PNC offering release at $10k and forgiveness at $38k on $90k 2nd. Can I close this gap?

[JTKinLA]

I recently relocated from California to Illinois, and needed to do a short sale on my LA condo. I'm on my 4th buyer, after the first 3 fell out. The foreclosure process was started by the 1st, shortly before accepting an offer, which includes $5k towards the 2nd.

My agent, who has been great, feels that we need to close this deal asap, or risk losing the buyer. i'm also eager to wrap things up. I have a total of $10-14k to contribute towards the 2nd (incl. the $5k). PNC have been holding strong at $38k for a full forgiveness. I'm holding out hope that SB 458 will pass, which will keep PNC from pursuing any deficiency, but I'd certainly rest better at night w/ a full forgiveness. Should I call their bluff and say $10k or no deal??

[Cat Damiano]

Hi JTKinLA,


Unfortunately this is a decision that only you can make. Go with your gut and keep the realtors feelings out of your decision to do what is best for you because they are only feeling the need to close the deal asap so they can get paid.

[DaveAce]

I recently relocated from California to Illinois, and needed to do a short sale on my LA condo. I'm on my 4th buyer, after the first 3 fell out. The foreclosure process was started by the 1st, shortly before accepting an offer, which includes $5k towards the 2nd.

My agent, who has been great, feels that we need to close this deal asap, or risk losing the buyer. i'm also eager to wrap things up. I have a total of $10-14k to contribute towards the 2nd (incl. the $5k). PNC have been holding strong at $38k for a full forgiveness. I'm holding out hope that SB 458 will pass, which will keep PNC from pursuing any deficiency, but I'd certainly rest better at night w/ a full forgiveness. Should I call their bluff and say $10k or no deal??

I've been reading many other postings on PNC second for about 9 months now as I am going through short sale with PNC as second. For full release PNC is about 30-50%. I think if you can get it under 40% for full forgiveness, they are easy to deal with. You maybe able to squeeze to 30%, but 40% is about typical.

If you took $10k w/o full forgiveness you are rolling the dice on what PNC might do. I have not seen many postings of people who took just the release and shared experiences afterwards. Only if people who went through this option would share their experience, it may have helped me. But I was able to accept my less than 40% settlement with PNC.

I basically received $120k in late 2006. Paid about $33k into the loan for about 4 years (maybe little less), and stopped paying due to shortsale. And I needed another $35k to settle at PNC's 40%. About $6k comes from first mortgage who probably lost about $250k at least from my rough estimation.

My strategy was just to leave all of this to lawyer and realtor this negotiations happen on its own. There was many weird parts of both first and second mortgage contacting me with collection and foreclosure. I just avoided getting served and contacted. Once you have a solid buyer with workable price based on today's market, banks tend to negotiate easily.

[shobam]

I've been reading many other postings on PNC second for about 9 months now as I am going through short sale with PNC as second. For full release PNC is about 30-50%. I think if you can get it under 40% for full forgiveness, they are easy to deal with. You maybe able to squeeze to 30%, but 40% is about typical.

If you took $10k w/o full forgiveness you are rolling the dice on what PNC might do. I have not seen many postings of people who took just the release and shared experiences afterwards. Only if people who went through this option would share their experience, it may have helped me. But I was able to accept my less than 40% settlement with PNC.

I closed a short sale on a second home back in sept 2010. BofA was the primary and the 2nd, a HELOC was an E*TRADE note being serviced via PNC. PNC started handleing all of E*TRADE'S 2nds in 2007 during the housing bust. I had to deal with PNC.

In essence due to a real hardship I had to sell my second home which was my primary residence for years before I got married. I bought the house in 2003, got married in 2005 and then rented my house and moved in with my wife in her house. In 2006 my wife became ill, couldn't work and then in 2008 the renters lost thier jobs and stopped paying rent. By 2009 I needed to sell the second home but it was only worth 200K at best, down from a high of 390K. I owed 234K to BofA the primary and 49K to PNC the servicer of the second. We had eager buyers who loved the house and hung in with us there until closing (9/2010) - 18 months from the date of listing. That was key to this sale, the buyers never wavered.

BofA was real easy and accepted the short sale and released me of any further collection activity and then sent me a 1099. PNC demanded 15 percent at closing and would not release the deficientcies after closing. In PNC's letter accepting the short sale they stated that I would be responsible for the deficienties and that they - PNC would use "whatever" legal methoods were permitted in my state (Mass) to collect those deficeinties. However I did ponie up the 15 percent or 7.5K at cloing and they - PNC released the lein and the sale went through.

In a side note regarding PNC's conditions regarding the short sale, PNC never refered back to the original HELOC documents as still being in force nor did they offer any work out for the debt. They just sent in a one (1) page document with a few conditions that needed to be met for the them to release the 2nd lein. Conversations with PNC before the short sale led me to think that I would be able to work out a reasonable settlement. Up to this point PNC was "fair" to deal with and BofA was very good. PNC did hold up the sale for the final 6 months with BPO's, lost paper work, requesting documents and all the BS that you have read here on this blog.

In November 2010, about 8 weeks after closing I began recieving calls from PNC CLC's recovery department. When I returned the calls I would get a recording of the recovery specalist assigned to my account and that went on for andother two (2) weeks. When I finally got a hold of her she very quickly said that they would settle for 10K, I had nothing like that laying around so I countered with 6K and she tentatively accepted that offer but I had to send in another batch of documents and another hardship letter. Being it was prior to my finding this blog and I was under poor guildance from my real-estate agent, I did send in all that financail stuff. It was a mistake. Months passed and I heard nothing back. Then I got a call from my Citibank credit card informing me that someone was trying to use my card, had to close accounts reopen accounts. I think that soemone in PNC's recovery department misshandled my information or flat out gave it away

Finally in Febuary of 2011, three months since the last time that I spoke with PNC, the same women called me back and started the whole process all over again. I told her about the earlier deal that we struck in Nov 2010 to which and she fired back that "Oh we lost all that paper work and you need to re-submitt it all". By this time I had found this blog, consulted a lawyer so I told her that I will settle for 6K but I will not send over all my financials again and told her why. She said that she would "Try and run that by the account MGR" and for me to send over my offer. I did. months passed again then in April 2011, I recived a call from a collection agencey, NCB management, they were now handleing the debt for E*TRADE. After the first group of calls to my place or work, my house and mother s house I sent in a CD letter and I have not heard from NCB since.

So PNC does not know what they are doing in my case. I never refused to deal with them nor did I deny the debt. If I'm at a collections agency now because I would not bend over and pull down the financail pants in front of them then so be it. Oh, another interesting tidbit, E*TRADE charged off the HELOC on Oct 4, 2010, four (4) days after closing and while I was current on that note and long before I had engaged in any settlement talks.

Good luck and keep me posted.

[JTKinLA]

Thanks for the responses! I'm hoping that the governor will sign SB 458, so that PNC will no longer be able to go after the deficiency on the 2nd. He received the bill on the 7th, so we should know any day now!!

[DaveAce]

I closed a short sale on a second home back in sept 2010. BofA was the primary and the 2nd, a HELOC was an E*TRADE note being serviced via PNC. PNC started handleing all of E*TRADE'S 2nds in 2007 during the housing bust. I had to deal with PNC.

In essence due to a real hardship I had to sell my second home which was my primary residence for years before I got married. I bought the house in 2003, got married in 2005 and then rented my house and moved in with my wife in her house. In 2006 my wife became ill, couldn't work and then in 2008 the renters lost thier jobs and stopped paying rent. By 2009 I needed to sell the second home but it was only worth 200K at best, down from a high of 390K. I owed 234K to BofA the primary and 49K to PNC the servicer of the second. We had eager buyers who loved the house and hung in with us there until closing (9/2010) - 18 months from the date of listing. That was key to this sale, the buyers never wavered.

BofA was real easy and accepted the short sale and released me of any further collection activity and then sent me a 1099. PNC demanded 15 percent at closing and would not release the deficientcies after closing. In PNC's letter accepting the short sale they stated that I would be responsible for the deficienties and that they - PNC would use "whatever" legal methoods were permitted in my state (Mass) to collect those deficeinties. However I did ponie up the 15 percent or 7.5K at cloing and they - PNC released the lein and the sale went through.

In a side note regarding PNC's conditions regarding the short sale, PNC never refered back to the original HELOC documents as still being in force nor did they offer any work out for the debt. They just sent in a one (1) page document with a few conditions that needed to be met for the them to release the 2nd lein. Conversations with PNC before the short sale led me to think that I would be able to work out a reasonable settlement. Up to this point PNC was "fair" to deal with and BofA was very good. PNC did hold up the sale for the final 6 months with BPO's, lost paper work, requesting documents and all the BS that you have read here on this blog.

In November 2010, about 8 weeks after closing I began recieving calls from PNC CLC's recovery department. When I returned the calls I would get a recording of the recovery specalist assigned to my account and that went on for andother two (2) weeks. When I finally got a hold of her she very quickly said that they would settle for 10K, I had nothing like that laying around so I countered with 6K and she tentatively accepted that offer but I had to send in another batch of documents and another hardship letter. Being it was prior to my finding this blog and I was under poor guildance from my real-estate agent, I did send in all that financail stuff. It was a mistake. Months passed and I heard nothing back. Then I got a call from my Citibank credit card informing me that someone was trying to use my card, had to close accounts reopen accounts. I think that soemone in PNC's recovery department misshandled my information or flat out gave it away

Finally in Febuary of 2011, three months since the last time that I spoke with PNC, the same women called me back and started the whole process all over again. I told her about the earlier deal that we struck in Nov 2010 to which and she fired back that "Oh we lost all that paper work and you need to re-submitt it all". By this time I had found this blog, consulted a lawyer so I told her that I will settle for 6K but I will not send over all my financials again and told her why. She said that she would "Try and run that by the account MGR" and for me to send over my offer. I did. months passed again then in April 2011, I recived a call from a collection agencey, NCB management, they were now handleing the debt for E*TRADE. After the first group of calls to my place or work, my house and mother s house I sent in a CD letter and I have not heard from NCB since.

So PNC does not know what they are doing in my case. I never refused to deal with them nor did I deny the debt. If I'm at a collections agency now because I would not bend over and pull down the financail pants in front of them then so be it. Oh, another interesting tidbit, E*TRADE charged off the HELOC on Oct 4, 2010, four (4) days after closing and while I was current on that note and long before I had engaged in any settlement talks.

Good luck and keep me posted.

shobam,

Thanks for sharing your experience and what you went (are still) going through with PNC after taking just the release. I think I could have taken your route for 10% of what I owed, but after reading what you went through, I believe it is worth the extra I paid to get the full release. My plan is wait for closing as soon as possible and check with my lawyer that I am getting full release and will get 1099Ced for the charge off. (both letters I have from the banks clearly states that) and wait for it and file 2011's tax as soon as possible and be done with it and never get any collection BS.

It is my experience that whomever the negotiator does not really care about what the reason of hardship is. Second mortage company has no reason to know much about hardship. By the time you stop paying and come up with shortsale, all they want to do is verify your finances to make sure you have nothing in your bank accounts. But most people who are short selling probably do not have too much in the bank anyway.

Throughout my experience with PNC. I think I answer one call from them from the collection department. I was at the work at the time so I had to speak in codes. I told PNC collection rep, I said that I have to do the thing that people are doing because of bad real estate market and my realtor or lawyer will be making contact to you guys soon. Rep asks. "Is it a short sale?" I said "Yeah. I forgot the what it was called for a moment." Rep asks. "Do you have buyer and accepted an offer?". I said "Yes. My realtor believes values is very good." Rep says "Thank you. I have to remind you have to pay your obligation and you have to make payings during your short sale process." I said "Thank you and have a nice day!".

After that I never picked up phone from them again. My lawyer got to them after first was ready with accepted deal. After a month or so, my lawyer and PNC person was exchanging some emails and basically doing like 3-4 days of negotiation. Reached 40% deal. They started at 60%, and my lawer countered with 20% for full release. We got to just under 40%. I am happy with this.

[charmtheduck]

I have both my 1st and 2nd mortgage with PNC bank. MY lawyer says that there is a merger doctrine that says if its the same company, they will be considered as one. That is why the short sale documentthat I received from the junior lien holder (PNC bank) states I waive all my rights to 580 A/D/E.
Anyway, PNC as a junior lien holder is very admaant in getting their money. They asked me to contribute $7320 to just release the lien so the short sale can proceed since the 1st agreed to the SS already. But they will go after me for the $70K deficiency. I am still waiting for my lawyer to negotiate it because I don't want a deficieny. I am eager to find out how the enw law in California SB 458 will affect SS.

I recently relocated from California to Illinois, and needed to do a short sale on my LA condo. I'm on my 4th buyer, after the first 3 fell out. The foreclosure process was started by the 1st, shortly before accepting an offer, which includes $5k towards the 2nd.

My agent, who has been great, feels that we need to close this deal asap, or risk losing the buyer. i'm also eager to wrap things up. I have a total of $10-14k to contribute towards the 2nd (incl. the $5k). PNC have been holding strong at $38k for a full forgiveness. I'm holding out hope that SB 458 will pass, which will keep PNC from pursuing any deficiency, but I'd certainly rest better at night w/ a full forgiveness. Should I call their bluff and say $10k or no deal??

[TomEason]

I have both my 1st and 2nd mortgage with PNC bank. MY lawyer says that there is a merger doctrine that says if its the same company, they will be considered as one. That is why the short sale documentthat I received from the junior lien holder (PNC bank) states I waive all my rights to 580 A/D/E.
Anyway, PNC as a junior lien holder is very admaant in getting their money. They asked me to contribute $7320 to just release the lien so the short sale can proceed since the 1st agreed to the SS already. But they will go after me for the $70K deficiency. I am still waiting for my lawyer to negotiate it because I don't want a deficieny. I am eager to find out how the enw law in California SB 458 will affect SS.

charmtheduck

You can go ahead and sign that document if you want to close ASAP. Why? Because the new California statute, SB 458, states that any agreement signed by a borrower that requires them to waive their rights under Cal CC Section 580, is against public policy, is void and unenforceable.

Having your lawyer negotiate with PNC, while normally a smart move, in this case will likely delay the SS closing enough for you to lose your buyer. If that happens, I recommend you forget the hassles of doing a SS, cancel your RE listing and tell your agent to take a walk. BTW, it is for reasons like this, that I recommend homeowners avoid SSs, and instead stay in their home for absolutely as long as possible while the lender FCs. Good luck!

[HopingtoFind]

Thanks for the responses! I'm hoping that the governor will sign SB 458, so that PNC will no longer be able to go after the deficiency on the 2nd. He received the bill on the 7th, so we should know any day now!!

Looks like it was signed into law.

[JTKinLA]

Looks like it was signed into law.

Indeed it was!! The law also provides that any attempt by the lender to seek a waiver of a borrower's rights under 458 shall be void and against public policy. At this point, my only motivation for negotiating w/ collections would be to mitigate how things are reported on my credit, and I'm not so sure that it will be worth the effort or money.

[jayguy0710]

charmtheduck

You can go ahead and sign that document if you want to close ASAP. Why? Because the new California statute, SB 458, states that any agreement signed by a borrower that requires them to waive their rights under Cal CC Section 580, is against public policy, is void and unenforceable.

Having your lawyer negotiate with PNC, while normally a smart move, in this case will likely delay the SS closing enough for you to lose your buyer. If that happens, I recommend you forget the hassles of doing a SS, cancel your RE listing and tell your agent to take a walk. BTW, it is for reasons like this, that I recommend homeowners avoid SSs, and instead stay in their home for absolutely as long as possible while the lender FCs. Good luck!

Forgive me since I don't speak "legalese", but is this basically saying that for all CA SS's by which the lender would normally be prohibited from obtaining a deficiency judgement if it were to go to FC, now cannot pursue the deficiency if a SS is agreed to?

For example, borrower has 80/20 non-recourse loans, if they were to just simply walk, no deficiency judgement would be allowed under CCP 580b. But under "prior-prior" law, if they agreed to do a SS, the 1st bank and the 2nd bank could demand that they retain the right to pursue the borrower for the deficiency(s).

Then a law was passed (effective 1/1/11 I think) that altered that law for 1st liens only. In the above scenario, the 1st would have to release the lien and give up their right to pursue a deficiency, but the 2nd lien could still demand that they retain the right to pursue the borrower, even if it was a non-recourse 2nd.

Under this law that just passed, both the 1st and 2nd would be barred from obtaining a deficiency judgement.

But this doesn't help people with 1st's and 2nd's that have refi'd, right?

Do I have all that correct?

If so, that potentially changes the game for non-recourse 80/20'ers like myself who chose to not go down the SS route because of the tendency of banks to slip in DJ clauses into the SS agreements. At the very least, I'm intrigued to see if there are other options out there now ...

[TomEason]

jayguy0710

Thanks for your question. The new law states that if a 2nd lender agrees to allow a SS to close by releasing its lien, it cannot subsequently pursue said borrower for any other money that was still owing on the note.

And any such closing/payoff demand agreement from that junior lender cannot contain a waiver of any of the borrower's rights under the sub-paragrahs of Cal CCP Section 580, and that if such a document does contain that waiver, it's against public policy, is illegal, unenforceable, and void.

A good law.

[jayguy0710]

jayguy0710

Thanks for your question. The new law states that if a 2nd lender agrees to allow a SS to close by releasing its lien, it cannot subsequently pursue said borrower for any other money that was still owing on the note.

And any such closing/payoff demand agreement from that junior lender cannot contain a waiver of any of the borrower's rights under the sub-paragrahs of Cal CCP Section 580, and that if such a document does contain that waiver, it's against public policy, is illegal, unenforceable, and void.

A good law.

Ahh, I agree - a good law. But does this just mean that 2nds will no longer agree to SS's, because to do so would give up their right to pursue a deficiency? Whereas before the 2nd might go along with a SS, because they planned on pursuing the borrower.

Just curious (for everyone elses' sake and I guess my own as well) what the real world, practical effect of this law is going to be...

[TomEason]

jayguy0710

You pose a good question. FWIW, the real estate industry applauds the passage of the bill, so evidently the Realtors trade group believes it will facilitate SS closings and thereby enable easier to earn commissions. I'm sure title companies also favor the bill's passage.

As far as changing the strategies of 2nd lenders, your guess is as good as mine. However, whenever a property has more than one loan, a SS is always a challenge, and frequently impossible. The percentage of successful SS closings is well below 50 percent, but for those with more than one loan, it's been very small.

[HopingtoFind]

Ahh, I agree - a good law. But does this just mean that 2nds will no longer agree to SS's, because to do so would give up their right to pursue a deficiency? Whereas before the 2nd might go along with a SS, because they planned on pursuing the borrower.

Just curious (for everyone elses' sake and I guess my own as well) what the real world, practical effect of this law is going to be...

I think it will probably make Short Sales even more difficult to complete especially when there is 2nd involved or they might demand more money to release lien. Think about it, in case of recourse 2nd they are not giving up their right to deficiency if the house forecloses, which they would have to do in case of Short Sale. On the other hand it will probably bring more people to the Short Sale table. So it might still be beneficial to Realtors and Title Companies over all.

[durtz]

My 1st is with B of A and 2nd with PNC. I have a chance to list my house and sell it to just cover my 1st but my agent has advised me that as a short sale it will take along time. Will PNC release my house and make my balance a personal line of credit with a fixed rate so i can sell my house and not list it as a short sale? If they don't i will be force to short sale and under the debt forgiveness program that ends this year i will not be required to pay any additional to any lender. i have been asked by many agents to sell my house because the tremendous curb appeal. the house will sell to just cover 1st but that's all no extra cash out of the sale.

[TomEason]

durtz

Thanks for your post and welcome to the community.

You have two choices: 1) Short sale or 2) FC.

As you know, in each case, you may have potential tax liability due to COD income. I recommend you consult with your tax person.

I'm not personally a SS fan, but you'll do what you deem is best for your situation.

[charmtheduck]

Ahh, I agree - a good law. But does this just mean that 2nds will no longer agree to SS's, because to do so would give up their right to pursue a deficiency? Whereas before the 2nd might go along with a SS, because they planned on pursuing the borrower.

Just curious (for everyone elses' sake and I guess my own as well) what the real world, practical effect of this law is going to be...

I was able to SS my 2 houses in California. One condo was with wellsfargo and I didn't have any problems with is since the 1st and 2nd loan were taken out for the original mortgage. I received a letter from Wellsfargo that they will not pursue any deficiency because of the law. My 2nd house I had a harder time SS since I refinanced and took money out. The loan was with PNC. My SS was being rejected by the 2nd lien holder since they wanted more money. I had a $80K balance in it but after the law was passed, they immediately contacted my real estate agent and agreed to release it after getting $4K from the 1st mortgage. So for me, this law really helped me SS my house. The forgiven amount for both homes was close to $400K but after filing my taxes with a CPA, I owe nothing since I was able to show that I was insolvent.

[charmtheduck]

I was able to SS my 2 houses in California. One condo was with wellsfargo and I didn't have any problems with is since the 1st and 2nd loan were taken out for the original mortgage. I received a letter from Wellsfargo that they will not pursue any deficiency because of the law. My 2nd house I had a harder time SS since I refinanced and took money out. The loan was with PNC. My SS was being rejected by the 2nd lien holder since they wanted more money. I had a $80K balance in it but after the law was passed, they immediately contacted my real estate agent and agreed to release it after getting $4K from the 1st mortgage. So for me, this law really helped me SS my house. The forgiven amount for both homes was close to $400K but after filing my taxes with a CPA, I owe nothing since I was able to show that I was insolvent. PNC was also asking for $37K before the law was passed.