2nd mortgage terms and conditions

[gigi321]

Also posted on another post. I had not seen this section previously. Oh....and I live in Florida.

Okay....so, we have approval from the first mortgage and have been waiting on the second for some time. Today, I get the following correspondence. I am so confused. My real estate agent advised me not to worry he was going to negotiate but, I can't help to worry. Is this even negotiable? Should I get an attorney? He said he was going to speak to an attorney himself..........he is experienced in short sales but was taken aback by this response.

"Please be advised that Wachovia Bank will accept a short sale offer of $3,000 towards the 2nd lien but the deficiency balance will be charged off and the customers will be contacted by our Recovery Department for re-payment options after settlement has taken place. This will not be considered a settlement or forgiveness of debt.

If you have any questions or concerns please feel free to contact me directly."

[Marshall Rosenbach Esq.]

Gigi - the best thing to do in this situation is to call the negotiator handling your file and ask them what the heck they mean! That sentence is not clear to me. I have seen many 2nd mortgage holders take 5-10% on the 2nd mortgage balance....others will ask for a lump sum plus want you to sign an UNSECURED promissory note for the balance for the 2nd mortgage....so ask them:
1. With this agreement, is the promissory note on the 2nd mortgage satisfied in full with this settlement?
2. If so, why would their need to be "re-pay options?"

Finally, make sure that whatever you negotiate, you get the lender to agree to waive the deficiency judgment and to acknowledge that the agreement fully satisfies the entire debt, not just the mortgage! (Because they will sometimes say the mortgage is satisfied, but they still have the right to chase you for the deficiency!)

[gigi321]

Thank you so much for your quick response. I will do that today!

Also, here is the statement from the 1st.

"We agree to accept the proceeds generated by the $129,000 "as is condition" purchase as full and final satisfaction on the first mortgage indebtedness on the above referenced property"

Am I safe to think they cannot come after me once the transaction is complete?

[Marshall Rosenbach Esq.]

Gigi - I really cannot give you legal advice specific to your situation because I have not been retained. However, to me, that language is vague in terms of satisfaction on the "first mortgage indebtedness." Because it says satisfaction of "indebtedness, which is what you want, but the specific reference to the first mortgage scares me that the satisfaction is limited only to the mortgage and not the general indebtedness. I would call the lender and clarify that this satisfaction is for the entire debt, not just the mortgage.

[gigi321]

Thanks for you help. After getting the following email from GMAC (1st) and the 2nd not budging on the charge off, we have decided to obtain an attorney. I feel like the 1st mortgage was pretty tricky with their original statement and thankful you encouraged me to ask more questions. Thanks again!


"The investor of your loan could pursue a deficiency judgment for their loss on this account. However, at this time, the investor does not pursue this option on short sale issues. A short sale is a negotiated settlement that the investor has agreed to. It has not been their practice to pursue deficiencies in these situations. However, they will not put this in writing."

[Marshall Rosenbach Esq.]

Good luck with it. And everyone should learn from this to ask the bank to clarify regarding whether a deficiency judgment is being waived.

[nbtapia1]

My 2nd loan lender told me they won't do anything unless 1st mortg do a modif for me., but 1st mortge is fine the rate is low (only 5.5%) now, and if they do a modif, its usually 5 ARM and I don't like it I like be safe with a fixed rate... help what to do

[Marshall Rosenbach Esq.]

nbta - submit a loan modification request to your first mortgage holder. Even though you have a good rate, 3% may not be out of the question sir!

[wgcamp]

I have a question. Business partner owns primary home condo in FL with a 1st and 2nd mortgage. We got AmTrust, holder of 1st, to modify 1st mortgage last week. CitiMortgage holder of $180 k 2nd is threatening to foreclose. I understand that 2nd is requried to modify when 1st modified in MHA prorgram see http://www.treas.gov/press/releases/reports/042809secondlienfactsheet.pdf Does any of this have the force of law? Plus condo is valued at $120k less than 1st mort balance. Citi thinks value is $650 recent sales at $370k on identical unit. Any experience with this? wgcamp

[wgcamp]

I have a question. Business partner owns primary home condo in FL with a 1st and 2nd mortgage. We got AmTrust, holder of 1st, to modify 1st mortgage last week. CitiMortgage holder of $180 k 2nd is threatening to foreclose. I understand that 2nd is requried to modify when 1st modified in MHA program
see
http://www.treas.gov/press/releases/...nfactsheet.pdf Does any of this have the force of law? Plus condo is valued at $120k less than 1st mort balance. Citi thinks value is $650 recent sales at $370k on identical unit. Any experience with this? wgcamp

[Marshall Rosenbach Esq.]

WG - it doesn't make sense that the 2nd would foreclose given the property is underwater. The 2nd would have to buy out the first mortgage which it will not do given the market value.

[wgcamp]

MER,
I agree. Apparently they dont know facts. They say they have a BOP that says unit is worth $650k. The broker has confused larger higher units with this unit. Part of trick is to point this out which we did. 2 reasons not to foreclose. 1. bad economics and 2. the MHA rules. I don't know if rules have force of law it may be just a matter between bank and Treasury Dept. who puts out regulations for servicers.
wgc