Citi 2nd mortgage Settlement offer/letter question

[gtazo]

I am brand new to this forum. I am currently writing my settlement offer/letter to Citi for my 2nd mortgage.

Also, I am currently in the process with my first mortgage lender, BoA, a 3 month trial period to show them I can pay my monthly payments in the hopes of not loosing my house to foreclosure. The last payment is due on April 1.

I'm wondering, in the settlement letter to Citi, do I mention that I am in a "foreclosure process" (or is this called something else) with the first mortgage lender or not?

I want to start the settlement offer at 5% with Citi, is it better to offer a one time payment or monthly payments over the course of a stated period of time? Is 5% too low?

Any other advice would be helpful. If you need any more info from me, let me know.

Your help on this matter is much appreciated as I'm new to this process and a bit confused!

Thank you!

[gtazo]

Also, should I mention how much underwater I am with my first mortgage?
Thanks!

[RunningDear]

I am going through the same process as you
You are going to want to read the following thread.


Strategy for Settling Your 2nd


And this is my story if you want to follow what is happening to me.


Chapter 7 completed Jan 2010 Home Value 386k; 1st 377k GMAC; 2nd Citi 136k


And good luck to you.
Peter

[rjm4347]

I just settled my 2nd with Citi a few days ago for 5% of the balance which was approximately $100k. I followed a strategy much like Tom's listed here on the site. Just keep at it and don't give up.

[HateCiti]

Hi rjm4347!
If you dont mind me asking...How long did it take you?
The whole not answering their phone calls , how long before they sent u a settlement offer?
How many months/ years were you behind?

[rjm4347]

They did not offer to settle, they sued me after about 12 months of not paying. I also had a first with them which during the process they modified to a fixed 3% but since the second had charged off they said it couldn't be included in the mod. The 2nd had been bought from another bank as well which I think played out in my favor. Once they sued my attorney answered them with the show me the paperwork defense which stalled them for more than a year and we started to work on getting it dismissed due to lack of prosecution because they hadn't answered. Knowing that eventually they might come up with something I contacted them and gave them an offer of 5% and got an answer back the same day saying that they accepted. My house is about $125k underwater and the second was $95k so we explained that if the suit went through my lawyer would file BK13 and of course they would get nothing. My first had been modified almost two years ago now and I have kept up with that one now with the interest rate cut in half. My worry was with the economy going the way it is having a variable rate was like holding a loaded gun to your head and the second was a balloon note (taken out to expand a growing business) which with the major drop in home values would have left me holding a large sum to pay out of pocket. The original plan was to pay that note with increased business income but we all know what happened in 2008 and my backup was the value of the house and we all know what happened there as well. So to answer your question as to how long from the day I stopped paying to the day they accepted was 3.5 years (of which 1.5 was my lawyers answer stalling the process with no communication).

[Cat Damiano]

Hi gtazo,


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


Here is a sample of a Debt Settlement Letter that I have posted in other threads to help members;

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)

[Carolinagirl5555]

The best advice I can give to anyone who is working on a settlement with Citi is to follow the advice posted on the site under Strategy to settle a second trust. I followed that strategy completely, ignored the many calls from Citi, stopped making the payments, and waited about 7 months until I got a call from a collection agency representing Citi. My guess is that they write the loans off after 6 months. The collection company was called Penncro and Associates, and they asked if I was interested in settling. I was extremely uninterested in having a conversation with them but when asked how much I could come up with, told them I would have to think about it and call them back. The loan was for $400,000 and I offered them $8,000. The negotiator was extremely professional, and after some back and forth we negotiated a settlement of $20,000 which is standard (5% I have been told is the best you can do). Ironically I had been begging them for two years to modify the loan down to $200,000, but they had ignored every one of my requests, all of my modification submissions, and every call I had ever made to them. It wasn't until I started ignoring them that they were ready to deal. Don't get caught up working with anyone at Citi, they are useless. Stop paying and wait for the collection company to call. The collection people work on commission and are motivated to get a deal done. Yes, it's going to hurt your credit. But from a risk reward proposition, I'm willing to take a hit to my credit to save $380,000. Good luck to everyone,

[Cat Damiano]

Hi Carolinagirl5555, Congratulations on your settlement on your second with Citi. If you don't mind, could you please post your success in the following thread? Success Stories in Settling 2nds

[debtfreeme]

Hi Carolinagirl5555, Congratulations on your settlement on your second with Citi. If you don't mind, could you please post your success in the following thread? Success Stories in Settling 2nds

Hello Cat Damiano,I'm trying to get this question answered concerning rewriting my conditions to Chase. I have cut/pasted from another section, searching for answers. Here it is: I am back after a few months of waiting. First of all Chase never called me. Probably due to my hardship letters mentions for collection companies not to call, though I excluded the Settlement dept. Well I called them and the women in the office were not cruel at all. They all sounded Hispanic as were their names. She stated 15K, I told her that I did not have it. OK, then she said 10K with proof of the funds. I said I will see what I can scrap up for the 3k initial offer that I sent to them in my hardship letter. I came up with 7.5 with proof and faxed it all. Minus their request for 2009-2011 tax forms, 2 paystubs and bank statments (all complete pages not just front cover consolidation). This was March 30 2012. Now I called them this week. Another agent mentioned that I need to re-do my offer with 10k. I told her, "I didn't have it, giving you all that I can muster up. She said OK. (simple, wow scary). However, they mentioned for me to re-do my stipulation. My concern is that I want to be covered. They said they will release the lien and not come after me for any deficiencies. Great! But i would have to redo my conditions. I have to put in words that I understand that they will 1. release the lien 2. not come after me for defiencies 2 send information to creditors concerning charge-off or settled for less than amount. My letter conditions read: 1My account will show paid in full with no future monies owed associated with the acct nbr of xxxxx 2.any litigation filed against me is dropped and no future litigation in any State will be filed against me associated with the acct nbrxxx 3. Lien shall be released with no defiencies incurred 4. delete all negative listings pertaining with the account nbr xxxx Please give me your input. This templated I retrieved online. They stated to redo the letter because she feels they will not comply (sounds like a person opinion or suggestion) I just want to be covered. Is there any wordings for settlement that I MUST have in the letter so as to not get bite later on I used a template. Is there anything

[Carolinagirl5555]

Concentrate on getting them to accept your settlement offer and agreeing not to pursue you for a deficiency judgment. I don't think Chase is pursuing them now but they could have started. You are not going to get them to agree to delete negative credit reporting nor are you going to get them to mark the loan as paid in full. They are going to keep the negative reporting for late payments and mark the loan as settled for less than the amount owed, no matter what you put in writing or what you request. You can dispute this later with the credit bureaus and see if you can get it removed, sometimes it works and sometimes it doesn't. But if they accept your settlement offer you're ahead of the game. Another great piece of advice from the forum is to not be too eager to settle, take your time. You are in the driver's seat once Chase starts talking about settling. Don't worry, if you don't get back to them they will call you, I guarantee it. I settled my second with Citi after ignoring them for seven months, having them approach me, and taking my time to negotiate the settlement with them. When I ignored them for a couple of days, they would call me two to three times a day asking if I had been able to do any more on the settlement offer. When I finally called them back, I drew a line in the sand, told them I absolutely could not come up with any more than 5% of the outstanding balance, and that I needed to know if they were going to accept it because otherwise I was going to talk to an attorney about bankruptcy. They accepted the 5% during that call. They sent me an offer letter, explaining the terms, and honestly the hardest part for me of the entire transaction was actually believing it when they released the lien. I would also advise to keep the letter as simple as possible, because the longer the settlement negotiations go on the worse you are going to end up. The people you are dealing with are professional negotiators, they do this for a living, and we don't. Best of luck to you, just keep your eye on the prize at the end of the process.

[Cat Damiano]

Hi debtfreeme, This is what I post for members to use as a Debt Settlement Agreement Form Letter that has helped and is short and to the point; 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)

[Cat Damiano]

I am sorry, the formatting for the letter posted merged, and it isn't letting me correct it. I let Moe know so hopefully he can get the issue resolved soon.

[debtfreeme]

I thank you both for the words of wisdom. I will allow them to contact me from here on. I did not forward them the revised copy yet as I was awaiting a reply from the forum.
Interestingly, I called earlier today to see if my documents requested had arrived as I faxed them over from a local Chase bank last week to the settlement dept. I was told that they did not receive them. I was also told that my negotiator cannot submit my papers if the docs are incomplete. (ie tax, paystubs, accounts). I thought to myself as from this side of the matter the cover said sent OK. I truly did not feel like submitting these docs again. Then too after someone on the site mentioned how these Banksters, pull people information and use it against you. I really am not sending them again. Especially later today i recieved a letter from Chase saying that my "Inquiry is Under Review"
that my inquiry is undter review.
Now I'm wondering should I really resend the settlement conditions list. If I do, thanks to Cat Damiano as I will use that in the future.

Thanks to all again

[Cat Damiano]

Now that the formatting is fixed, here is that debt settlement letter again;

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)

[murgurl]

Hello,I live in CA...1st B/A $201k current nver mod.2nd Citi 210K Property value aprox 370k Citi just filed NOD and stared foreclosure process 3/20. I had been trying to work something out but was turned down for a mod with Citi in Oct 2011. That was my last payment date. Now that its in FC they have assigned a "specialist" who wants me to send in documents and see if they can help Short sale etc!!!!!! Yikes!!! I am not moving...When I relayed that info to the "specialist" she wants all sorts of documents.ie.paystubs,bank states etc. I was out of work for two years but now things have turned around. I am making a living. I would like to settle on the second. I sent $7k offer letter after I read a post here in the forum..How long should I wait? And does it make sense that they would FC with the property worth less than both mortgages?? Both loans are refi..Thanks for any advice

[Cat Damiano]

Hi murgurl,



There is a strategy guide for settling seconds if you have not had a chance to read it, it is located in the very first post of the following thread;

Strategy for Settling Your 2nd

[murgurl]

Hello,
Yes thank you...that is great info.Howevever he does not adress the situation when a NOD is filed and F/C start. B/a 1st is not underwater..Citi 2nd is by about 40k....can they take the house??

[Cat Damiano]

If your second is in the money, then you can post this question in the following thread;

Settling with "in the money" 2nds

[gtazo]

I'm finally getting back on this forum after making my post a month ago. Just read the Strategy for Settling your 2nd! Really great information! I was taking the approach it was talking about in the 2nd paragraph, just wanting to get this dealt with. Reality is, it's been over 6 months and Citibank hasn't contacted me AT ALL regarding the loan. I'm just going to take the advice found in the Strategy, and forget about it until they actually take it upon themselves to contact me.
Thanks for sharing!

[Carolinagirl5555]

I went through the exact same thing with Citibank. Initially I attempted to get the loan modified, begged for help, tried to work with them, etc. Nothing worked, spent hours and hours faxing documents and talking to many different people, none of whom had any suggestions. Then I found the Strategy for Settling Your Second on this site. Stopped making the payments and ignored the collection calls. At about 6 or 7 months, they sent the loan to collection. Within a month of getting the collection notice, I was contacted by the collection company and they asked about a settlement. I had a 380,000 heloc with them. I told them I had only $8000 and would be happy to send that to them but that that was the best I could do. They said they couldn't go that low and hung up. About a month later, I again got another call from the collection company who was now motivated to work with me. I negotiated a settlement of $20,000 and had to listen to the collector tell me what an incredible deal this was, they have never had anyone get a settlement that low before. I'm sure everybody hears the same thing. I told them I would need to think about it and would call them back. The next day I applied for a home equity loan with my credit union, got the $20,000, and sent it to them registered mail. They sent me a letter saying the loan had been satisfied for less than the amount owed but it also said they were accepting this amount as settlement in full of the debt so were not going to pursue me for a deficiency judgment. The very best day of this entire process was the day I was able to log on to the county records and see that the lien had been released. The advice in the Strategy for Settling Your Second is spot on correct. There is no advantage to trying to settle quickly with them, just wait it out. Good luck!!

[ready to settle]

Carolinagirl5555
Though I have a different collection company I have not taken any of their calls (6 months now). After reading your post maybe I should talk with them. They never say anything more than "call us back". They never lead us to believe they are ready to settle. Did you only deal with the collection company or did you have to work with citi before they took your offer? Any advice would be great.

[Carolinagirl5555]

I received a substantial amount of calls for the first three months from Citibank. There was maybe a break of about a month or two before I got another call and then it was from the collection company. I ignored them for the first month or two and then called them back. When I called them, I told them the property was not worth what was owed and I would be willing to try to settle with them but have only $8000 to pay them. It is critical that you start very low, as you can see from my post their final settlement offer was double what I initially offered. I think probably 5% is about standard in terms of what you can expect as a settlement. If you talk to them and they just want to hound you for the full amount, I would then hang up and ignore them for another month or two. There is evidently a set amount of time that has to pass without a payment before they are ready to negotiate a settlement, and most people think it is 6 months or more. Once I got a settlement offer from them, I then contacted Citi to verify that the collection company had the ability to negotiate on their behalf. Honestly, I really did not believe that they would be willing to settle a $380,000 debt for $20,000 so I was skeptical. When I called Citi they confirmed that the debt had been sold to the collection company and that I would now have to deal with them. Once the amount was negotiated, I requested a letter from the collection company verifying that they were willing to settle for $20,000, that they would accept this amount as settlement in full for the debt, and that they would not pursue me for a deficiency judgment for the remaining amount. In my case, the collection company was very easy to work with once the settlement was negotiated. Because I had not been ready with the money before I negotiated with them, I had to make payments of $1600 a month for the first two months until I could get the refi completed. The new lender wanted the $380,000 loan released before I completed the refi and of course the collection company wasn't willing to release the debt until it had been paid, so there was some negotiation back and forth with that. After the first month's payment of $1600 I received a statement from the collection company saying I still owed the entire $380,000, and they explained that until the entire $20,000 was paid I would still continue to owe the full balance. My suggestion would be to look at the balance on your loan with Citi and set aside 5% of that so you have that amount ready when they offer a settlement. Had I done that the entire settlement would have been much easier. Ironically if I had just saved the amount I wasn't paying them every month I would have had the amount they wanted for the settlement, but of course hindsight is always 20/20! Just make sure you play it cool with them and not let them know you are anxious to settle. Go back and reread the strategy for settling your second and follow the negotiation advice. Best of luck to you, hope this helps!

[RunningDear]

Carolinagirl5555,
Congratulations! and thank you for sharing your story in so much detail. I am going through the same thing with Citi. And it REALLY helps to see success stories like this. Even the details about setting up a payment plan is good to know.

[JonathanCA]

Can anyone chime in on the credit impact of their situation (ballpark)? I'm curious what others have found and/or experienced as the reduction on their credit scores. Thanks.

[RichInVA]

Citi informed me that they would settle with me on my 2nd ($67,000) for a single payment of $4100.00. I am currently underwater by about 100K, so it sounds like a great deal. My question is; am I going to recieve a 1099 for $63,000 in January and have to pay income tax on it? I am currently in the process of filing chap. 13 bk, and with the current economy, I wouldn't be able to pay the tax.

[Carolinagirl5555]

Rich, my settlement letter from Citi included language that stated they were accepting the amount of $20,000 as payment in full for the debt, meaning they would extinguish the debt and no 1099 would be issued. I have verified through the county I live in that the deed of trust has been cancelled and marked as paid. Make sure before you give them the money that you have that letter in your hand with that same type of language in case something happens down the road. Congrats on your settlement, it is a great feeling isn't it? I am still fighting with my first trust lender but at least see a light at the end of the tunnel. Best of luck.

[JonathanCA]

I'd be cautious of not expecting a 1099 and speak with a tax professional and/or your attorney assisting you with the BK filing. Logically "extinquished in full" would indicate the bank will clear their books, however the IRS is a seperate entity. The IRS will most likely expect someone to claim some level of income on the deficiency, and if you think the bank will let you off the hook on this one you might be a bit optimistic. Again, I'd speak with your BK attorney to get his input as $63k of debt forgiveness is a once in a lifetime opportunity and hard to pass up. Good luck.

[RichInVA]

Thanks Carolinagirl and Jonathan, Great advice from both of you. I just recieved my agreement letter, and it states that the loan will be reported as "paid in full for less than the full balance", and from what I can tell from the IRS website, they have to send me a 1099C, but depending on my circumstances, I may not have to pay income taxes on it. I am currently filing BK13, so I am insolvent which is one of the supposed exceptions for the IRS. I could have had the 2nd stripped, but then I would have had to involve my wife in the bk, as of now I am filing individually, and hopefully my wife can try to keep her credit up.