Settlement Offer on 2nd Mortgage possible?

[cs2003]

Hello and thank you for this forum. I apologize in advance for the long post, but feel its necessary so you can answer my question at the bottom of the post.

Here is our situation. Our home has a first mortgage with Countrywide (160,000) and a second mortgage with CitiMortgage (65,000). When we purchased the home it had an appraised value of $240,000. When we purchased the home we took out a loan for the $160,000 and because we didn't qualify my father-in-law took out a home equity loan for the balance. We were told that after a year we would qualify to take out a second mortgage and pay-off my father-in-law, which we did. The first is an interest only at 6% and the second is at 12.8%. We were told that in two years we would be able to combine them into one low interest loan.

Fast forward to today. Because of the drop in home values, our home now is worth only about 175,000-185,000 tops. We have water issues that would need to be corrected in order to get the 185,000. So we are unable to refinance.

In December of 2008 my company closed and my husband's hours were cut at his job. In January we started working with Citi to get a loan modification, as we knew we would have trouble making the payment. They informed us that we were qualified for the modification and if we made a good faith payment they would start the modification process and wrap any payments during the modification into the back of the loan. After countless phone calls and lost paperwork, in June we were informed we were not qualified.

Two weeks later my husband was laid off from his job. We contacted Citi to see if there we any other programs and were told no because this was a second mortgage. Three days later we received a letter from their attorney demanding payment in full. We have not heard from them until the other day when they just called "to see what was going on". They said they could attempt the modification process again if we made a large payment. I responded that unless I had something in writing that we were approved we could not...that it was between paying our health insurance or them. They were polite and said they would check back soon to see how things were going.

Right now we are current on our first mortgage, but will have to borrow money from our 401k to keep it current while my husband is laid off. Other than the 401k we have no other assets as we've used up our savings. We do not want to lose the house as it is right next door to my parents, who are in their 80's.

My question is: In your opinion, would Citi more likely offer a settlement on the 2nd mortgage if our first is current or behind? Would we be better off to be late on the 1st and try to catch up with that one later?

Thank you for your responses.

[NeedHelpwCW]

cs2003,

I have a 1st with CW and a 2nd with Citi as well. I started my modification request in March (right after Obama annouced the Making Home Affordable).

I am current with both loans.

I faxed my hardship package along with bank statements, paystubs, W2s, & tax returns to CitiMortgage. (there's also Citi Financials)

It took three attempts for the fax. Each time I called to check the status of my loan modification request, the rep. noted that nothing has been received. I had to faxed it to them again and again. There's over 80 pages of paper. But, I spent the time to do it anyway.

It was finally assigned to someone in April. Once I knew the assigned person, I contacted him and requested a settlement instead of a modification.

They settled my HELOC for 10% of the balance. Now, I had to pay them one lump sum.

The settlement was finally recorded in my county recorder's office a month ago.

I was able to get a modification with CW (through NACA)... 2% fixed for the remaining of the loan term.

You have to be patient in this process. It's a long and stressful one though.

[NeedHelpwCW]

How many success settlements are out there?

[trying hard]

What amount did you owe on your 2nd?
I've contacted Citi 5 times, over the phone, in writing, faxes etc etc and each time they seem to have no idea what I'm talking about.

I've decided I have no choice but to settle my 2nd with Citi to make everything work.

Did you offer 10% or did they and how many payments had you missed?

Thanks

[NeedHelpwCW]

My posting said that I am current with both loans!

I offered 10% and they accepted.

I called them more than 5 times... almost everyday! I took time off from work just to call them. They transfered me to so many different people and these people don't know what they are doing.

[trying hard]

Missed that - sorry.

Do you mind telling me how big your 2nd was ($$).

I am going to shoot for 5% settlement.

[CW California]

Originally Posted by NeedHelpwCW

cs2003,

I have a 1st with CW and a 2nd with Citi as well. I started my modification request in March (right after Obama annouced the Making Home Affordable).

I am current with both loans.

I faxed my hardship package along with bank statements, paystubs, W2s, & tax returns to CitiMortgage. (there's also Citi Financials)

It took three attempts for the fax. Each time I called to check the status of my loan modification request, the rep. noted that nothing has been received. I had to faxed it to them again and again. There's over 80 pages of paper. But, I spent the time to do it anyway.

It was finally assigned to someone in April. Once I knew the assigned person, I contacted him and requested a settlement instead of a modification.

They settled my HELOC for 10% of the balance. Now, I had to pay them one lump sum.

The settlement was finally recorded in my county recorder's office a month ago.

I was able to get a modification with CW (through NACA)... 2% fixed for the remaining of the loan term.

You have to be patient in this process. It's a long and stressful one though.

That's awsome Needhelp! How adversely did the settlement affect your credit?

[NeedHelpwCW]

I don't know how it would affect my credit. I was never late on the payments. Instead of reporting paid in full, it will be reported as paid in full for less than the balance (for something along that line). I will check my credit later. I am trying to settle some credit cards. (Never late on these as well.) I want to wait until those are completed.

[restless]

NeedHelp :

Yesterday Citi sent a realtor to my house to do some kind of walk-thru. She said Citi asked her for her estimated value of the home.

Did they do this prior to your settlement acceptance??? If so, about how much time after they did this did it take for them to finally accept your offer?

[NeedHelpwCW]

Hi Restless,

This is the BPO and it took her about 20 minutes. She came in to take pictures of all the rooms and living areas. Then took pictures of the outside from the back and front. I think this is the deal breaker. The value of your property needs as low as possible. I provided her with "SOLD" properties in my neighborhood. They will only look at SOLD properties.

After this BPO, the file is sent to Texas for review.

[angiedawn21]

I also successfully settled my 2nd mtg with Citi after reading about NeedHelpwCW's settlement. I first applied for a modification in January and was denied sometime in April I believe (with absolutely no communication from January to April). I called the Loansafe line for Citi in June and first asked a/b doing a modification. After going over the numbers with me, it did look I qualified or if I did my payment would only go down a little bit so then I asked a/b settling my loan. The Citi rep was surprised since I had never made a late payment and did not seem to think it work, but he said he would submit it once I sent over the documents he requested. He needed my paystubs, taxes, hardship letter with settlement offer, bank statements with proof that I had access to the funds to cover the settlement, and maybe some other things that I just cannot remember right now. About a week later they did a BPO and another week later I was contacted to find out how soon I could get the funds to Citi. A couple of days later, they called and let me know that I was approved. I sent the settlement payment within a week. I received a Congratulations email from Citi about a week later saying that I had paid off my loan in full. Again I was never late on my mortgage. My first mortgage has a $288000 balance, my 2nd's balance was $89000 or so, my BPO came in at $285000, and I settled for $15000.

[CW California]

Wow Angie that's amazing. Have you found out what kind of credit hit you took yet? I am interested in this because I would really like to settle my 2nd. I can't afford it but since I own my own business I am worried that I won't have any operating cash flow if I screw up my credit.

[angiedawn21]

Originally Posted by CW California

Wow Angie that's amazing. Have you found out what kind of credit hit you took yet? I am interested in this because I would really like to settle my 2nd. I can't afford it but since I own my own business I am worried that I won't have any operating cash flow if I screw up my credit.

I had my credit pulled yesterday. Currently, the Citi settlement does not seem to be affecting my credit--it is just showing a zero balance without any comments a/b it being a short settlement, but I have no idea if that is going to change in the future. It is hard to be 100% sure though b/c I am also trying to have my 1st mtg modified under the Obama plan and Chase forced me to become 30 days late. My credit started out at 780 and now is around 680.

[angiedawn21]

Originally Posted by CW California

Wow Angie that's amazing. Have you found out what kind of credit hit you took yet? I am interested in this because I would really like to settle my 2nd. I can't afford it but since I own my own business I am worried that I won't have any operating cash flow if I screw up my credit.

I had my credit pulled yesterday. Currently, the Citi settlement does not seem to be affecting my credit--it is just showing a zero balance without any comments a/b it being a short settlement, but I have no idea if that is going to change in the future. It is hard to be 100% sure though b/c I am also trying to have my 1st mtg modified under the Obama plan and Chase forced me to become 30 days late. My credit started out at 780 and now is around 680.

[CW California]

Originally Posted by angiedawn21

I had my credit pulled yesterday. Currently, the Citi settlement does not seem to be affecting my credit--it is just showing a zero balance without any comments a/b it being a short settlement, but I have no idea if that is going to change in the future. It is hard to be 100% sure though b/c I am also trying to have my 1st mtg modified under the Obama plan and Chase forced me to become 30 days late. My credit started out at 780 and now is around 680.

Thanks angie.

[NeedHelpwCW]

Congrats Angie! I am so happy for you!!

Did you proposed the $15,000?

[BOA_bayArea]

"The Citi rep was surprised since I had never made a late payment and did not seem to think it work, but he said he would submit it once I sent over the documents he requested. "



Angie, could you please let me know the contact info (name, #, ext) of the rep who submitted your application for you? If you prefer to send me an email instead of posting here, please email me at

Thanks.

Bruce

[Saule]

Hi, Angie! I have the same situation as you. 1st 300K and 2nd 55K with Citi. I 'll try to do settlement on my 2nd. Could you provide me the contact info .
Thanks.

[angiedawn21]

Originally Posted by NeedHelpwCW

Congrats Angie! I am so happy for you!!

Did you proposed the $15,000?

I did propose the $15000.

[restless]

Originally Posted by angiedawn21

About a week later they did a BPO and another week later I was contacted to find out how soon I could get the funds to Citi. A couple of days later, they called and let me know that I was approved. I sent the settlement payment within a week. I received a Congratulations email from Citi about a week later saying that I had paid off my loan in full. Again I was never late on my mortgage. My first mortgage has a $288000 balance, my 2nd's balance was $89000 or so, my BPO came in at $285000, and I settled for $15000.

This is very encouraging. Tomorrow will be (1) week since they came to my house to do the BPO (anyone know what that stands for??)
I have 80% of the money for the settlement. Do you know if they will let you make payments??

[kennyc]

Angiedawn21,

Can you also provide me with your contact for settling the 2nd with Citi? You can email me at kckc1016@yahoo.com

Thanks

[mtg2008]

Originally Posted by NeedHelpwCW

cs2003,

I have a 1st with CW and a 2nd with Citi as well. I started my modification request in March (right after Obama annouced the Making Home Affordable).

I am current with both loans.

I faxed my hardship package along with bank statements, paystubs, W2s, & tax returns to CitiMortgage. (there's also Citi Financials)

It took three attempts for the fax. Each time I called to check the status of my loan modification request, the rep. noted that nothing has been received. I had to faxed it to them again and again. There's over 80 pages of paper. But, I spent the time to do it anyway.

It was finally assigned to someone in April. Once I knew the assigned person, I contacted him and requested a settlement instead of a modification.

They settled my HELOC for 10% of the balance. Now, I had to pay them one lump sum.

The settlement was finally recorded in my county recorder's office a month ago.

I was able to get a modification with CW (through NACA)... 2% fixed for the remaining of the loan term.

You have to be patient in this process. It's a long and stressful one though.

Hi NeedHelp,

Is the property value is similar or less than your first mortgage, correct? I guess if the value is much higher ($80K more) than the 1st mortgage, I guess citi will not just settle the 2nd, correct? They would rather foreclose it and get more money...

Would you please explain a little bit detail about your case?

Thanks a lot!

[mtg2008]

Originally Posted by NeedHelpwCW

cs2003,

I have a 1st with CW and a 2nd with Citi as well. I started my modification request in March (right after Obama annouced the Making Home Affordable).

I am current with both loans.

I faxed my hardship package along with bank statements, paystubs, W2s, & tax returns to CitiMortgage. (there's also Citi Financials)

It took three attempts for the fax. Each time I called to check the status of my loan modification request, the rep. noted that nothing has been received. I had to faxed it to them again and again. There's over 80 pages of paper. But, I spent the time to do it anyway.

It was finally assigned to someone in April. Once I knew the assigned person, I contacted him and requested a settlement instead of a modification.

They settled my HELOC for 10% of the balance. Now, I had to pay them one lump sum.

The settlement was finally recorded in my county recorder's office a month ago.

I was able to get a modification with CW (through NACA)... 2% fixed for the remaining of the loan term.

You have to be patient in this process. It's a long and stressful one though.

Hi NeedHelp,

Is the property value is similar or less than your first mortgage, correct? I guess if the value is much higher ($80K more) than the 1st mortgage, I guess citi will not just settle the 2nd, correct? They would rather foreclose it and get more money...

Would you please explain a little bit detail about your case?

Thanks a lot!

[tc4gold]

Hi,

I had a $346k second with National City, after months of dealing with them and not paying. I was able to negotiate a settlement of 20% of the balance. I started at 10%, they pushed for $35%. I was lucky to have a friend who offered to settle the debt for me and I am now paying them back over a 10 year period at a very affordable rate. The second loses all in a foreclosure or bankruptcy so they should settle but you have to fight. My appraisal came in at $600k and my first is at $450k so with commissions and lack luster sales, (I would have been lucky to sell in my area for $550k) they would come out with nothing, by the way my house is a triplex nad the value dropped $325k in the last 3 years. Keep fighting but you have to have the money to settle with. Good luck.