7)

I am not an attorney.  

YMMV.  GL!

[despritfreya]

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@Shooting-For-800 wrote:

If you were upside down on the house during BK, the HELOC should have be discharged. It should be considered unsecured if you were upside down more than the HELOC totalled.

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Absolutely 100% incorrect.

If there was a valid mortgage/lien on the home when the Chapter 7 was filed it is still valid as such mortgage/liens pass through a Chapter 7 unaffected.   OP will have to deal with the mortgage/lien when he/she sells or when the lender decides there is sufficient equity over the first mortgage to foreclose.

OP - the only true way to make sure the lien is not on the title is to have a title company run a complete title report. 

Des.

[Anonymous]

I guess what I find online through the assessors office isn't complete then? I see no lien on the report, just the sales info.

I need to find a company that can do a title search for me, as that makes a big difference to me and I want to know rather than be surprised.

Thanks much for the responses!

Ilene

[Shooting-For-800]

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@despritfreya wrote:

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@Shooting-For-800 wrote:

If you were upside down on the house during BK, the HELOC should have be discharged. It should be considered unsecured if you were upside down more than the HELOC totalled.

---

Absolutely 100% incorrect.

If there was a valid mortgage/lien on the home when the Chapter 7 was filed it is still valid as such mortgage/liens pass through a Chapter 7 unaffected.   OP will have to deal with the mortgage/lien when he/she sells or when the lender decides there is sufficient equity over the first mortgage to foreclose.

OP - the only true way to make sure the lien is not on the title is to have a title company run a complete title report. 

Des.

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HELOC Stripping only applies in Chapter 13?

[despritfreya]

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@Shooting-For-800 wrote:

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HELOC Stripping only applies in Chapter 13?

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Prior to 2015 the only Circuit that allowed lien stripping in the context of a Chapter 7 was the 11th Circuit. After 2015 no Circuit will allow it. See the USSC decision of Bank of America, N. A. v. Caulkett. ___ U.S. ____, 135 S.Ct. 1995 (2015):

Section 506(d) of the Bankruptcy Code does not allow a Chapter 7 debtor to void a junior mortgage on the debtor's property when the amount of the debt secured by the senior mortgage on that property exceeds the property's current market value.

https://scholar.google.com/scholar_case?case=17556597504568287125&hl=en&as_sdt=6&as_vis=1&oi=scholar...

Des.

[Shooting-For-800]

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@despritfreya wrote:

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@Shooting-For-800 wrote:

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HELOC Stripping only applies in Chapter 13?

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Prior to 2015 the only Circuit that allowed lien stripping in the context of a Chapter 7 was the 11th Circuit. After 2015 no Circuit will allow it. See the USSC decision of Bank of America, N. A. v. Caulkett. ___ U.S. ____, 135 S.Ct. 1995 (2015):

Section 506(d) of the Bankruptcy Code does not allow a Chapter 7 debtor to void a junior mortgage on the debtor's property when the amount of the debt secured by the senior mortgage on that property exceeds the property's current market value.

https://scholar.google.com/scholar_case?case=17556597504568287125&hl=en&as_sdt=6&as_vis=1&oi=scholar...

Des.

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Um, ok.  So only in Chapter 13 then?

[despritfreya]

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@Anonymous wrote:

I guess what I find online through the assessors office isn't complete then? I see no lien on the report, just the sales info. I need to find a company that can do a title search for me, as that makes a big difference to me and I want to know rather than be surprised.

Thanks much for the responses!

Ilene

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Do not rely on your own "investigation".  Hire a professionl when it is this important.  Any title company can do this. 

It is always possible that your 2nd was released through the National Mortgage Settlement/Frank Dodd Act (especially if you successfully modified your 1st under HAMP) but, you will want an official report to verify the condition of your title.

Also, if the title company does not show the lien you might want to use the same title company to close any sale of the property.

Des.