Second Mortgage Options

[auroraproblem]

Like many we have a second mortgage. Ours is with Wells Fargo. Though they have agreed to a temporary modification, they have informed us that there is nothing they can do long term. My issue with the temporary is that it is 4 years, which means the payment is going to be a problem again in 4 years and the current interest rate on the loan is almost 10% which was something we should have been able to refi out of but there is no hope of now or in the future. They also have made note of a balloon now at the end of the term (which I am sure is the repayment of the reduced payments on the temp mod).

My question and reason for the new thread is what are the options with second mortgages. I have read that with the values so low on homes that a judge can rule them 'unsecured' and discharge them in a bankruptcy. As much as we would not want to file 7 or 13, it seems like going along in the direction of having a 85k loan against a property that is no longer worth any of that and paying extremely high interest rate on it as well for likely the life of the loan (at least the next 10 years before one could hope to refi out) is a bad option.

In general, does anyone know the options? I called Wells Fargo and talked about settlement, they seemed open to the idea, though we were not behind enough in payments.

Just wondering if anyone had some advice to options.

[folide]

If you are enough underwater where they would not get anything after paying off the first were they to foreclose and you live in California then they are in a bad position and cannot do much but harass you through phone calls. It is not in there best interest to foreclose. I just stopped paying mine and it will eventually be charged off. They will still probably keep the lien on the property but will only get paid when the house is sold. I am not advocating to stop paying your second, everyone's situation is different. I am just saying what I did and it could be an option for you.

[auroraproblem]

I am in Washington. We are currently not able to afford the payment, so we are already missing them. Though I would rather not just stop paying and figure they can settle up eventually. We are huge underwater, not just in the loan to value, but our debts as well. We have had to consider filing 7 or 13 because of our financial situation. I would rather just settle with them and see if I can borrow the money from family etc...to pay them off. However, right now they are talking 20% minimum (which we can not come up with) and only if we were way behind (even then she said it would be doubtful).

[gmazz]

First let me say I'm soooo happy to find this site! I am in Connecticut with a first with Citi and second with GMAC.
My husband and I are self employed private investigtors and security consultants. Last year we lost a major account and with the "trickle down effect" our clients were not paying on time. We are still losing business and our new clients that we acquire are paying late. So in August, 2008 we were forced to file Ch 7. Still we are behind on both mortgages. Citi will be 2 months late on May 15. GMAC is already 2 months late. And Oh yea, they just sent us a letter today threatening the F word. LOL

We finally got to request a mod with Citi but won't know if we qualify until our 1040's are complete. (Had to file for extenstion, more fun)

Doing the numbers, I calculated our DTI Ratio is between 41 and 43%,

We are totally stressed out and trying our best to hang in there.

Does anyone out there have any advice on anything additionally we should do? Can GMAC being the second start foreclosure proceedings with customer being 2 months behind.

Appreciate any help you can give us.

Good Luck and God Bless All

[jdett]

I stopped paying mine and after 5 months, Here is what they sent me. Keep in mind that I owed them 75K plus late pmts and late fees.

Homecomings financial would like to an option to satisfy your entire second mtg obligation for an amount that is sunstatially less than the unpaid principle balance.

After a carefull review of certain information , we would like to accept $5,974.05 in certified funds as fulll and final satisfaction of your account. Upon recipet of above-mentioned payment, homecomings Financial LLC will release the second mortgage lein and cancel the note/ or credit agreement.

now, that wasn't to hard. Hmmmm I wonder.

[folide]

jdett, did you request a settlement or did they just offer it out of nowhere. I want to negotiate with Citi about my second.

[jdett]

they offered a loan mod, but, it wasn't that great. I did stay in contact and I did throw out a couple things that showed I new what how things worked. I said to them one time. If I file Bankruptcy, the judge will call this a unsecured lien and include it.

then one day after the called everyday for about a month, I got this letter.

hope that helps.

[folide]

Thanks. I will see what they offer me.

[auroraproblem]

Originally Posted by jdett

they offered a loan mod, but, it wasn't that great. I did stay in contact and I did throw out a couple things that showed I new what how things worked. I said to them one time. If I file Bankruptcy, the judge will call this a unsecured lien and include it.

then one day after the called everyday for about a month, I got this letter.

hope that helps.

I could be wrong, but I do not think that all states will unsecure a second like that. In Washington state it is something like a dead of trust, believe I was told it could not be declared in a bankruptcy but don't know for sure about the unsecuring it portion.

Can someone provide a link to information that might be state by state listing?

[gmazz]

Wow, that sounds like a really great deal! I only pray that GMAC would offer me something similar. My balance on my 2nd with them = 53,942.68

I'm still working on trying to get a mod with Citi . . . just filed my 1040 extension today, waiting for my accountant to email it to me. Then I send hard copy as promised to my Exec Response Unit Rep, Hector.

Good luck to you and all the best to everyone who is fighting the good fight.