Expert: Terry Leeders - 4/25/2009

Question
I filed bky in 2006 and did not reaffirm with my 1st mortgage or my equity line of credit. The tax value of my home fell dramatically not even covering the 1st mortgage amount.  Now the home equity line will mature next year and they will not work with me and no one will refi because of many different reasons.  I have been paying the equity line every month on time, but I will not be able to pay of the 33 grand they will want when it matures.  Can they foreclose on me? and wouldn't my 1st lender then step in?  I have been paying the 1st mortgage and reached a post-discharge resolution with them.  Will I lose my home if  no one will take this loan over or the "jr mortgage" wont work with me? What should i do?

Answer
The 2nd loan has the right to foreclose, but usually will not if there is no equity for them to get after paying off the first.  But that is something that they could try if there is some equity to attach to. I would suggest refinancing the entire balances between the two, check with several lenders (including your 1st).  The lien remains on the home, despite the bankruptcy filing.  They can only move to recoup their lien otherwise, since you did not reaffirm the debt.