Settling with "in the money" 2nds

[robin_m]

Tom,

Thanks for your quick reply. yes I have been following the strategy for almost a year now.
It has been charged-off already. This is the first contact with them and we are trying to make something happen with the 2nd.

Question1: Why do you think it is off. 850 - 780 - 50 = 20. so they will get 20 if they take it to extreme step of foreclosure. isn't it?
the other thing is I don't know the exact value of home. zillow puts it at 900, eppraisal at 850

Question2: Is it ok to provide copy of 1st mortgage statement to the 2nd lender.? any issues.
In theory, they could find this out from credit checks or simply calling the 1st lender. right?

I agree with you that if nothing happens now, I can simply wait.
It doesn't hurt to wait except that the property values are going up in our area.

Thank you again!

[TomEason]

Tom, Thanks for your quick reply. yes I have been following the strategy for almost a year now. It has been charged-off already. This is the first contact with them and we are trying to make something happen with the 2nd. Question1: Why do you think it is off. 850 - 780 - 50 = 20. so they will get 20 if they take it to extreme step of foreclosure. isn't it? the other thing is I don't know the exact value of home. zillow puts it at 900, eppraisal at 850 Question2: Is it ok to provide copy of 1st mortgage statement to the 2nd lender.? any issues. In theory, they could find this out from credit checks or simply calling the 1st lender. right? I agree with you that if nothing happens now, I can simply wait. It doesn't hurt to wait except that the property values are going up in our area. Thank you again!

Thanks for your post. You got the numbers wrong. Per my last post, the correct numbers are: "850-780-150= - 80. You can add another $50K to the 2nd's loan balance for their costs to resell the REO. So, you're 2nd is underwater by about $130K." Although property values may be increasing, your place will have to appreciate by 15% before the 2nd would be close to being in the money. You can forecast how long that might take and proceed accordingly. Good luck.

[jakester]

Hi Folks- I have searched for correct thread, and this seems to be the best fit, though my situation has some individuality, as most of ours do. I researched over a year ago on LoanSafe while considering strategic default, and decided for a variety of reasons that it was not my best alternative. In the year that followed, my primary residence appreciated well, and now it is under contract to sell. The digits:
- 234K primary
- 93K heloc
- 320K contract sales price (net of closing assistance for buyers)

I am looking at coming to closing with 7K plus whatever the remaining sellers closing costs are. Fortunately, my new employer is paying for real estate commissions. My heloc lender is saying they are open to letting me sell and pay remaining with unsecured loan after closing.

My questions:
1- Are there specific dangers in providing the heloc lender stacks of info in association with this request? They are asking for tax returns, all bank statements, retirement statements. I have seen many threads advising NOT to provide lender info, but in this case I am trying to get them to do me (do us both) a favor.
2- Are there tactics that I could employ to increase the likelihood they will approve my request? For example, should I inform my primary of the situation and play like I am going to hand over the keys if the heloc lender does not agree to sale? Perhaps one of the tactics would be to provide them no information and make them wonder if they will see one cent from me after closing.
3- Are there tactics I can employ to keep the heloc lender from forcing me to drain every penny from savings? My reserves are lower than preferred due to closing on new primary residence, and I have only been able to keep my head above water up to now by having savings to dip into when needed.

As I type this, I am thinking I have nothing to gain from providing any more information, even though I am always inclined to "play nice". Please comment on any gotchas that come to mind that I am probably not thinking of.

Thanks to all contributing to this great website/resource.

[TomEason]

Hi Folks- I have searched for correct thread, and this seems to be the best fit, though my situation has some individuality, as most of ours do. I researched over a year ago on LoanSafe while considering strategic default, and decided for a variety of reasons that it was not my best alternative. In the year that followed, my primary residence appreciated well, and now it is under contract to sell. The digits:- 234K primary- 93K heloc- 320K contract sales price (net of closing assistance for buyers)I am looking at coming to closing with 7K plus whatever the remaining sellers closing costs are. Fortunately, my new employer is paying for real estate commissions. My heloc lender is saying they are open to letting me sell and pay remaining with unsecured loan after closing.My questions:1- Are there specific dangers in providing the heloc lender stacks of info in association with this request? They are asking for tax returns, all bank statements, retirement statements. I have seen many threads advising NOT to provide lender info, but in this case I am trying to get them to do me (do us both) a favor.2- Are there tactics that I could employ to increase the likelihood they will approve my request? For example, should I inform my primary of the situation and play like I am going to hand over the keys if the heloc lender does not agree to sale? Perhaps one of the tactics would be to provide them no information and make them wonder if they will see one cent from me after closing.3- Are there tactics I can employ to keep the heloc lender from forcing me to drain every penny from savings? My reserves are lower than preferred due to closing on new primary residence, and I have only been able to keep my head above water up to now by having savings to dip into when needed.As I type this, I am thinking I have nothing to gain from providing any more information, even though I am always inclined to "play nice". Please comment on any gotchas that come to mind that I am probably not thinking of.Thanks to all contributing to this great website/resource.

Thanks for your post. I'm confused. Since you're bringing $$ cash to the closing, why would you need anybody's permission to do the deal? And you definitely should NOT provide your 2nd lender with any financials.

[jakester]

Thanks for your post. I'm confused. Since you're bringing $$ cash to the closing, why would you need anybody's permission to do the deal? And you definitely should NOT provide your 2nd lender with any financials.

I cannot bring enough to pay off my heloc, but the bank is playing like they will let me sell and give me an unsecured loan for the balance. They say they need me to submit some paperwork (including financials) to approve my sale. Should I let my primary know what is going on? Can they help coerce the heloc to let me sell?

[TomEason]

I cannot bring enough to pay off my heloc, but the bank is playing like they will let me sell and give me an unsecured loan for the balance. They say they need me to submit some paperwork (including financials) to approve my sale. Should I let my primary know what is going on? Can they help coerce the heloc to let me sell?

Thanks for your post. No, your 1st lender cannot coerce your HELOC lender to do anything. Why do you want to do a SS? Do you have a goal or a reason? If it were me, I'd simply let it go to FC. FYI, there are no advantages for the property owner in doing a SS. And the advantage of a FC is that you'll be able to remain in the house for many many months, all rent free. You might visit the following thread and read post #1. Good luck. SS vs DIL vs FC Comparison

[Festivo]

Hi,


I posted in Bank of America Home Loans, but was advised to look here. Im still looking through this thread, but thought id see what your thoughts were. We are currently filing ch 7 but are keeping our home using the homestead exemption. We have a first through Seterus for 238k (after modification) and our second was just recently transferred to NMS recovery services. We are not familiar with them at all. Our second is for 75k. We would like to settle the second because its payment is so high, but it will be years before we can consider refinancing. My question is has anyone settled their second with positive equity in the home. Ours could have as much as 75-100k. We would consider selling, but our income is half of what it used to be and renting would cost us more than we can afford.

Also, has anyone worked with NMS recovery services, are they fairly easy to work with?


thank you

[Stonehouse]

In Michigan have a first mortgage for 153k with Chase that was just modified. A second with Greentree for 56k. SEV is 67k, I had an appraisal done a year ago for 172k. GT says value is 195k. Zillow is about the same. They charged off a month ago. I talked to them yesterday and offered 10% to settle the second. They want me to send a laundry list of financials (I am self-employed) and then they will get an appraisal. Should I send the documents? Should I wait. I want to settle in 2013 while the mortgage debt relief act will exclude the debt from being taxed. What is the best course of action? How much "equity" do I really have in the property.

[jakester]

...Why do you want to do a SS? Do you have a goal or a reason? If it were me, I'd simply let it go to FC. FYI, there are no advantages for the property owner in doing a SS.

TomEason, my goal was actually not to do any of those. My goal was for HELOC lender to give me unsecured loan and let me sell the house, which is vacant after I closed on my new out-of-state primary residence where my job is. I was anticipating that the net gap at closing was going to be slight enough that it would be worth me paying off rather than damage my credit. The latest twist is that appraisal came in yesterday $20K less than the contract price, and my agent tells me I have no recourse for ignorant, negligent appraisers. So now my gap is ~$30K instead of ~$10K. I will be reviewing additional posts now to come to informed decision on what I should do. Reading the posts on "buy-n-bail" last year, I held those folks in such high regard, perhaps I will join them. If wrecking my credit is inevitable, maybe I should join the ranks who stopped paying on a house that is rented out....

[TomEason]

TomEason, my goal was actually not to do any of those. My goal was for HELOC lender to give me unsecured loan and let me sell the house, which is vacant after I closed on my new out-of-state primary residence where my job is. I was anticipating that the net gap at closing was going to be slight enough that it would be worth me paying off rather than damage my credit. The latest twist is that appraisal came in yesterday $20K less than the contract price, and my agent tells me I have no recourse for ignorant, negligent appraisers. So now my gap is ~$30K instead of ~$10K. I will be reviewing additional posts now to come to informed decision on what I should do. Reading the posts on "buy-n-bail" last year, I held those folks in such high regard, perhaps I will join them. If wrecking my credit is inevitable, maybe I should join the ranks who stopped paying on a house that is rented out....

Thanks for your post. It's unfortunate the appraisal came in lower than you were expecting. Yes I agree; a buy 'n bail is a very savvy move, particularlly when the "bail property" is rented and generating positive cash flow recurring revenue. FWIW, if I were you that's what I'd do! Good luck.

[windnwaves]

I have a HELOC with Chase and would like advice on whether to default and attempt to settle it. I would like to keep the house, which is in California and rented out. The HELOC is not purchase money and the home is rented out. Here are the numbers:

Zillow value = $560k
1st mortgage with Chase = $550k
2nd mortgage (HELOC) with Chase = $24.5k

Is it unlikely that I'd be able to settle because the HELOC isn't purchase money and because the HELOC isn't completely underwater? Also, I have another home in California with a 1st and 2nd mortgage also with Chase that has equity in it. If I attempt to settle the HELOC on property A, could Chase identify the equity in property B and put a lien on it?

Any advice would be most appreciated!

[TomEason]

I have a HELOC with Chase and would like advice on whether to default and attempt to settle it. I would like to keep the house, which is in California and rented out. The HELOC is not purchase money and the home is rented out. Here are the numbers: Zillow value = $560k 1st mortgage with Chase = $550k 2nd mortgage (HELOC) with Chase = $24.5k Is it unlikely that I'd be able to settle because the HELOC isn't purchase money and because the HELOC isn't completely underwater? Also, I have another home in California with a 1st and 2nd mortgage also with Chase that has equity in it. If I attempt to settle the HELOC on property A, could Chase identify the equity in property B and put a lien on it? Any advice would be most appreciated!

Thanks for your post. As your Chase HELOC is NOT "in the money", please no longer post in this thread. I recommend you visit a more appropriate thread and/or start your own thread. And no, Chase cannot put a lien on your other property.

[windnwaves]

Thanks, Tom. Much appreciated. Good to know that the HELOC isn't considered "in the money" when it's partially underwater, which makes sense given what the sales cost would be, and that Chase can't put a lien on my other property. My apologies for posting my question here. I'll start a separate thread for it.

[SangFroid]

We are in negotiations with Etrade to settle. Just today they offered to settle for 20% or $17,081.51. I told him we don’t have it. Our contact at PNC said we are welcome to make a counter offer to the investor (Etrade). We are going to counter offer at 5% because, thanks to Tom's explanation below, we've determined that we are "underwater" in the eyes of the investor due to the $50K REO costs. So we know they need to/must settle with us. Now it's just a matter of how much. We hope they accept 5%, but if not, we'll accept the 10% we heard they don't go below because we want to sell our home in this market as soon as we finalize the settlement with the 2nd.

Wish us luck!!!