Just Settled Our Citi HELOC 2nd Lien for 15%

[jsmey9]

With some financial help from family, and over a year of working with Citi, just completed the settlement of our HELOC for $30,000. We owed about $185,000. So that’s about a 15% settlement. Received a lien release document this weekend from our county clerk/recorder. I thought I would post our steps as well as names and numbers for anyone in a similar situation. Thanks so very much to this forum and good luck to everyone out there trying to save their home.

Our Details
Location: Sacramento, CA
1st: Bank of America/Countrywide $130,000 @ 4.75%
2nd: CitiMortgage $185,000 @ Variable APR
BPO by CitiMortgage on 12/2009 (This value is extremely important – I’ll explain later): $160,000
More realistic value (Based on County Accessor): $140,000

December 2008: With a pending salary reduction (about 15%) and declining home value (once $415k), started looking into modification on HELOC. Found instructions on Citi’s site and sent in hardship application. Waited…..

Dec 08 – May 2009: After faxing in my documents about 4 times, I was finally notified that my application was with Brandi Grant and that I should work with her directly. I tried contacting her from mid March 09 to the beginning of May via email and phone with no luck. 480-753-2600 X52784 (Arizona) brandi.d.grant@citi.com

May 09 – June 09 : Stumbled across loansafe and found the homeownerhelp@citi.com. Emailed my situation and got a call from Sergio (Executive Response Team) the same day. Had me fax my docs to 480-753-7852. Said there was a company wide hold on all HELOC and 2nd mortgage modifications. A few weeks went by and eventually he gave me an option to modify the loan @ 2% for the life of the loan (P/I) . I thought that sounded great. It would still be a little tough to handle the payment due to the high balance but at least it was fixed for life. I thought we were done but as it turned out since my current monthly interest only payment was less than the 2% offer, the investor wouldn't sign off. Got a formal letter in the mail saying my modification request was denied. I was told to try again later.

June 2009 – January 2010 (Stopped paying HELOC): It was in early Nov 2009, I started reading loansafe posts regarding settling with Citimortgage. Emailed homeownerhelp@citi.com and a rep named Gary Taylor (Short Sale Department) called and left me a VM. He left this number 800 926-9783 X52968 but when I called it got me nowhere. Did some research and tried 1-866-255-3901 X52968 and it worked. Started working with him initially. He asked me to fax in (866-714-9031) a hardship app, financials, and hardship letter with settlement offer. Offered approx 5% ($10, 000). This was the most we had. It meant that if the settlement was approved we would go to CarMax and sell our primary vehicle for cash. Things moved pretty quickly after. An internal BPO was done and I was assigned a settlement negotiator. I was very hesitant on getting involved with the appraisal, but looking back I really should have provided my county assessment documentation which valued the home at about $140K. The BPO was the basis for the settlement negotiation from there on. It didn’t matter what I provided CitiMortgage after, they always would refer back to his BPO value to determine how much equity was in our home. If it would have come in lower, our settlement would have been lower. In the meantime Citi collections was calling me constantly asking for payment on my late account. They said I was over 180 days late and if I didn’t make at least 1 payment, my account would be sent to the Recovery Department and it would be harder to settle. At this point I figured, if they are serious about working with us, they’ll help us whether we make a payment or not. Finally got a call from the negotiator (Rosanna Marquez 866-422-0658 X20366) saying that my $10,000 offer was too low. She said the lowest they could go would be $30,000. I asked if I could counteroffer (Maybe $15K) since that was way more than we had. She said no. That is the lowest they would accept – some negotiation. I told her thank you and mentioned that CitiMortgage will have a very hard time recovering any money after the house forecloses because their valuation was too high. Same day I got a call from Citi Loss Mitigation asking for 1 month payment. Told them we will not be making anymore payments. Stopped paying the 1st (B of A/ Countrywide) as well and began looking into moving out. Advised by a lawyer that a Chapter 7 would be the best option for us. It would allow us to give up the house and cancel out some other debt we had accumulated. A Chapter 13 w/ lien strip was not an option due to the fact there was a little equity in the home after our 1st mortgage received sale proceeds.

March 2010 – So my wife and I were in save mode. Every cent that was meant for the 1st or 2nd was stored away. We figured we could save maybe $15K before we had to leave. We thought that would be plenty for a place to rent, bankruptcy court costs, and emergencies. About a week ago we ran our situation by some family members. Much to our disbelief they were willing to help get us to $30K. Quickly called Rosana and asked if the offer was still on the table. Said yes, asked me to fax two month’s bank statements and 1st mortgage payoff demand statement to 866-714-4162. Got a secure email in the next few days with payoff instructions. Email details below:
*************************
This letter serves as CitiMortgage, Inc.' s (CMI) authorization and acceptance of a short payoff on the above referenced account, in the amount of $30,000. This amount is valid through XX/XX/XXXX. Certified funds or bank wire must be received on or before XX/XX/XXXX. Upon receipt of the bank wire, CMI will release its mortgage on the property. Any funds held in CMI's Escrow/Impound Account and/or insurance claim proceeds will be considered the property of CMI and will be applied towards our loss.
**************************
Also included a document regarding 1099C since debt being cancelled is more than $600. We’ll worry about that during tax time. Should be okay under “The Mortgage Forgiveness Debt Relief Act and Debt Cancellation”

[Evan Bedard]

Thank you so much for sharing your story in detail! I'm sure this will benefit many people here who are currently trying to settle their HELOCs. Congratulations on the settlement jsmey9!!

[74liberty]

Your detail is very helpful. Did the settlement letter you received from Citibank specifically state that it is a settlement -- no short sale language included?

I have a Citibank 2nd HELOC that I am working to settle. Citibank rep gave me a verbal approval for a $10K settlement and faxed me a letter referencing a settlement of $10K; however, the letter is vague because it has short sale languages. I was told by the Citibank rep that this is their standard settlement/short sale approval letter and they can't change it. But if you received a letter specifically for a settlement, then I am concern about their settlement offer with me. I've been informed by an attorney friend that the bank can back down on my settlement offer once they received the $10K because my letter states I am required to sell the property -- which I'm not. The Citibank letter I received reads:

Please accept this letter as the CitiMortgage Inc. authorization and acceptance to the settlement and/or short sale on the above referenced account , in the amount of $10,000. This amount is valid through XXXXX. If the closing date is changed or if full payment is not received prior to XXXX, a new settlement approval, equivalent to 10% increase to the amount may be required. You are required to meet all the following to receive the mortgage settlement:
* Make all payments until the sale of the property.
* Sell the property in "AS IS" condition as repairs cannot be paid from the sale proceeds.
* Report that no transfers of the property can occur within the first 30 days of closing
* Provide the real estate agent a commission of $0.00 or 0%.
* Transfer all proceeds from the sale of the property to CitiMortgage, including all refunds, escrow accounts, insurance claim funds and credits on or before XXXX.
* Email a copy of HUD 1 settlement statement and a copy of either the certified funds or the bank wire confirmation slip to XXXXXX at the time of closing. Include your name and your mortgage account number.
* Present this letter to the property seller at time of closing.

Important Details:
Upon receipt of sale proceeds, CitiMortgage Inc. will release its mortgage on the property, will not pursue the customer for the remainder of the debt and will report your mortgage as "paid in full for less than the full balance" to all credit report agencies.

[gilp_mail]

74Liberty - I think your acceptance letter should look a little more like jsmey9's acceptance letter - if you are not going to sell the property and that was not part of the original deal. You may want to call your them back and talk directly to your contact person there.

[fatheroffour]

Wow! Great post! I will soon be working with Citi to settle HELOC with a balance of $43000. The BPO done by our 1st with Wells shows a value of $170,ooo and we owe Wells $190,000 so I am hoping Citi will make a good settlement!

[rosie71]

Your detail is very helpful. Did the settlement letter you received from Citibank specifically state that it is a settlement -- no short sale language included?

I have a Citibank 2nd HELOC that I am working to settle. Citibank rep gave me a verbal approval for a $10K settlement and faxed me a letter referencing a settlement of $10K; however, the letter is vague because it has short sale languages. I was told by the Citibank rep that this is their standard settlement/short sale approval letter and they can't change it. But if you received a letter specifically for a settlement, then I am concern about their settlement offer with me. I've been informed by an attorney friend that the bank can back down on my settlement offer once they received the $10K because my letter states I am required to sell the property -- which I'm not. The Citibank letter I received reads:

Please accept this letter as the CitiMortgage Inc. authorization and acceptance to the settlement and/or short sale on the above referenced account , in the amount of $10,000. This amount is valid through XXXXX. If the closing date is changed or if full payment is not received prior to XXXX, a new settlement approval, equivalent to 10% increase to the amount may be required. You are required to meet all the following to receive the mortgage settlement:
* Make all payments until the sale of the property.
* Sell the property in "AS IS" condition as repairs cannot be paid from the sale proceeds.
* Report that no transfers of the property can occur within the first 30 days of closing
* Provide the real estate agent a commission of $0.00 or 0%.
* Transfer all proceeds from the sale of the property to CitiMortgage, including all refunds, escrow accounts, insurance claim funds and credits on or before XXXX.
* Email a copy of HUD 1 settlement statement and a copy of either the certified funds or the bank wire confirmation slip to XXXXXX at the time of closing. Include your name and your mortgage account number.
* Present this letter to the property seller at time of closing.

Important Details:
Upon receipt of sale proceeds, CitiMortgage Inc. will release its mortgage on the property, will not pursue the customer for the remainder of the debt and will report your mortgage as "paid in full for less than the full balance" to all credit report agencies.

I received the same letter when negotiating a short payoff for my Citi HELOC. I offered 10 cents on the dollar and was amazed to receive the approval within 45 days of starting the process. I owe a lot to the first post, I did use those phone numbers posted and my file ended up in the hands of Rosana Marquez. I wasted no time, went to the bank and wired my payoff. I was skeptical at first. I wasn't thrilled with all of the short sale verbage, however, I felt comfortable with the "settlement and/or short sale" in the first paragraph. I wired the funds on July 23rd, just called citi and the automated system said I had a ZERO balance. I'll be watching for the release of mortgage to come in the mail. I am still underwater with my first but I feel like I can breathe now. I want to thank Jsmey9 for sharing their success, I would not have been able to do this so quickly and so easily without your information. @74liberty, I don't think anyone at Citi is trying to trick us. Zero balance baby! Zero balance!

[fatheroffour]

Rosie,

Great Job! How did the BPO go? Was it interior? I am working with executive response team hoping to settle!

[2bsettled]

74liberty - I too received the same approval letter from Citi and was worried over all the short sale language and requirements. I had an attorney speak to the negotiator and he confirmed that the short sale verbage didn't apply to me and what I was after was a settlement only. It's a good thing the first paragraph included the 'settlement and/or short sale' statement. I just wired the money equivalent to a little over 10% of the 2nd lien and crossing my fingers that everything goes as they promised.

Rosie71 - Did you receive any further communications stating the lien has been satisfied?

[rosie71]

As of now I have a zero balance when I call Citi and punch in my account info. I called Rosana today and she explained that it takes 30 days for Citi to send the release to my county. All counties are different, some mail releases to homeowners, some do not. I paid off the heloc about 3 weeks ago. In a few weeks, I will pay a visit to the county building for proof of the release of lien. I no longer feel like I am a tenant in my own home. I actually feel like a homeowner again. The downside to short payoffs and short sales is that we cannot get a new mortgage for 3 years. Our credit will also suffer possibly by 125 points. I am ok with both.

[rosie71]

The BPO was interior. No one would tell me how much the BPO came in at. Citi said they do not share that info. Probably thinking I would run so fast if I new how much my house was really worth. LOL! I went to Zillow.com and Cyberhome.com to see how much my house was worth. Funny how much they differ. Still, both had me so underwater, I knew we had a good shot at a settlement. I will also add this was something my husband and I did all by ourselves and paid no one to help us.

[sdorn]

Rosie did you get the release of lien yet? If so how long did it take?
Thanks

[daneam]

"just called citi and the automated system said I had a ZERO balance."

well often it would say zero if it is charged off after 180 days of non payment.

[Stressedlikecrazy]

Hi,

We have a 188K heloc with citi. The home already for closed and now we have moved into our what used to be our rental property. The heloc has been moved from citi to a collection agency. We only have 30k .. do you think they will settle.. we are hiring a bk attorney as well

any help or advice would be appreciated.

[daneam]

Hi,

We have a 188K heloc with citi. The home already for closed and now we have moved into our what used to be our rental property. The heloc has been moved from citi to a collection agency. We only have 30k .. do you think they will settle.. we are hiring a bk attorney as well

any help or advice would be appreciated.

If the foreclosed has done, why do you want to settle with them? at this point the debt is unsecured, just like credit card debt. The investment companies usually buy the seconds for $500 regardless the amount but for your case, the value is zero. Maybe offer them a couple hundred dollars if that is what you want....

[pholden]

great info - am in the process of trying to negotiate a buy out my $440 k heloc (first is with Wells and now have been frustrated 3x trying to do a loan mod with them) in order to get some breathing room financially and keep my house - even tho I've just lost my job. I'll def use the contacts listed about if the gal who is so far being responsive to me (Linda Carl) goes awol. thank you!!!!

[TheDoctur]

I'm not in foreclosure but have a situation I need advice on. I am interested in finding a more defined sample letter to write asking to settle my second mortgage with Ocwen Loan Servicing. I have no experience doing this but I want to settle my second lien. If there is new information regarding the settlement process, please share. My situation is as follows;
1. I'm in a 80/20 mortgage with 2 different servicing companies.
2. I'm upside down on both loans
3. I did a loan mod for the first and current on the loan but the second said they can't modify me
4. I am 6 months past due with the second and after speaking to one of the representatives from Ocwen she said I should consider settling my loan in full
5. I'm a little leery of how the process works because she said they had info on their website explaining how to settle. But I found no info regarding settling a loan.
6. If it's not a scam then I want to try to settle because my wife recently got word that her contract as a school teacher won't be renewed for the 2012-2013 school year and that will put us in more of a strain to try and pay or save the money to catch up.
7. I know that my second mortgage is 100% unsecured and being upside down on our first mortgage we're not sure if we want to continue throwing our money away.
8. I want to make an offer to settle our second (34K) for 10-15% of the amount owed about $3400-5k, but I'm not sure if I should just make them an offer or find out if they have a letter or packet they send out initially defining how to settle your loan.
9. So if anyone has any information to help us make this decision about settling our loan, it would be greatly appreciated.
10. Does settling your mortgage mean negative credit rating?
11. If they settle can we ask them to forgive the remainder of the debt (no 1099c) and not treat it as a short sale?
12. Would it be wise if the second is settled to go back to the first mortgager ask for another modification to reduce the principle to market value?

[Cat Damiano]

Hi TheDoctur,



Welcome to the forum and thank you for joining.............


Here is a sample letter, although, if you have not already done so you should read the first post in the following thread which answers most of your questions.

Strategy for Settling Your 2nd

Debt Settlement Agreement Letter

(Creditor's/Collection Agency's name) and (debtor's name) hereby agree to settle the debt under the following terms and conditions:


The Creditor and Debtor agree that the current outstanding debt is $________(balance amount).

Both the parties agree that (Creditor's/Collection Agency's name) will accept a sum of $_________ as full repayment of the debt. The (Creditor/ Collection Agency) consents to compromise the debt under the condition that the company will recive the settled amount by [date].

The settled amount shall be considered as paid in full and (Creditor's/Collection Agency's name) will take no further collection action on receiving the settled amount.

If the (debtor's name) fails to pay in the settled amount by [date], the agreement shall be terminated immediately and the (Creditor's/Collection Agency's name) shall immediately demand the outstanding amount owed by the (debtor's name) in full.

(Name of Creditor's Representative) shall declare that he is authorized to act as a representative of the Creditor's company.

This agreement for debt settlement shall be binding upon and have effect to the benefit of the parties, their successors, and assigns.

Dated (Today's Date)

Signature:____________________

__ Authorized Representative of [Creditor OR Collection Agency Name] Signature:______________________. (Debtor's name)