Lots of questions - Need some guidance

[Housebroken13]

Hi,

My wife and I were discharged from BK way back in 2009. We did not reaffirm the mortgage on our primary home and have payed/stayed; the mortgage was modified prior to our BK filing.

In other words, do I have to pay the non-interest bearing principal on a discharged mortgage if I sell the home?

We've both improved our credit and are making more money than we were back then.

Right now our mortgage is w/ Mr. Cooper and the terms are as follows: (Modification)
Interest Rate: 4.375%
Interest Bearing Principal Balance: $203,011.41
Non-Interest Bearing Principal Balance: $80,396.36
40 year Term
Property is located in CT.

My questions are this:

1) We are right at where we think we can sell our home for what we owe or slightly over what we owe. Would the bank accept a lower amount e.g. if we just paid the interest bearing principal balance with the proceeds of the sale to get the lien out of our name? Or would that constitute a short sale?

2) If we wanted to stay is refinancing an option? Perhaps a cash out to get some liquidity so we can perform some renovations?

3) If we were to sell what options would we have for purchasing new? We were looking at a homes in the $350K range.

Thank you in advance.

 

[Raven1]

My wife and I were discharged from BK way back in 2009. . . We did not reaffirm the mortgage do I have to pay the non-interest bearing principal on a discharged mortgage if I sell the home?

Yes.

Would the bank accept a lower amount?

Maybe but doubtful if the property has sufficient value.

Would that constitute a short sale?

Yes. If you get the lender to accept something less than full payment of its lien then that is a “sort sale”.

Is refinancing an option?

Attempting to refinance is always an option. Getting a loan for such purposes depends upon many, many factors.

What options would we have for purchasing new?

Cannot comment on this one.

 

[Housebroken13]

Thank you!

 

[Jzone]

I would start with having a real estate lawyer do a title search for you. Even though the original mortgage was discharged and not reaffirmed, the original mortgage company more than likely still holds a lien on the property. Most states let you check this for free online or at your county clerks office.

If you plan to sell or refinance, that lien would have to be settled. One good thing to look into is that you may be past the statue of limitations in your state for enforcing a lien. Check that out too as some states are 7 years while others like Michigan have no statue of limitations and can just wait it out until you want to sell or refinance and then they get their payday.

I'm not sure, but that non-interest bearing principle could be your balance that was modified? Check with your bankruptcy attorney and maybe they can clear that up for you.

Im in a similar situation in Michigan. Bankruptcy discharged in 2011, stayed in the house and continue to pay on the first mortgage only. Second mortgage was also discharged but havent payed in about 6 years. They cant collect on the debt, but still hold the lien. I dont need to sell or refinance anytime soon, but I know when I do, they will be standing in line trying to collect something!

 

[Housebroken13]

Thank you this is extremely helpful