2nd filed Notice of Default

[murgurl]

Hello,
Property is in CA
Bank of America holds the 1st 210k - Refi- CURRENT ON PAYMENTS
Citi has 2nd 204k -HELOC
Value per Citi BPO is 370K
I have not made a payment on 2nd in 8 mos...followed advice waiting for settlement offer
Citi just filed a Notice of Default/pre-foreclosure!! 3/20
It seems that Citi is underwater...can they take my home? Wouldnt thay have to pay B/A?

Please advise
Thanks

[TomEason]

murgurl

Thanks for your post.

It's obvious your Citi HELOC is underwater. Since the valuation is per a Citi BPO, it's apparent Citi is very confused.

I might suggest you contact Citi and bring this to their attention. Should Citi proceed with their money losing action, it would be a career ending move by the Citi management type responsible for that decision.

[murgurl]

Tom,

I agree with you!! I wish it was that easy! I realy dont think a "management type" has been consulted..HA! However I have contacted them and tried to bring them to their senses. I made an offer for settlement. Before they would take a look at it I had to send all of my documents..ie bank states etc.. I did this because of the pre-foreclosure status..I am waiting now for their response..So it seems you are pretty certain that in your experience that a foreclosure will not take place?

[TomEason]

murgurl

Thanks for the follow-up. Yes I'm pretty certain Citi will come to their senses and cancel this FC action.

However, I have witnessed some pretty dumb moves by lenders; so anything is possible.

You might consider sending a letter to Citi's executive offices to enhance the possibility that a "management type" is made aware of Citi's potential faux pas.

[murgurl]

Ok thank you for your input! Do you have an adress or email to Citi exec offices?

[TomEason]

Ok thank you for your input! Do you have an adress or email to Citi exec offices?

No I don't. You might Google for that info.

[Evan Bedard]

Here is a phone number and address Cat has posted for Citi's 2nd mortgage/HELOC department:

1-718-248-0847

CitiMortgage Inc.
1000 Technology Dr.
O'Fallon, MO. 66368-2240
Att: Recovery Dept.

[ccsint]

Hello,
Property is in CA
Bank of America holds the 1st 210k - Refi- CURRENT ON PAYMENTS
Citi has 2nd 204k -HELOC
Value per Citi BPO is 370K
I have not made a payment on 2nd in 8 mos...followed advice waiting for settlement offer
Citi just filed a Notice of Default/pre-foreclosure!! 3/20
It seems that Citi is underwater...can they take my home? Wouldnt thay have to pay B/A?

Please advise
Thanks

Um, I might be confused on this one, guys.

$370k is the value of the house.
This means that the 2nd is only Partially under water, and if they forclosed (not including costs, of course), they net $160k, which is only a $44k loss on a 204k loan. That's much better than many who have tried to settle. This explains why they have an incentive to forclosure, IMO.

Why would they ever offer you a settlement below $160k?

[TomEason]

ccinst

Thanks for your post.

FYI, the way to determine if a junior is underwater is subtract the loan balances from the property value. If the result is negative, the junior is underwater and won't FC. And that is not taking into account the approximate $50K cost for a lender to prepare for and re-sell an REO property. A loan need not be totally underwater to be classified as underwater. In either case, the underwater FCing lender will lose $$.

FYI, lenders don't pay out real cash $$, in this case to acquire an asset worth less than the acquisition price, thereby rendering the transaction a loss for that FCing lender. This money losing mistake would qualify as a career ending move for the lender's management type who is responsible for that decision.

Banks don't like to ever spend money on an investment unless it's certain to be a clear money maker.

[murgurl]

Thanks Evan for the info And... I personally prefer Tom's observations!! Hope thats the way it works out!!

[ccsint]

ccinst

Thanks for your post.

FYI, the way to determine if a junior is underwater is subtract the loan balances from the property value. If the result is negative, the junior is underwater and won't FC. And that is not taking into account the approximate $50K cost for a lender to prepare for and re-sell an REO property. A loan need not be totally underwater to be classified as underwater. In either case, the underwater FCing lender will lose $$.

FYI, lenders don't pay out real cash $$, in this case to acquire an asset worth less than the acquisition price, thereby rendering the transaction a loss for that FCing lender. This money losing mistake would qualify as a career ending move for the lender's management type who is responsible for that decision.

Banks don't like to ever spend money on an investment unless it's certain to be a clear money maker.

Thanks, makes sense. I just can't imagine this being a hard & fast rule that the bank won't forclose if you are partially underwater; if you are only slightly underwater and don't pay your second, it would seem some banks would just eat the loss and foreclose. But you are the expert.

In this case, if you factor in $50k in closing costs, the 2nd lender should be able to clear $110k in a foreclosure. It seems that this would put a limit on how much you could settle for (the lender would seem to have no incentive to settle for anything less than $110k).

[TomEason]

ccsint

Thanks for your post. It's only "a hard and fast rule" for the banks who want to maximize their bottom lines.

Your argument might make sense except for this. Lenders don't pay out real cash $$ to buy anything, and certainly not an asset that's worth less than they'd be paying for it. Lenders would much rather settle a loan than pay out real money.

Bear in mind that banks generate profit by making new loans. That ability is limited by their reserve requirements. Any $$ that depletes that reserve, diminishes the amount of new profit generating loans it can originate.

[attylenacalgroup]

Hi All. I have not seem many 2nd mortgages settle, especially when they have over $160k to be gained by foreclosing. Unless you have a solid cash offer to make them, I would be very careful with letting the foreclosure continue. I would recommend attempting to modify versus trying to get them to write it off. If they continue with foreclosure, I would also recommend bankruptcy to stop the foreclosure and then modify through the lender's bankruptcy department.

[murgurl]

I will keep you posted on my results!!! FYI I just ran comps and an exact condo just sold 4/12 for $325!!! In other circumstances this would be bad news......However!!!! It may be looking a bit better as far as a settlement!! Fingers crossed....
ccinst overall view....seems to make sense at first...but take into consideration Citi would indeed have to come out of pocket with $$$$with zero assurance that the property will sell in this market..like Toms view better..

[TomEason]

attylenacalgroup

Thanks for your post.

I must tell you that you're misinformed about settlements of 2nd loans. A settlement is always a better deal for the borrower than a loan mod of a 2nd (unless of course it happens to be a full extinguishment 2MP). And if the 2nd is underwater, who cares if it takes years to settle? All the lender can do is watch and wait (likely for many years).

Furthermore, your advice about BK indicates you're likely a single attorney BK mill, who does nothing else but BKs. The only possible reason a borrower would file BK to deal with a 2nd is to know that the applicable BK court will likely allow a lien strip of that 2nd in a Ch 13 (and that loan must be completely underwater/out of the money to do so). A Ch7 won't be a permanent solution, just a delaying action.

You might visit the following thread to view all the success stories in settling 2nds.

Success Stories in Settling 2nds

[murgurl]

TOM...do I have that long to wait if they filed the Notice of Default???

[TomEason]

murgurl

Thanks for your question.

Since Citi is confused about your situation, and since a NOD has been filed, it would behoove you to be more proactive in reaching resolution by educating the folk at Citi about their impending costly error.

[murgurl]

Ok..I am in the process right now of doing that...will keep you "posted"

[murgurl]

Update...CITI turned down settlement with zero comment..just said NO. I spoke with a realtor in my area who specializes in Short sale. She told me that most likely CITI would FC..keep the first with B/A current and REO sell the property..Does this sound correct or was she trying to get me to use her to sell??? I contacted Frank Eliason as recommended on this site. I am waiting for his reply...

[TomEason]

mugurl

Thanks for your update.

I recommend you ignore that clueless RE agent. She is angling to get your listing for a SS, and will say most anything to prompt your signing a listing agreement with her.

I recommend you send a letter to CITI's office of the CEO and President, explaining the situation and advising them they're about to make a costly error. This will likely prompt an investigation of the matter.

Good luck.

[murgurl]

Great thanks again for the advise Tom!!!!!

[yomann]

There is a thread labeled "Has anyone been foreclosed by their 2nd mortgage?"
No one on that thread has reported being foreclosed on .......
So, I concur with Tom - when the bank re-examines their initial direction, they will cancel the foreclosure action.

[murgurl]

Thanks for the input!! I cant find that thread....sounds like something I need to read.....Can you direct me to it.Thanks

[yomann]

Here it is ..........
Anyone ever been foreclosed by their 2nd mortgage ?

[murgurl]

UPDATE.....I called the attorney office and the FC is still in process. The 90 days have passed however a sale date has NOT been set. MEANWHILE I am in the process of a modification with CITI...copies of this..copies of that etc etc....Settlement has been turned down....zero offer back..just NO...Can they FC when a mod is in process??? When will that law pass here in CA??

[TomEason]

UPDATE.....I called the attorney office and the FC is still in process. The 90 days have passed however a sale date has NOT been set. MEANWHILE I am in the process of a modification with CITI...copies of this..copies of that etc etc....Settlement has been turned down....zero offer back..just NO...Can they FC when a mod is in process??? When will that law pass here in CA??

murgirl

The new bill has passed and is awaiting Gov Moonbeam's signature. When signed it will be a law, but won't be in effect until 1/1/2013.

Are you saying you've submitted a loan mod app on your Cit 2nd? To be honest, I've never before heard of a borrower submitting a loan mod app (as opposed to a settlement) on a 2nd. Whenever a 1st is permanently modified under HAMP, the 2nd lender (if participating in HAMP) will usually send a 2MP mod offer to the borrower. But that's not your situation.

[murgurl]

yes that is correct...it was submitted for a modification!!! NOW I JUST GOT A SALE DATE ON MY DOOR!!!!! Trustee sale for 218k....to CITI....I owe another 200k to B/A...I spoke with my CITI rep on 7/27 and said it was in with UW...Date of sale posted 7/30!!! What Now??

[hammerman]

Any news on this situation? Good/bad?

[TomEason]

yes that is correct...it was submitted for a modification!!! NOW I JUST GOT A SALE DATE ON MY DOOR!!!!! Trustee sale for 218k....to CITI....I owe another 200k to B/A...I spoke with my CITI rep on 7/27 and said it was in with UW...Date of sale posted 7/30!!! What Now??

What did CITI management say after you sent the letter to CITI's office of the CEO and President, explaining the situation and advising them they're about to make a costly error? You might want to refer to post #20.

[murgurl]

SALE date 8/23....CITI has lost my docs again and again..supposedly today it is submitted and I will get answer soon...AGAIN SALE DATE 8/23....To refresh.....MY first is current 200k second is with CITI 211k....Property value is 380k.....What is going on???? At this point I really do not believe they will FC however it is getting a bit edgy to say the least...any comments

[murgurl]

hello TOM??CAT?? anyone have any suggestions..I have contacted Mike Cardace at CITI..Seems nice enough but stil no answers as of today..

[Cat Damiano]

hello TOM??CAT?? anyone have any suggestions..I have contacted Mike Cardace at CITI..Seems nice enough but stil no answers as of today..

You can also call into that dept. directly here;

CitiMortgage Executive Response Team
(1-636-261-7200)

[murgurl]

thanks..have you ever heard of FC on an underwater second?? Its a HELOC with CITI!!

[Cat Damiano]

thanks..have you ever heard of FC on an underwater second?? Its a HELOC with CITI!!

Not after having a modification in place on the first and working with the lender on the second lien, I have not seen a member post that the second lien holder foreclosed. Contact the executive team directly to see why you have a sale date when you are working on a modification.

[murgurl]

I contacted the exucutive team!!! She arranged for the FC to be postponed!!!! Yay!!! I told her the situation Underwater Heloc etc...She said she would look into it right away!! I believe her. She has called twice.. exactly when she said she would!!! Thanks CAT!!

[Cat Damiano]

I contacted the exucutive team!!! She arranged for the FC to be postponed!!!! Yay!!! I told her the situation Underwater Heloc etc...She said she would look into it right away!! I believe her. She has called twice.. exactly when she said she would!!! Thanks CAT!!

No problem, I just hope that they are able to get this fixed for you. Please keep us posted on how it goes.

[murgurl]

Here is an update!! FC postponed....They said a Mod was approved for my Heloc!!! Need to make a payment first and then the three month trial will start...They will not give me the terms yet???? And they will not cancel FC until trail is completed in Jan...The trial payment is about half of what it was..thts the good news. However I dont have assurance of what the actual terms will be. I even called the executive team...they confirmed that this is how it happens...any comments???????? or Helpfull ideas??? THANKS

[TomEason]

Hi murgurl

Thanks for your post.

If it were me, I wouldn't accept their loan mod offer. Why? Two reasons: 1) Your 2nd (HELOC) is underwater so they won't FC, and 2) the settlement of a 2nd is always a better deal than a mod.

I recommend you seek to eventually settle by following the guide at post #1 of the following thread. No hurry; patience is key. Good luck!

Strategy for Settling Your 2nd

[murgurl]

Thanks for the input!!!
Firts...did you read that there has been actual SALE dates? The FC was in process! Pretty darn stressfull!! I really do believe that they will NOT FC because it is underwater...however with a sale date looming I have been playing chicken with them for 3 m onths!! Any other suggestions???

[murgurl]

Tom..I just read #1 in that post per your suggestion!! That was really good info..HOWEVER there was zero info on what action to take when they have procedded with a Sale Date!!!! any comments would be great!!!