Suggestions for negotiating out of 2nd mortgage?

[Mathew Thadeus]

I recently went through Chapter 7 due to a business failure. I could not fit into a Chapter 13 since I had too much secured debt. So I did not get a lien strip.

Now I am trying to negotiate down and pay off my second. The house is worth about $720,000 The 1st is $740,000 and the Second is $340k. The first is with ASC and the 2nd is with BoA. I am not in a BoA class action settlement state.

I have been able to land a good job and I can afford to pay my 1st. However, I cannot afford to pay on the 2nd. I also do not see any scenario where paying off $340K more than my property is worth is ever going to make financial sense.

I would like to get BoA to settle for 10-20 cents on the dollar since the house is upside down and they cannot collect on a default judgment.

My fear is that BoA will just put my loan on file and come back 5 years from now when the property is worth something again.

I know this is a hard sell to the bank.

Any suggestions on how to present this or negotiate this?

Any other suggestions as alternatives - Forensic audit?, Chapter “20”?, Investor or hard money lender? Other?

Thanks!

[Mathew Thadeus]

Sorry, I forgot to mention in the subject line of my thread that the lender is BoA...
Does anyone have a suggestion on how to start a pricipal reduction or settlement discussion with BoA? So far the calls I have made keep getting routed to the loan modification process and they just want to talk about interest rate reductions. Thanks!

[auroraproblem]

Originally Posted by Mathew Thadeus

Sorry, I forgot to mention in the subject line of my thread that the lender is BoA...
Does anyone have a suggestion on how to start a pricipal reduction or settlement discussion with BoA? So far the calls I have made keep getting routed to the loan modification process and they just want to talk about interest rate reductions. Thanks!

If you can get access to the cash within a few weeks, then contact their loss mitigation or short sale department; tell them you want to offer a short pay and likely they will tell you 20% minimum to be considered. Depending on your default status with them the 20% seems to be flexible at times.

Make sure in your offer that you indicate some information as to why, for example like a hardship letter and/or the house values, etc.

Most likely they will require some paystubs, bank statements, etc.

Good luck.

[Mathew Thadeus]

OK, I will give that a try and see what they say. Thanks for your input.