Settling a second action plan---> My next move?

[StrategicDefault949]

Purchased 700sf condo OC CA 2005, refi no cash out 2006. Depreciation to nearly 150k underwater and needed to move. Strategically defaulted after a short sale was pulled out from under me by my first, Provident Mortg.

So now I am foreclosed on, and I am on the hook for my second and ready to negotiate a settlement. 2nd is 48k and I am willing to pay 8% or 4k. From others experiences, this seems very doable.

I have not been contacted AT ALL by Citimortgage for my second.

My questions:

1. After foreclosure, how long does it take for the second to come after their money?
2. Should I contact them?
3. Should I let them sell it off to a collector, and then negotiate?

I'd like to get an agreement, pay it and go on with my life, any tips?

Thanks in advance!

[Maurice Bedard]

Hello,

Let me see if I can guide you a bit here.

1. After foreclosure, how long does it take for the second to come after their money?

Usually within 90 days plus.

2. Should I contact them?

No, this like poker. You do not want to seem desperate.

3. Should I let them sell it off to a collector, and then negotiate?

They may do that anyways. Hopefully they do not so you get a better deal with Citi. I don't think if they sell it you can settle at 8% because they buy your debt around that cost.

Here are a couple good articles on this:

Settling Your Second Mortgage For Pennies On The Dollar | LoanSafe.org

Should I negotiate a settlement of my second mortgage?

[TomEason]

Purchased 700sf condo OC CA 2005, refi no cash out 2006. Depreciation to nearly 150k underwater and needed to move. Strategically defaulted after a short sale was pulled out from under me by my first, Provident Mortg.
So now I am foreclosed on, and I am on the hook for my second and ready to negotiate a settlement. 2nd is 48k and I am willing to pay 8% or 4k. From others experiences, this seems very doable.
I have not been contacted AT ALL by Citimortgage for my second.
My questions:
1. After foreclosure, how long does it take for the second to come after their money?
2. Should I contact them?
3. Should I let them sell it off to a collector, and then negotiate?
I'd like to get an agreement, pay it and go on with my life, any tips?
Thanks in advance!

StrategicDefault949
I know you're going to do what you feel is best for you, i.e. what you can live with. Were it me, I would forget about Citimortgage completely and have no communication with them, and especially do not disclose your whereabouts, personal info, or financials. Citi was wiped out in the foreclosure sale, and is now a "sold out second" and an unsecured creditor. Even though the loan is recourse, and Citi is not legally barred from so doing, they will not sue you. In fact, I've seen no evidence of any "sold out junior" lender in any state sue a borrower for money owed, even though they legally could.

[Maurice Bedard]

Great advice Tomeason!

[Troutderby]

I am in the same boat with CITI other than I am trying to keep my home- I am current at the moment but have fallen as far as 3 months on both my 1st and 2nd. I am at least 95k underwater and Im trying to settle my HELOC of 80k and have money ( 20k ) in my significant others account so they don't know about it. Is there any contact #'s at CITI that you can help me with. Or any specific department i need to submit my application to. And is there a specific application for settling a Heloc or 2nd mortgage? Any help is greatly appreciated.

[StrategicDefault949]

Here's a wrinkle I didn't expect.

Citi had asked for 14k to settle when I was trying to short sale. They are getting 14k from Mortgage insurance, so won't settle for less than the 14k.

My agent says that the Mortgage insurance, in effect, buys the 48k second for 14k, and I am then on the hook to the mortgage insurance company. How does this effect me and what changes can I expect from now owing the mortgage insurance company? Are they more diligent in going after the money? Will I be able to settle with them for less than the 14k or will they take less to just recoup some of their loss?

I wasn't expecting this and wonder if anyone has insight to this action?

[TomEason]

Here's a wrinkle I didn't expect.

Citi had asked for 14k to settle when I was trying to short sale. They are getting 14k from Mortgage insurance, so won't settle for less than the 14k.

My agent says that the Mortgage insurance, in effect, buys the 48k second for 14k, and I am then on the hook to the mortgage insurance company. How does this effect me and what changes can I expect from now owing the mortgage insurance company? Are they more diligent in going after the money? Will I be able to settle with them for less than the 14k or will they take less to just recoup some of their loss?

I wasn't expecting this and wonder if anyone has insight to this action?

StrategicDefault
Although the mortgage insurance company may say you owe them, your contract or note was with Citi. Therefore, in order to try to collect anything on that loan, Citi will have to sue you, or Citi will have to sell or assign the loan to another entity who will have legal standing to sue. Were it me, I would have no communications with Citi, the mortgage insurer, or any future debt owner. Try not to worry about it.

[laststraw]

I also had a second mortgage with Citi, very close to the amount ($48,000) that yours is. I did not know that they had insured the loan, essentially betting against my ability to pay. Kinda strange, since I had a previous mortgage with them for more than 10 years and was never late.

The insurance company sent it to a collection agency and I settled with them several months after they took over the debt for less than 10 percent. My advice? Don't be in a hurry, and when you send them the hardship letter make it clear that you are out of options and are considering bankruptcy.

[TomEason]

I've posted this on a couple other threads, but in light of the questions on this thread, here it is again.

Strategy for Settling Your 2^nd Loan

To start with, if you intend to keep your house and cannot afford to keep paying both the 1st and 2nd, your priority is to keep your 1st current. Your 2nd lender, often being totally underwater, and hence "out of the money" won't foreclose. So, forget about your 2nd for a while, e.g. about 6 months or more. Here's the deal. Should you want a reasonable settlement, you'll need to follow a certain strategy. If you try to play by the lender’s rules, you may be able to settle sooner, but you will pay a lot more. If you have a good reason to be in a hurry (no, just to done with it and move on doesn’t count), then by all means reach out to your lender, but be prepared to jump through hoops, and to ultimately pay a lot more. However, to achieve a more palatable settlement, the process will require a smart strategy and patience, as it will most likely be a process lasting at least six months, and often much longer.

Here are some key guidance factors to follow:

1) First, stop paying on your 2^nd loan and have no more communication with them, by either phone or mail. That’s right. When you see your lender’s collections dept on your caller ID, do not answer the phone, and do not return any voicemail messages. The first three or four months, you’ll likely receive many calls from the lender’s collections dept. Please just ignore them. FYI, many forum members have learned how to deal with lots of incoming collections calls from all sorts of creditors. You’ll figure out what’s best for you.

2) It’s irrelevant whether your lender charges off and/or sells your 2nd/HELOC to a debt buyer or not. Makes no difference whatsoever, so ignore it. If, in fact, the debt is sold to a new entity, and you receive a letter from the new owner, DO NOT bother sending a debt validation letter. It accomplishes nothing for you, does not affect your legal standing, and is generally a waste of time and effort. Plus, it signals to the debt owner that they have the correct address, and that you, as a debtor, are concerned, stressed, and naïve enough to send it. BTW, a new debt owner is required, under the provisions of the FDCPA, to send a letter to the debtor advising them, among other things, of their right to have the debt validated. Means nothing, so forget about it.

3) When, eventually, you engage in settlement discussions with the lender’s settlement department (no, not the collections dept), you will most likely be asked some prying questions, and be asked to disclose financials. Politely refuse to discuss these. DO NOT disclose any personal info, to include your plans, and absolutely no financial or employment info. As one poster’s attorney quipped, giving financial info to a creditor is akin to “pre-judgment discovery.”
A creditor doesn’t need that stuff in order to make you an offer. As the oft repeated maxim states, “knowledge is power.” And, as in the following humorous age old buyer-seller exchange. Buyer (Borrower): “How much do you want?” Seller (Lender): “How much you got?”

4) Some key negotiation guidelines:

a) Set your settlement goal, including the price and all the other conditions. Needless to say, do not share your goal with the lender.

b) Do not rush the settlement proceedings, to include commencing negotiation talks. Let the lender’s settlement department initiate the talks, most likely in about 6 months. Be patient. Time is on your side and the passage of time will only strengthen you position.

c) Do not behave as if you are rushed, eager, or worried at all. Instead behave in a very nonchalant manner, with a couldn’t care less attitude. Be prepared to walk away from the settlement talks at any time. Don’t worry, the debt’s not going away, and negotiations can be resumed later. Wait for the lender to initiate re-engagement in the negotiations.

d) When the lender’s settlement department contacts you, most likely in about 6 months, they will leave a voicemail implying there may be a “workout” available for you. Return that call and listen to their offer. This means that lender is now motivated to reach a reasonable settlement, and may be glad to eke out any money on this loan.

e) Never accept the first offer. Instead counter the offer with a counter below your goal price. And, then off you go with your negotiations. Remember this negotiation basic. When the lender asks you to give up something, ask them what they’re willing to offer in return.

f) Avoid talking much, only enough to present you offers (counter offers), and to confirm and verify the lender’s offer. No idle chit chat, and never disclose personal info. Your negotiating opponent will likely be a trained negotiator.

g) While I realize this seems obvious and goes without saying, DO NOT end up negotiating with yourself. This frequently occurs when a negotiator is overly loquacious and attempts to be pleasant and polite to their negotiating opponent. The result is often giving something away, leaving something on the table.

h) Always sleep on an offer before accepting it.

[StrategicDefault949]

This is going really slow. About 12 weeks ago, I got a letter with an offer to settle for 28k, I did not respond. Recently I got a letter with 8k of interest tacked on to the principal for which I am not going to respond.

I stopped paying in March 2010, they foreclosed in Dec. 2010.

I have received a total of 1 (ONE!) phone call regarding this entire matter and that was June 2010.

I find that odd, yet I'm sure it is an indicator of how screwed up this financial RE mess is.

Is there a time limit for them to file legal action?

[StrategicDefault949]

Letter today from Old Republic saying that legal action has been approved by the creditor.

Is Old Republic suing folks nowadays?

Should I still be ignoring them?

[gakaye]

my job relocated, our family has moved and we have been unable to sell our georgia home... it is $85k under-water and foreclosure is inevitable.

bank of america 1^st $173k
citimortgage 2^nd $38k

just received a letter from the law office of zakheim lavrar, p.a. about our 2^nd mortgage with citimortgage …we are behind 5 months.

letter says that citibank has placed our account with them for collection and possible legal action …they are attempting to collect a debt …we have 30 days to reply and ends with “no attorney has reviewed our account”… i am a little worried.

guess citi sent our account to collection... assigned or sold it??? we sent a validation letter to the law office this morning... don't know what to expect next.

[gakaye]

my job relocated, our family has moved and we have been unable to sell our georgia home... it is $85k under-water and foreclosure is inevitable.

bank of america 1^st $173k
citimortgage 2^nd $38k

just received a letter from the law office of zakheim lavrar, p.a. about our 2^nd mortgage with citimortgage …we are behind 5 months.

letter says that citibank has placed our account with them for collection and possible legal action …they are attempting to collect a debt …we have 30 days to reply and ends with “no attorney has reviewed our account”… i am a little worried.

guess citi sent our account to collection... assigned or sold it??? we sent a validation letter to the law office this morning... don't know what to expect next.

what do you think would be our best next move?

[TomEason]

Hi gakaye

Thanks for your post.

IMHO, your best move is to completely ignore that law office as well as Citimortgage, and communicate with neither ever again.

If it were me, I wouldn't worry about it. Good luck to you.

[gakaye]

Hi gakaye

Thanks for your post.

IMHO, your best move is to completely ignore that law office as well as Citimortgage, and communicate with neither ever again.

If it were me, I wouldn't worry about it. Good luck to you.

thank you, tom... for your reply!

[gakaye]

Worried and not knowing which way to turn I sent a letter to Frank Eliason, a CitiMortgage special contact found on this site. I explained our financial situation and expressed my willingness to settle the debt... offering Citi 5% of the balance. Within a week my account was moved from Loss Mitigation to a CitiMortgage Executive Response Specialist. I was told a settlement is handled just like a short sale and a workout package has been sent for me to complete. A BPO would be ordered. I am in the process of gathering the requested financial information and filling out the package forms. Although there isn't a settlement guarantee... for the first time in months I have felt a sign of relief. I've read not to give financial information but, my goal is to settle our 2nd. Is it a mistake for me to go along with Citi's settlement procedure?

[TomEason]

Worried and not knowing which way to turn I sent a letter to Frank Eliason, a CitiMortgage special contact found on this site. I explained our financial situation and expressed my willingness to settle the debt... offering Citi 5% of the balance. Within a week my account was moved from Loss Mitigation to a CitiMortgage Executive Response Specialist. I was told a settlement is handled just like a short sale and a workout package has been sent for me to complete. A BPO would be ordered. I am in the process of gathering the requested financial information and filling out the package forms. Although there isn't a settlement guarantee... for the first time in months I have felt a sign of relief. I've read not to give financial information but, my goal is to settle our 2nd. Is it a mistake for me to go along with Citi's settlement procedure?

If you're able to get a settlement for the amount you want, go for it.

However, as you know, were it me, I'd never disclose financials. Regardless what they say, lenders don't need that stuff in order to settle.

FYI, the more assets you disclose, the higher their settlement offer will be. If you feel you must disclose, I recommend you do what you can to make your situation appear financially weak (or bleak).

Bear in mind this is a negotiation, and I recommend you behave accordingly.

[gakaye]

If you're able to get a settlement for the amount you want, go for it.

However, as you know, were it me, I'd never disclose financials. Regardless what they say, lenders don't need that stuff in order to settle.

FYI, the more assets you disclose, the higher their settlement offer will be. If you feel you must disclose, I recommend you do what you can to make your situation appear financially weak (or bleak).

Bear in mind this is a negotiation, and I recommend you behave accordingly.

After 8 weeks I finally received a letter along with documents from Zakheim & LaVrar in regards to my 9/17 request for VALIDATION. I'm not sure if the information received is adequate... the letter stated their client, CitiBank, N.A verified the debt is due but I didn't receive a copy of the contract agreement between CitiBank and Zakheim & Lavrar giving them the right to collect. The documents included were a copy of the loan application and our note plus a 2nd copy of the note with an additional page that appears to be the transfer from the original lender, Provident Funding Association L.P. to CitiMortgage, Inc then to CitiBank, N.A. (stamped signatures). Is the documentation sent a sufficient validation?

On another note it's been 7 weeks since I emailed the workout package to Citi's Executive Services Group. I followed up with an email to verify the financial packet was received even called a few times to check the status of my settlement offer... but I haven't had ANY response. Is that normal?

Any insight would be greatly appreciated... thank you!

[Evan Bedard]

On another note it's been 7 weeks since I emailed the workout package to Citi's Executive Services Group. I followed up with an email to verify the financial packet was received even called a few times to check the status of my settlement offer... but I haven't had ANY response. Is that normal?

Any insight would be greatly appreciated... thank you!

Hello Gakeye,

I know its been a few months since your last post, but just curious how are things coming along for you now?