Tuesday, October 11, 2011

Should I pay my second mortgage if my house is underwater?

 By Atty Crispin Lozano

The most common question of homeowners if they have a residence that is underwater is “Should I pay my second mortgage?”  To illustrate, assume that Juan and Maria bought a house in 2006 worth $500,000 with a financing of 80/20 or a first loan of $400,000 and a second loan of $100,000.  The house now has a market value of $300,000.  Under this situation the first loan is collateralized up to $300,000 whereas the second loan has no collateral.  A lender can foreclose in California if the mortgage is not being paid.  In foreclosure actions, lender foreclose only if there if a value in the collateral.  Under this situation the second loan has no collateral because of the reduction in property value.  Only the first loan has collateral.  For practical purposes the second mortgage holder will not foreclose on the house because it will not get any money in doing so.
Question: How can a homeowner totally eliminate the second mortgage?
Answer: Filing Chapter 13 Bankruptcy will allow a homeowner to strip the lien on the second mortgage.  The result of lien stripping is that the second mortgage of $100,000 above will be considered an unsecured loan.  Unsecured loan are like credit cards where no collateral is attached to the loan.  In Chapter 13, the unsecured loan will be paid based on the monthly disposable income of the debtor.  If the disposable income is just sufficient to pay secured creditors, the unsecured creditors will only get a minimal percent of whatever is left in the disposable income.
Question: If I file for Chapter 13, will the lender of the first and second mortgage be able to foreclose?
Answer: Once you are approved on your Chapter 13 plan of payments which include paying the arrears on the first mortgage over three to five years and continuously paying the current monthly payments for the first mortgage, the lender will not foreclose on your house.  The second mortgage lender will not also foreclose because once the lien is stripped, the loan becomes unsecured.  However, you have to complete the plan payments.  Failure to pay plan payments will cause your case to be dismissed.
Note: This is for presentation purposes only and not a legal advice.  
Bankruptcy News
1. If you are being sued by your creditors, most money judgment can be eliminated in bankruptcy.
2. Collection actions continue and you can be sued if you are in debt settlement.
3. Chapter 7 will eliminate all unsecured debts.  If you are near retirement age, you must eliminate most of your debts.
4. Bankruptcy will stop foreclosure actions.  If your trustee sale date is 10 days before, you can still file for bankruptcy.
5. If your salary is being garnished, you have a court case about debts or you are being harassed by creditors, bankruptcy can stop garnishment, court cases, harassing creditors and eliminate the debt.
6. Bankruptcy is cheaper, faster and safer than debt settlement which has no guaranteed success.
7. Preserve your health, eliminate stress and live a happy life by eliminating your debts which is the root of all problems.
Immigration News
1. On September 22, 2011, we received an approval from USCIS for adjustment of status using cross chargeability that enabled the beneficiary to use the worldwide priority date (which is faster) instead of the Philippines priority date.
2. On August 30, 2011, we received an approval from Immigration Court of an adjustment of status for an alien who was denied the adjustment of status from another attorney.
3. On July 28, 2011, we received an approval of adjustment of status for an alien who entered the U. S. without valid documents but qualified under Sec. 245(i).
4. On July 21, 2011 we received an approval for withholding of removal in Immigration court for an old lady who could not come back to her country because of political situation.
5. On June 28, 2011, we received an approval in Immigration Court for an adjustment of status.  The applicant was previously denied on the I-130 petition because they did it without an attorney.  We filed a second I-130 petition that was approved based on good faith marriage.
6. On March 1, 2011, we received an approval of adjustment of status by an Immigration Judge for an alien who was originally denied adjustment of status based on petition by employer.
7. On January 25, 2011, we received an approval of a self-petition by a battered spouse.  Her entry with a different name was forgiven.
8. On December 23, 2010, we received an approval from the Immigration Court for a waiver of misrepresentation for an alien who entered as single but actually married.
9. On January 5, 2010, we received an approval in Immigration Court of an adjustment of status based on good faith marriage despite an age difference of 18 years.
10. Abused spouse of U.S. citizen or permanent residents can self petition even if there is a problem with the entry documents such as C or D visa or entry without inspection or assumed name.
11. Individual Tax Identification Number (ITIN) can be used for filing tax returns and is required before bank accounts can be opened.
Crispin Caday Lozano was born in the Philippines and a naturalized U.S. citizen.  He is an active member of the State Bar of California, the American Immigration Lawyers Association and the National Association of Consumers Bankruptcy Attorneys.  He specializes in immigration law and bankruptcy law.  He earned his Juris Doctor at Western State University College of Law in Fullerton, California.  He is also a Certified Public Accountant, a Real Estate Broker and a Bachelor of Business Administration Cum Laude graduate.  He has four offices which are located in Hayward, San Jose, and Cerritos, California.  You can contact him at telephone number 1-877-456-9266.  Email your questions to LozanoLawOffice@crispinlozanolaw.com/; visit our website at www.crispinlozanolaw.com/

Immigrant Visa granted ten years ahead of the beneficiary's priority date -- The spouses Gerald and Sharmilee Abello received their green cards ten years ahead of the beneficiary's priority date with the help of Attorney Crispin C. Lozano.  Gerald was petitioned by his US citizen father on March 20, 2001 as Married son of a U.S. citizen under the third preference F-3.  His wife was born in Fiji Islands Republic.  Under the current visa processing, if Gerald will use the Philippine priority date of March 20, 2001, it will take ten more years of waiting before he will get his green card and also for his wife.  Atty. Crispin C. Lozano argued that Gerald is entitled to use the priority date under the Worldwide Visa Bullentin which currently processes March 2001 because that will allow his wife, who was born in Fiji Islands, to get an immigrant visa and it will prevent the separation of the husband and wife.    The USCIS approved their case based on this legal argument.


  1. Get your Adjustment Of Status. Automated Visa Preparation System without the high legal fees. Approved by Immigration Lawyers.This will allow you to start the process of obtaining their Green Card.

  2. A second mortgage loan can be taken out only if you have already taken out a first mortgage loan. The equity that you have built up in your primary home is utilized to take the second mortgage loan. A second mortgage loan is treated as a sub-ordinate to the first mortgage loan. The rate of interest associated with a second mortgage loan is comparatively high than the rate of interest associated with the first mortgage loan. This is because in the event of default, the first mortgage loan is taken care first and the second mortgage loan is looked after later.

  3. CFS Mortgage, http://www.cfsflex.com, has a flexible loan program. They allow a mortgage after a foreclosure, short sale, or chapter 7 bankruptcy. There is only a six month waiting period. This is perfect for individuals looking to become homeowners again.

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