Hidden Second Mortgages



Hidden Second Mortgages in Jacksonville Bankruptcy

I have previously written about modification of Mortgages through Chapter 13 in Jacksonville, FL bankruptcy:


 Since the Supreme Court did away with Chapter 7 second mortgage stripping in early 2015, the ability to strip second mortgages has been limited to Chapter 13 cases. So what does that do with modifying your mortgage? The two have come together recently in a number of my cases recently. In several Chapter 13 cases, I have seen previous modifications that were actually treated as second mortgages – usually without the understanding of the clients.

 The typical scenario is that our office starts working on the modification paperwork required for the current modification and we pull a title report from the local public records. What we see is a large second mortgage from the Florida Housing Finance Corporation or HUD related to a previous modification on the first mortgage. When I contact the clients about this mortgage, they claim there is no second mortgage and don’t know anything about the recorded mortgage on their property.

 This is disturbing on several levels. First, it appears that creditors are not explaining important legal documents to homeowners when completing modification paperwork. All of the previous modifications were done without the benefit of an attorney and were outside of the Chapter 13 process. Second, it means that your Chapter 13 attorney had really be able to understand this issue even if the clients never inform them of the potential existence of the second mortgage.

 Our office will make sure that your public records are thoroughly checked and that all liens are discovered and dealt with in the Chapter 13 case. Judgments should be cleared from the title. Second mortgage should be stripped where appropriate. Finally, HOA liens should be cleared also.

 Don’t risk coming out of Chapter 13 with liens on your property. All of your hard work in completing a Chapter 13 plan could be wasted if the appropriate action was not taken with respect to liens and mortgages on your property.

  If you feel that you may benefit from a loan modification or any type of mortgage relief, contact our office at 904.725.0822 for a free consultation.

Bryan Mickler