20% mortgage in collections, 80% in foreclosure

[DeeGee]

My lender has started foreclosure proceedings (we actually go to court in August). I had assumed that the foreclosure was against the full amount of the loans (100% financed) and only realized they were only foreclosing on the larger portion when I received a letter from a collection agency recently demanding payment for $30,000. When I contacted the lender I was told this was the norm and that they were going after the more important part of the loan and had closed out the other account by sending it to collections. I owe $146,00 in total. both loans are with the same lender, indymac now one west bank. Is this legal (i'm in Florida)? Can I discharge the debt by filing bk?

[Evan Bedard]

Hi Deegee welcome and thank you for joining the forum.

When I contacted the lender I was told this was the norm and that they were going after the more important part of the loan and had closed out the other account by sending it to collections.

It is normal for lenders to sell your 2nd mortgage to collection agencies for pennies on the dollar and then they go after your 1st mortgage for foreclosure.

[rockraider3]

Originally Posted by Evan Bedard

It is normal for lenders to sell your 2nd mortgage to collection agencies for pennies on the dollar and then they go after your 1st mortgage for foreclosure.

Evan - I've just started to come to the realization recently that this is what happens with 2nd mortgages. Literally, last week my HELOC lender told me they'd sell to a collection agency by the end of August if they didn't receive payment from me.

I was aware this happened with unsecured debt, but not with notes secured by a property.

Anyway, do you have any idea what "pennies on the dollar" might represent? I hear that phrase a lot and wonder if it literally means 5-10 cents or less. I'm offering my HELOC lender around 17-20% in cash to settle. They're telling me 30% at a minimum. So if they plan to sell for pennies on the dollar, wouldn't my settlement offer be superior to that? I'm trying to figure out what they are accepting what I can offer...

[Evan Bedard]

Hi Rockraider3,

In my personal experience many lenders will be willing to accept around 20% as the settlement amount. Your offer does seem very good and continue to try and fight for that. Talk to as many reps, supervisors, and managers as needed be