Non Performing 2nds

5 Replies

Also, known as "cram downs" the reduction of principle owing by the court which can be applied arising out of other matters such as predatory dealing.....but that's another matter. Unsecured is better than blown away. While you might think a second NPN is more valuable, don't bet on it, you'll need to collect and it will depend on the type of bankruptcy it appears to me. :)

Originally posted by @Julian Buick :

Just read an article about the Supreme Court rejecting 2nd lien stripping in Chapter 7 bankruptcies. Was wondering how that will affect the resale value on non performing 2nds.

 Well it means that current pricing on 2nds will not be deprecated which would be likely should that ruling have gone the other way. It is still a 2nd and subject to the performance on, and subsequent actions from the first lender. At least now it appears that buying  a subordinated debt has less risk if the borrower files BK with all other things being equal. The holder of a 2nd can still foreclose even if the borrower has gone thru BK successfully, since the debt is on the property. 

Does anybody think this precedent will be applied to Chapter 13 as well?

Doubtful, as this kept the status quo rather than change it. Plus, the two versions have different purposes in the eyes of the court.

@Julian Buick

  don't see this as much of any thing a underwater first followed by an underwater second.. that second has little to no value.. unless you were to judicial foreclose then get a judgment on the folks then that could be wiped out by chapter 7 ( I think ).

at the end of the day seem like a lot of work with a lot of risk..

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