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2nd mortgage settlement

Discussion in 'Short Sale Outpost' started by giacona, Mar 23, 2010.

  1. giacona

    giacona LoanSafe Member

    I settled my 2nd mortgage for 10% of the balance after my short sale closed.. Below reaeds there settlement letter

    PNC Bank is willing to accept 4,463.00 to close the above account. This offer is good until March 31, 2010. If certified funds or cashier check are not received by that date, this offer is withdrawn. After receiving the certified funds, all consumer reporting agencies to which PNC Bank directly provides information will be notified of the paid settlement.
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    Does this sound good enough that I am released of any further obligation or do I need to have them change the language?
  2. justdeb

    justdeb LoanSafe Member

    unless it says they will release the lien rights... I'd be leery of it. A "paid as settled" doesnt mean the lien rights are released.

    Ask them upfront if they are planning to release the lien when you pay this amount and if so, tell them you want that in writing immediately and to amend their letter - overnight it to you - and you'll sign it then. Also I'd ask if they're going to 1099 you for the deficiency or if this actually does settle it in full. Ask them to report it as PAID IN FULL vs. PAID SETTLED on your report.

    Congrats on a great settlement offer - but ensure they release that note! :)
  3. giacona

    giacona LoanSafe Member

    I dont think they need to release the lein b/c that was released when the short sale closed. This settlement is from the defeciancy balance they were pursing me for.

    Do I still need to have the wording changed?
  4. justdeb

    justdeb LoanSafe Member

    did the house sell for over what the 1st and 2nd were, leaving you just a little short on the 2nd balance owed - or was the 2nd fully unfunded from the sale? It does matter how it sold as there were 2 liens - the 1st and the 2nd.

    Read Moe's post here: http://www.loansafe.org/forum/short-sale-outpost/4374-negotiating-deficiency-key-short-sale.html

    it has alot of info in it that may help you. If you have an attorney that handled your short sale, I'd consult with them regarding this matter.
  5. nal67

    nal67 LoanSafe Member

    Giacona,

    That is a tough one. Since they say "paid settlement" it does sound like they are settling it in full. However, I would ask them to make it more clear that this is the end of it. Our approval letter that we just got is before our close. However, it very clearly states:

    "PNC will not pursue collection of the remaining deficiency balance" and "PNC will report the amount of the Debt Foregiveness as: "settled for less than full balance" to the credit reporting agencies.

    Just curious how much they got as part of the sale i.e. how much they will get in total. We are having to give them 35% to settle as part of our short sale. I had been told once we close, it would be easier to negotiate but I just didn't trust them. Also, they said they would charge off the account and I figured that was just another item to have to negotiate getting removed and I am really sick of dealing with it.

    I have also told it depends on the investor but that our investor (Etrade) is one of the hardest to work with as far as PNC is concerned. I also think it depends on the amount. A lawsuit is expensive so they will only go after the large fish. Unfortunately for us, our PNC loan was $350K so they really did not want to give in.
  6. perkfern

    perkfern LoanSafe Member

    Wondering how you got PNC to finally accept 35% and release both the lien and the remaining deficiency balance? We are working with them right now and concerned that if we sign their required deficiency agreement, it will be difficult to fully settle. Also share your concern about dealing with this after closing and getting it charged off, which may be an additional credit hit.
  7. nal67

    nal67 LoanSafe Member

    We had several rounds of back and forth. They initially started with 60% but then went to 50%. We kept pushing and saying no way we could do that as it would require $100K+ from us which we obviously didn't have. We stopped paying, got a letter from a BK attorney saying we were good candidates and they would then get nothing. We were going to come up with cash to make 28% and they said no. Then we talked to the buyer who was willing to come up some and we gave them a final offer of 35% which they took. Seemed like they took the offer when they figured out we had no more to give and right after we went 60 days late unfortunately. Don't know if this made a difference but the timing kind of sucks as we now can't buy a place for at least a year.

    Luckily, we only had to come out of pocket a bit when all was said and done and no further issues or dealing with collections. However, it has been 19 days and they are still showing the rest of the balance. Our negotiator says it has to be manually done to show as paid in full so that takes a while.
  8. perkfern

    perkfern LoanSafe Member

    That is very helpful information. Just had a few follow-up questions:

    1) When PNC offered to settle at 60% and then 50%, had you already at that point been late on payments and sent them the BK letter? Or, did you try those tactics later on?

    1A) How did you kick off the negotiations and did you say from the beginning that you were interested in a full settlement of both the lien and the deficiency balance?

    2) When you say that the BK letter framed you as good candidates, can you provide a little more detail on what was included in that letter? We may or may not be good candidates for BK, and we had to show our retirement balances to the bank, so unsure if that is a good tactic for us.

    3) We also are current on our payments and have good credit. Were those huge factors against you?

    4) The amount of our balance with PNC is about $70,000. Any idea on how that might be viewed by PNC from a settlement standpoint?

    5) Do you have any other ideas on negotiation strategies? Our thought is to have our realtor, who is extremely competent, try a first line negotiation, and if he can't make headway, then bring in our attorney.

    Thanks so much for the assistance!
  9. nal67

    nal67 LoanSafe Member

    The 60% was established almost 6 months ago. At that time, we had an offer that netted that much but were also told that was their "magic number". That offer fell through and it took several more months to get an offer that netted them 14%. They said no, they would not release deficiency and were sticking to their 60%. We said ridiculous as their BPO was now $150K lower. the market was worse, we were in a worse situation financially, etc...

    We started to go 30 days late around the time of the 50% approval and did that for a few months until it looked like things might fall apart and they were being ridiculous. We debated on whether to go 60 days late but decided to since they were thinking about the 35% amount and we thought it might help our case.

    We did say from the beginning we wanted a full settlement. When they came back with the 60% versus our offer of 14%, we asked for a lien release approval which they gave us. However, their wording was so harsh in terms of coming after us for the balance, we went back to to the table and tried to negoatiate the release of deficiency.

    I'm not sure we were a great candidate for BK but we found a good attorney and went in for a consult. You can almost always file if you want to so I don't think that is an issue. We paid him a fee to write us a letter stating we had consulted with him, we were a candidate for chapter 13 in which case PNC would lose the whole amount, however, we wanted to work things out, etc... He actually made one of the offers for us in the letter.

    We were told when we first got the 60% approval that they were less willing to deal with us because we had stellar credit. They definitely pull and do a profile. That was mid 2009 so things might have changed but our negotiator then certainly mentioned it a couple of times. I was loathe to go late but was willing to try anything that might help.

    $70K is a lot less than $350K. For us, our huge balance meant a higher liklihood that they would come after us judicially. I have no idea if $70K is that large in terms of their other loans but they made a point of saying our balance was large repeatedly.

    It is dependent upon your investor though. We were told that ours is a hardass and that, had it been a bank or different lender, we might not have had such a tough time. It actually took a year of constant asking before someone finally let slip who the investor was as their policy was not to tell.

    We tried a three prong approach. Our agent is phenomenal with short sales. We also tried from our end to supplement her work and brought the attorney in as a last resort. I think maybe they just got sick of dealing with us and figured 35% was better than they were usually getting. I did find that sympathy worked rather than anger.

    Good luck - it was a long hard road but feels so nice once it is through.
  10. pookey

    pookey LoanSafe Member

    nal67, what state are you in?
  11. nal67

    nal67 LoanSafe Member

    I am in California but my loan was a non-purchase money second and they certainly kept pointing out that it is a recourse loan during my negoatiation. I also kept pointing out that their BPO (somehow got them to tell me) was less than my first so they wouldn't get anything if we did a BK with cramdown and a sale after BK. I couldn't argue that they would get nothing if we let it go into foreclosure - they just said to go ahead and they would come after us judicially and get it eventually.

    Again, I think it was much more effective to try to get them to go for the sympathy card and to bring in experts to attest to our hardship. Also to let them know that we were doing the very best we could to maximize the amount they would get and what we were offering was better than they would get in any other scenario.
  12. LISAWH916

    LISAWH916 LoanSafe Member

    If I may ask, could you upload a copy of the letter your attorney sent to your lender? How much did he/she charge you for this service? What type of an attorney was it? -Bankruptcy?

    Thanks for your help!
  13. nal67

    nal67 LoanSafe Member

    I can't really upload as much of the info is personal. It was a letter from a BK attorney essentially outlining the situation and saying we were good candidates for BK should they not settle the debt. We used a very highly recommended BK attorney and I think we paid $350 or so for a lengthy consult on the viability of BK plus doing the letter in the hopes of avoiding it.

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