How can I get my second mortgage lien that is valued at zero and supposedly extinguished actually avoided so I can move forward and refinance? 12 Answers as of October 30, 2014

My wife and I finally received our chapter 13 discharge papers and during our bankruptcy, we were able to strip our second mortgage because we were so upside down in our home. We now we want to refinance our home but numerous title companies are asking that we file a motion to avoid the second mortgage lien. I do not understand why they are requiring this since the lien was valued at zero during our bankruptcy and our discharge states that liens valued at zero are now extinguished by operation of law after discharge. I do not think my attorney has ever filed this type of motion. The title companies are extremely adamant that I need this or they cannot remove the second mortgage lien even though it is valued at zero. This has been a frustrating experience.

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Stephens Gourley & Bywater | David A. Stephens
You probably do need a motion to strip it off unless the second mortgage advises the title company that it will remove it or that the balance due is $0.00. Stripping it removes it as a lien.
Answer Applies to: Nevada
Replied: 10/30/2014
Law Office of Shawn N. Wright | Shawn N. Wright
I am not sure which state you reside in, however this is a problem that is fixable. I am not sure how your second mortgage was stripped off, but here in the Western Pennsylvania Bankruptcy Court, we have to file an adversary complaint against the holder of the second mortgage. We would then get a court order that directs the mortgage company to file a satisfaction piece (basically a document filed with the County Recorder of Deeds) upon the successful completion of the Chapter 13 plan. I recently had a mortgage issue like this with HSBC Mortgage, and they were completely non-responsive, so I filed a motion to reopen the bankruptcy case and I got a court order from the Bankruptcy Judge that permitted me to file such a satisfaction piece. So, the satisfaction piece is what the title company will need in order for you to refinance. It should be feasible to obtain, but it takes some effort.
Answer Applies to: Pennsylvania
Replied: 10/30/2014
A Fresh Start
A Fresh Start | Dorothy G Bunce
It sounds like you and the title companies are not communicating very well. When you stripped your 2nd mortgage in your Chapter 13, the Court issued an order saying that the lien would not be good upon receiving a chapter 13 discharge. You may need to obtain a certified copy of that order as well as a copy of your chapter 13 discharge.
Answer Applies to: Nevada
Replied: 10/29/2014
Lynch Law Offices, P.C. | Roseanne N. Lynch
In Illinois the lien remains on the property. You need to file the Motion and get a Court Order "avoiding" the lien so that the Title Company can make sure that the lien is actually released, or it cannot issue title insurance. It is complex and you need an attorney basically because you need to bring the Motion in the Federal Court. You should speak to an attorney that is skilled in title exam as well as bankruptcy. It is frustrating but the results are worth the cost.
Answer Applies to: Illinois
Replied: 10/29/2014
GARCIA & GONZALES, P.C. | Richard N. Gonzales
I have successfully filed THOUSANDS of bankruptcies over the past 30 plus years. I can not tell without looking at your BK file what was filed, or what remains to be done. If I were you, I would pay an experienced BK lawyer for one hour of their time to review your Court file. The lawyer can access your file through PACER from their office. After this review, you can be advised what needs to be done. Do it before the Court closes your file. Otherwise, you may have other fees and costs associated with re-opening your case. Good luck!
Answer Applies to: Colorado
Replied: 10/29/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    Generally the order stripping of the second mortgage is recorded to avoid this problem. You need to seek an opinion from local counsel, someone who can look at the docket.
    Answer Applies to: California
    Replied: 10/29/2014
    Novakov & Associates, PLLC
    Novakov & Associates, PLLC | LINDA S. NOVAKOV
    If you have an order from the Bankruptcy Court that specifically sets out the information for the second mortgage that is filed against the property, you may be able to file that Order in the Clerk's office. I would suggest contacting the attorney who filed your Bankruptcy and requesting help with the issue.
    Answer Applies to: Kentucky
    Replied: 10/29/2014
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    Take the judge's signed order from when the adversary proceeding was done and a copy of the order signed discharging it to your local register of deed, Register the get a copy and that should take care of it.
    Answer Applies to: Michigan
    Replied: 10/29/2014
    Steele, George, Schofield & Ramos, LLP
    Steele, George, Schofield & Ramos, LLP | Alan E. Ramos
    In most (if not all) courts, when you are granted a lien strip it is conditional upon your completion of your plan and receiving a discharge. Once you complete the plan and receive a discharge, you must apply to the court for an order stripping the lien. You then record the order with the county recorder's office. If you case has been closed, you will need to reopen it. You should speak with a local attorney and ask him/her to process this for you.
    Answer Applies to: California
    Replied: 10/29/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    Being valued at zero simply means you are not liable for the debt. You still have to remove the mortgage lien in the bankruptcy. A motion to avoid the lien during a chapter 13 will get you a signed order from the judge to take to your local county records office and present to them for recording. Once they record that judges order, then your second mortgage is removed. You can Google "motion to avoid second mortgage lien" and you should understand that the title companies are correct.
    Answer Applies to: New York
    Replied: 10/29/2014
    This lien stripping capability in Minnesota has really only existed for those filing in the last 2 years. The bankruptcy court and the Ch 13 Office has provided guidelines within the last year as to what is needed. A motion is necessary in order for there to be a court order providing for the stripping of the second mortgage. You will have to ask your attorney about your situation.
    Answer Applies to: Minnesota
    Replied: 10/28/2014
    D.J. Rausa, Attorney at Law | D.J. Rausa
    If the lien was stripped, then as part of your discharge, the Court ordered that the second reconvey the property to you. Your attorney needs to compel the second mortgage holder to release the lien.
    Answer Applies to: California
    Replied: 10/28/2014
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