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SOL on 2nd Mortgage

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When you have a mortgage (first, second etc) you sign two documents: the promissory note and the mortgage.

1) The note details your terms of repayment and makes you personally responsible to repay the loan;

2) The mortgage ties the note to your house as a lien.

If you stop paying the note, it does not get rid of the lien. There are all kinds of strategies having to do with getting rid of the lien after you have stopped paying the note. Once such strategy has to do with the value of the property and the size of the mortgage(s). For example if you file a Ch 13 if the value of the house is less than the value of the first mortgage; then you can strip off the second mortgage and pay it pennies on the dollar as part of your plan payment and emerge from BK 13 with one mortgage (the first).

There is a similar strategy for Ch 7, but the Ch 7 strategy is an unofficial stripping of the second or jr liens because there is no provision for it in the BK law at this time.

I have heard of people trying the above without actually filing BK by stopping paying the 2nd and then waiting until the 2nd gets sold off to a collections agency and the debtor neogtiates a percentage of the second in exchange for a lien release. I don't know the rate of success of this action without the protection of the BK discharge injunction.

The five years comes from the length of time the lender has, in Florida, to come after you to collect the deficiency judgement if you should sell your home in a short sale and get a lien release - but not a debt release. (Remember they can come after you even if the collateral has been sold, unless you get both a lien release AND a debt release).

For your specific question, please consult an attorney that is familiar with Fl real estate and specifically stipping mortgage liens. I'm sure there is more detail you would need to answer your question correctly. I am not an attorney so my info should be taken with great caution.

Edited by Denita
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