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Advice on settling 2nd w/ Chase - Almost starting trial w/ 1st - Will hav positive equity once modif

Discussion in 'Debt Settlement' started by calimada, Aug 23, 2013.

  1. calimada

    calimada LoanSafe Member

    Hi Everyone,

    About 1.5 years ago, my 2nd w/ chase was charged off. It was for about 60k at the time and I was behind 6 months with the payments and 9 months on my 1st.

    3 months later they made an offer for 15% or 9k. Following the advice for settling 2nd, I didn't accept and countered w/ 5-10% and they declined. They claimed they would get more in a shortsale and I said I'd never shortsale the home, but they didn't care. They tried to threaten me that if I didn't accept it would go to 20%.

    Now over a year later, I've had no contact from them and my home value has risen and I think I'm about to put in a trial on my 1st.

    Should I contact them now or wait till my loan is permanently modified? Recent home value increasing in my area now put me at positive equity (albeit only maybe 10-15k), so I think my position may be worse.

    My concern is if If my modification is made permanent and I get what I think they are offering, they will have easily more than 60k equity and they ask for more than the 15% or 20% they offered.

    Advice?

    Thanks,
  2. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    Hello Calimada,

    IMO it would be best to wait it out until your first mortgage is permanently modified and the payments are affordable. It would make no sense to attempt to settle this account now w/o first ensuring the senior lien is manageable. Keep in mind that it will cost about $40K in fees for the 2nd to foreclose, if you determine you have $10-15K in equity following the modification you very well may still settle for as little as 5-10%. Also, reading your previous post it seems that they may actually be "deferring" a portion of the balance. I'm not positive as you only have verbal statements from their reps, but a deferment is not the same as an actual principal reduction..
  3. calimada

    calimada LoanSafe Member

    Ok Guys, so It looks like settling my 1st is fast approaching. Should I begin to do anything w/ my 2nd or still just play the waiting game?

    After my modification, my loan will be $525k and my home value will be above 615k (possibly even 650k--- prices going up crazy again in socal).

    I realize they have little to gain by trying to forcelose on a property which would cost them $40-50k, but I would have more equity than my HELOC is worth. I guess I'm just looking for re-assurances I'm not exposed.
  4. calimada

    calimada LoanSafe Member

    Btw, BOA did an exterior only appraisial and came back 617... another slightly bigger home in my same complex sold for above 700k which is why i think my home value is closer to 650 now.
  5. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    I recommend you contact a local RE agent for a CMA, this will give you a better estimate of your home's current value. If prices continue to rise and you determine your home is now actually worth $650K+, you will have quite a bit of equity and it may be in your favor to initiate settlement talks. Although this goes against the strategy for underwater 2nds, you may now be technically "in the money" and there's nothing stopping them from pursuing further action.

    http://www.loansafe.org/forum/debt-settlement/41196-settling-money-2nds.html
  6. calimada

    calimada LoanSafe Member

    Talk to them. Scumbags won't even talk to me unless I send in financials. i asked them to send this to me in writing that they won't even talk to me unless I send them financials because I want to talk to show this to state attorney and they have me on hold for 30 minutes.
  7. TomEason

    TomEason LoanSafe Guide Staff Member

    calimada

    Thanks for your posts. As you're discovering, you unfortunately now have very little, if any, leverage in settlement negotiations with Chase.

    After you've gotten a current valuation, you'll know better what strategy to follow. As of now (using $617K as the value), you're 2nd is not clearly in "in-the-money" but it's getting close. 617K - 525K - 60K - 50K = -18K.

    That $50K figure represnts the costs Chase will bear post FC to resell the REO (and get paid). Needless to say that amount will be higher for more expensive properties.
  8. calimada

    calimada LoanSafe Member

    So I managed to speak to someone a little more friendly today. She said my no doc offer would be around $16k which is around 25 percent of my original LOC.

    She said if I sent in financials (last year taxes + 2 months of bank statements), I could get it reduced to 10 percent;. She said the offer would only increase if my assets showed that I had something like 100k in it.

    She acknowledged that the property still has negative equity (610k (home value) - 510k loan -100k late - 20k escrow - 50k cost to foreclose). However after modification, I'm look at home 610k (value) -525k -50k = 35k positive value.

    She also mentioned that if I could make a lum sum payment she thinks she could get a 10 percent approved by her manager (but only if i send in docs)

    My bank statements will show that I have less than 10k, but my taxes will show about 116k last year.

    Advice? take the 16k? send in financials? Refuse and offer 10 percent w/ no doc?
  9. opensource

    opensource LoanSafe Member

    We just had the same exact conversation with our 'negotiator'. They wanted financials and mentioned they'd get more out of a short sale (which they agreed was ridiculous once we stated we were current on our first and there's no way our 1st would agree to it). They've been real sticklers lately requesting the financials. We're filing Chapter 7 so was hoping to have the lien done before filing but it looks like they're playing hardball for now.

    Best of luck to you, I'll be watching to see how this turns out.
  10. TomEason

    TomEason LoanSafe Guide Staff Member

    calimeda

    Thanks for your post.

    Any decision you make or strategy you choose to follow will be dependent on a current valuation. I presume you haven't yet gotten a current CMA; if that's the case I strongly encourage you to do so ASAP.
  11. calimada

    calimada LoanSafe Member

    I have done a current CMA and it came back as 610-617k.
  12. calimada

    calimada LoanSafe Member

    I guess my question:

    1) should I accept the 16k given that I'm under a time crunch to and there is probably 35k of equity in the home (after foreclosure costs)
    2) should I try to go the doc route (and what are the consequences)
    3) be patient
  13. TomEason

    TomEason LoanSafe Guide Staff Member

    calimeda

    Thanks for your post.

    The numbers indicate your 2nd is still underwater, but by only a little. 617K - 525K - 60K - 50K = -18K.

    I recommend you keep a close eye on RE sales activity in your market. And get the opinions/forecasts of RE professionals.

    If, and when, selling prices appear to be appreciating to the point your property is clearly "in-the-money", then I recommend you pursue a strategy discussed in this thread.

    http://www.loansafe.org/forum/debt-settlement/41196-settling-money-2nds.html

    If, however, it appears selling prices are flat or decreasing, I recommend you follow the guide at post #1 of this thread.

    http://www.loansafe.org/forum/debt-settlement/37996-strategy-settling-your-2nd-94.html
  14. calimada

    calimada LoanSafe Member

    Him Tom, you're counting the -60k twice. The new loan will be 465k due in 22 years then a balloon payment of 60k. The toal for both is 525k, which puts me at +42k.

    So I think I'm in the money, I tried to review that thread before but saw mostly info about people's loan. Can you point me to a post # that talks about the strategy?
  15. TomEason

    TomEason LoanSafe Guide Staff Member

    Hi calimeda

    Thanks for clarifying that.

    As you may have noticed from the posts in that thread, there is no definitive strategy to pursue.

    Since a borrower has much less, if any, leverage in settlement negotiations with their 2nd lender, it's necessary for the borrower to be proactive in driving settlement negotiations.

    The borrower should be prepared to pay more (much more than is possible settling an underwater 2nd) in the final settlement agreement.
  16. calimada

    calimada LoanSafe Member

    So I ended up working with a really reasonable person in the Recovery department. If anyone wants her extension let me know. She told me that no doc, her computer told her that she could only offer 16k, but if I sent in financial it could get improved; she said would push her manager to get 10%. I did so yesterday and they offered me $7500 w/ "settled in full" on my credit report (this is about 12.5% 61.5k). I would have fought more but given that my loan will modify by the end of the month I decided to take it.

    It took over 3.5 years, but hopefully this chapter of my life is over for now (well at least another 5 years).
  17. TomEason

    TomEason LoanSafe Guide Staff Member

    Hi calimeda

    Congratulations for having achieved that settlement! IMO it's a very favorable settlement for an in-the-money 2nd. Would you mind sharing your story in the Success Stories thread? We'd appreciate it.
  18. calimada

    calimada LoanSafe Member

    Hi Everyone, I received my letter today but it says that they will update credit report to say "settled for less than full amount". I had originally requested they update it to "settled in full" however, my rep is saying they can't do that (and that's "can't" not "we're not wililng to"). Only way to get them to update to say "paid in full" is to pay full amount.

    Is this BS? I swear when I originally negotiated with them they said they could do this.
  19. TomEason

    TomEason LoanSafe Guide Staff Member

    Hi calimeda

    Thanks for your post. I'm aware of no lenders who will "credit bargain." I, therefore, recommend you accept the settlement offer regardless.
  20. calimada

    calimada LoanSafe Member

    Hi Everyone, I received my letter today but it says that they will update credit report to say "settled for less than full amount". I had originally requested they update it to "settled in full" however, my rep is saying they can't do that (and that's "can't" not "we're not wililng to"). Only way to get them to update to say "paid in full" is to pay full amount.

    Is this BS? I swear when I originally negotiated with them they said they could do this.

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