Complex question for 2nd mortgage

[roadtofreedom]

Hello - I was perusing the massive thread on settlements and couldn't see a situation quite like ours.

We live in FL. Our first mortgage balance is around $115k and the second $50K. The house is worth about $108K currently.

Here's the tricky part. My wife and I were on both loans. I filed individual BK7 in 2009 (she did not file). Both the first and second were not reaffirmed. The payments have always been made on time for both loans - before, during, and following the BK. I guess for my purpose I'm in a ride-through. However, since she did not file I believe she is still "on the hook".

One final twist - we are doing an FHA streamline now, which will put me back on the hook for the first. We are still waiting to see if the second will subordinate again.

That said, I'm interested in seeing if settling is an option or if there are other smarter options to handle the second loan. I've already paid about 45k in interest on this loan (the rate is insane) and I want to eventually get this house to a point where we can sell it. I think I'm safe as far as collection activities go. They can't foreclose. I am worried about what could possibly happen with my wife still being on the loan.

It was stupid to file individual BK7. If we had filed joint we would have bailed a long time ago. Now I'm trying to figure out if I have any options besides paying the full 50k balance on the second. I'm prepared to pay up to 20% for an easy solution, especially if it involved keeping this off her credit.

Thanks for any input!

[yomann]

We are in a somewhat simular situation.
To your question, your wife can also now file BK7 if you want out of the house.
Our attorney advised against filing joint BK to keep my wife's credit intact.

We have paid on the 1st after modification, but not paid on the 2nd for 3 years, as we cannot afford to.
Even though the 2nd is ONLY in my wife's name, they have not contacted us after MY BK.
Yes; the 2nd has some equity ($70K), but it could end up costing them all of it if they FC'ed.
Our best case scenario is to let the 2nd age for quite a bit longer, and then try to settle for a lien release at a single digit percentage of the loan amount.
Since the 2nd was included in BK, the balance due does not rise due to penalty/late fees/ delinquencies etc.
So, we continue to live here, as our monthly housing expense is much less than renting a similar house.

[roadtofreedom]

Thanks for the reply. She would not qualify for BK7 now. Our financial situation has drastically improved over the past few years. If she could, I definitely would, because we've been tackling 40k in credit cards for over a year now and still have another year to go. I can stop paying and see how it shakes out but we intend to sell and relocate across the country within 3 years, so we will probably have to deal with it before then. Even if I thought we could walk away, it creates an obstacle that would prevent us from obtaining a new home for at least 2 years once the foreclosure process completes, which could realistically be more like 4 or 5 years it seems.

[roadtofreedom]

We are still waiting to see if the second will subordinate again.

I've been reading non-stop since since yesterday... it seems this part might be a big challenge. It is possible they would accept a settlement to release the lien and consider it paid to avoid subordinating again or risking holding a note that is no longer really a secured asset?

[roadtofreedom]

Sorry to keep posting questions but I might as well get them out.

I think I have this right... if there is no equity for the 2nd, they won't foreclose, meaning they can't sue just yet because there's no deficiency until they do so, right?

Is it likely they will settle within 15 months? That would be the optimal timeline for us. I have to imagine the settlement process would be accelerated if they see the primary was discharged from BK7 3 years ago too, but I'm worried I'm being too optimistic.

Thanks again for all the views. Can't wait to get some more responses.

[roadtofreedom]

Tom or anyone - I'm not sure if I'm over-thinking this or if the issue really is that complex and that's why there isn't much input. I keep searching and re-reading the sticky posts. I'm having a hard time finding out anything about Nationstar settlement experiences. Maybe someone can just give me a quick thumbs up/down on the following?

• Regardless of my wife not being in the BK with me, we still follow the basic strategy for settling the second in the sticky and stop paying.
• I should initiate contact to let them know it's okay to contact me with settlement offers (not sure if a call is okay or if it needs to be a letter).
• Stay off the phone and just wait it out until we begin to receive offers. They wont foreclose from a negative position and can't sue my wife if they don't foreclose. They can't touch me basically.

I'm having a hard time convincing my wife this is the way to go so any assurance I can find certainly helps. I'm just unsure of the worst case scenario, and of course that's all she wants to talk about.

[roadtofreedom]

Eh, after more reading and research, I've decided to consult an attorney. FL seems to be a very dangerous place for mortgage debt and the lack of replies here hasn't been encouraging.