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On Nov 2, 2010, at 8:26 PM, "Cameron Totten" wrote:
I have a client who purchased the house that he was renting from the Chapter 7 Trustee. He cured the initial default after purchase. However, he is having difficulty keeping up with the payments demanded by the servicer post-discharge. (Although the note was discharged in the Chapter 7, the servicer acts as though the note still governs the terms of the loan.). I realize that his payments post-discharge are "voluntary" and only serve the purpose of keeping the lender from foreclosing. That is, it appears that if my client continues to make the payments as set forth in the note, the lender will never foreclose on the deed of trust. Of course, the terms of the note are horrible and the monthly payment will almost triple in early 2011.
However, my question is, if the property was sold at a foreclosure sale or liquidated by a bk trustee, would the lender be able to recover the interest post-petition and/or post-discharge on the lien/deed of trust? There is an ARM rider that was attached to the deed of trust and also recorded but it seems dependent on the note. The issue is whether the second is totally unsecured or not. If the first can only recover from the principal amount at the time of the bk filing from the foreclosure sale, the second would likely be partially secured. However, if the first can claim interest post-petition on the lien, then the second is unsecured and could be stripped in a 13 or 11.
Cameron Totten
Cameron Totten
ctottenlaw.com
Sent from my Verizon Wireless BlackBerry
Read 506bSent from my iPhoneOn Nov 2, 2010, at 8:26 PM, "Cameron Totten" <
tottenlaw@sbcglobal.net> wrote:
I have a client who purchased the house that he was renting from the Chapter 7 Trustee. He cured the initial default after purchase. However, he is having difficulty keeping up with the payments demanded by the servicer post-discharge. (Although the note was discharged in the Chapter 7, the servicer acts as though the note still governs the terms of the loan.). I realize that his payments post-discharge are "voluntary" and only serve the purpose of keeping the lender from foreclosing. That is, it appears that if my client continues to make the payments as set forth in the note, the lender will never foreclose on the deed of trust. Of course, the terms of the note are horrible and the monthly payment will almost triple in early 2011.
However, my question is, if the property was sold at a foreclosure sale or liquidated by a bk trustee, would the lender be able to recover the interest post-petition and/or post-discharge on the lien/deed of trust? There is an ARM rider that was attached to the deed of trust and also recorded but it seems dependent on the note. The issue is whether the second is totally unsecured or not. If the first can only recover from the principal amount at the time of the bk filing from the foreclosure sale, the second would likely be partially secured. However, if the first can claim interest post-petition on the lien, then the second is unsecured and could be stripped in a 13 or 11.
Cameron Totten
Cameron Totten
ctottenlaw.com
Sent from my Verizon Wireless BlackBerry
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