Best way to proceed with 2nd

[headed4trouble]

Hi: I have a situation and not sure what to do so seeking advice.

I have a home I bought for $320,000 back in 2005. In September 2007 it appraised for $400K and I refinanced it 100%, $320K with Suntrust and $80K HELOC with Citimortgage. Because of financial issues I stopped paying both mortgages in February of this year and in April applied to both companies for loan modifications.

Citibank came back pretty quick and reduced my interest rate so I resumed paying with them and have continued to do so. Suntrust I have not heard back from since I applied in April, I keep calling but my paperwork has not been looked at yet. I have not paid Suntrust since February and now they are threatening to start foreclosure proceedings. The lady on the phone in the loan modification office told me that they can go right the way up to scheduling a sale date before that will encourage the loan modification office to start moving.

I'm so underwater (house worth less than $200K) that I am considering just letting it go to foreclosure. My question is, if Suntrust the first forecloses, can Citibank come after me for a judgment on the $80K, and more to the point, are they likely to do so? I was thinking that the worst would be a tax bill on $80K (increase of new loan over original purchase price) but now I can see getting a judgment for $80K.

Any thoughts much appreciated.

Thanks

[Evan Bedard]

Hi headed4trouble,

My question is, if Suntrust the first forecloses, can Citibank come after me for a judgment on the $80K, and more to the point, are they likely to do so? I was thinking that the worst would be a tax bill on $80K (increase of new loan over original purchase price) but now I can see getting a judgment for $80K.

Since your home is now worth less then 200k your first mortgage will collect and the proceeds and the second will not be able to collect anything because the house is worth much less than before...

[trappedincali]

Sounds to me like you have a recourse second HELOC which would become unsecured if the first forecloses. They would then either attempt to collect, or sell the loan to a collection agency to do the same. I doubt they will just go away on a 80k loan, and I wouldn't sleep easy making that assumption either (I'm in a similar situation). Worst case, they can get a judgment and garnish wages.

You need to have your loan docs reviewed by a qualified attorney who understands real estate law. You may also want to consult a bankruptcy attorney just to get your BK options understood as well. That kind of peace of mind is money well spent. Nobody here can give you specific advice on your situation unfortunately.

Good luck with whatever you choose.

[zz_iga]

2nds cannot go and garnish wages. Contact them about settetment and offer them like 10-15 k to close the loan..... cause your up-side-down they most likely will take from you anything cause they loooosse!

[Evan Bedard]

2nds cannot go and garnish wages. Contact them about settetment and offer them like 10-15 k to close the loan..... cause your up-side-down they most likely will take from you anything cause they loooosse!

True settling your 2nd mortgage is a great idea. Some lenders are willing to settle for about 5-20% of the remaining balance...