Bankruptcy chapter 7 discharge of 2nd mortgage?
What might happen at closing the sale of my house, given the following facts?
Declared bankruptcy in early October 2005 (amid a rush of filers still looking to get in before the law changed).
Discharged in early 2006.
Listed 2 mortgages for house: First from the lender.
Second mortgage is a no payment forgiveable rehab loan from our local housing department. The loan incurs no payments and is reduced by 10% every year after 5 years in the house (completely forgiven after 15 years). This zero payment, forgiveable rehab loan was secured 7 years ago.
Didn’t reaffirm either mortgage. Stayed in the house.
Am selling the house now. Won’t sell for enough to cover both mortgages.
What happens? Can I be sued for a deficiency judgment? Will the housing department show up at closing and demand payment?