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Chase won't sign subordination agreement so Loan Modification is denied. Advice ?

Discussion in 'Loan Modification' started by imcamille, Sep 10, 2011.

  1. imcamille

    imcamille LoanSafe Member

    Is there anything we can do.
    My parents house is worth no more than $400K
    1st Mortgate- Ulster Savings Bank -$110,000
    2nd Mortgage - Chase Bank - $ 350,000

    My parents have applied for a loan modification with Ulster and Ulster has denied it because they say that Chase refuses to sign a subordination agreement, which I guess would keep Chase as the second Mortgage.
    The representative at Ulster told us that most other banks have no problem signing the agreement, but Chase will not do it.
    Is there anything that can be done?
    As a result Ulster has actually started foreclosure and we're set to attend a Court ordered special foreclosure conference in a month.
    Any advice would be appreciated.
  2. TomEason

    TomEason LoanSafe Guide Staff Member


    Thanks for your post. Since your parents' Chase 2nd is out of the money, if I were them I'd stop paying Chase ASAP. That will enable your parents to now possibly afford the Ulster payments.

    Hopefully that will make a difference in the court ordered conference. If your parents are successful in having the Ulster foreclosure abated or delayed, they'll have time to sort out the loan mod situation.

    If I were your parents, I'd never again pay Chase and would eventually settle with them. You might visit this thread www.loansafe.org/forum/debt-settlement/37996-strategy-settling-your-2nd-62.html

    Good luck.
  3. revisednut

    revisednut LoanSafe Member

    I would be careful not paying the 2nd lien, as there is substantial equity. There is nothing in it for them to subordinate again. I've worked for a couple large banks, and now work for a private investor that purchases loans. If this were on my portfolio I would foreclose from 2nd position, pay off the first and liquidate the asset in REO. The post about not paying the 2nd and settling, is likely not going to work. We'll say it can be liqudated for $300k-$110k to the first leaves $190k payout to the 2nd. So, from the banks perspective, why would you even CONSIDER to settle for anything less than $190k. Just my 2 cents.
  4. TomEason

    TomEason LoanSafe Guide Staff Member


    Thanks for your post and perspective. I disagree with you, but let me ask you this question.

    What would your outfit pay for this 2nd loan? Would you pay anywhere near $190k for an underwater, non-performing 2nd?

    If your outfit will pay these kinds of prices, you likely have tons of 2nd lenders standing in line awaiting a purchase offer from you!
  5. imcamille

    imcamille LoanSafe Member

    More info

    Thanks so much for your replies.
    I just want to clarify a couple of things.
    • I spoke to my Mom about the stopping payments on the second mortgage. It turns out they haven't been paying mortgage #2 for the past year.
    • Also: My parents are both over 70 and My father is very ill with dementia. If the banks find out about his health, could it have some type of effect on the modification or foreclosure process?

    Tom, are you saying that if Ulster was informed (during the foreclosure conference) that we have stopped paying the second mortgage payment, it might improve our chances of getting the foreclosure delayed or they might even let us reapply for a loan modification?

    Also, would it make sense to try to settle the second mortgage of $350K? At most we could get together maybe 35-50K to settle but Chase hasn't approached us at all about settling.

    Another question: Is there any chance Chase might change their mind and sign the subordination agreement? If so, which dept. should I contact? It just doesn't make sense for them to let the home go into foreclosure and end up with a small portion of what they're owed. If given a modification, my parents might be able to resume payments on both 1st and 2nd mortgages- until the market improved or they were able to sell for a better price. Only a few years ago the house was worth over $600K

    Thanks in advance for your replies.
  6. TomEason

    TomEason LoanSafe Guide Staff Member


    Thanks for your post. The bank cares not at all about a borrower's health.

    And no, I haven't said anything about what to discuss at the FC conference. BTW, I don't have a clue what happens at court ordered FC conferences, because my state is a non-judicial foreclosure state and we have no such thing.

    I recommend you forget about the 2nd. Use any available funds to take care of the 1st - that's the loan that's FCing. If the 1st isn't taken care of, then your parents will lose their home.

    As most all loan servicers will modify a 1st without a subordination agreement, I wonder why Ulster won't. Loan mods don't require the recording of a new mortgage, thus no subordination is required. You might write Ulster management a letter asking about this. They should be able to figure out a way to deal with it if they want to.

    I don't know if Chase would reconsider the subordination agreement. Your best shot is to write a letter to Jamie Dimon's office, who will forward it to the appropriate officer. I recommend you forget about phone communications.

    BTW, if Ulster FCs, Chase will get nothing. They'll be wiped out in the FC and become a SOJL.

    Tell us what state your parents are in.
  7. imcamille

    imcamille LoanSafe Member

    My parents are in New York state.
    Could you explain SOJL..what it means/stands for?
  8. Cat Damiano

    Cat Damiano Mortgage Wars

    Hi imcamille,

    An SOJL is a Sold Out Junior Loan/Lien

    A sold out junior lienholder is the holder of a deed of trust that is junior to the first lienholder, and who has been denied a recovery due either to the foreclosure by the first lienholder, or because there isn’t enough value in the property to satisfy the junior debt after satisfaction of the senior debt.
  9. imcamille

    imcamille LoanSafe Member

    thank you

    Thank you for that info Cat.
    Now I'm wondering: If it's true that Loan mods don't require the recording of a new mortgage, and no subordination is required......why would Ulster ask Chase for one?
  10. TomEason

    TomEason LoanSafe Guide Staff Member


    Thanks for your question, but you shouldn't be asking us. As I stated in post #6, I recommend you write a letter to Ulster asking about it.
  11. imcamille

    imcamille LoanSafe Member


    Hi Tom, thank you for always getting back to me so promptly. I didn't realize I couldn't ask other forum members. I thought since this is a forum, I'll ask simply to see if anyone else in this extremely helpful community might have the answer for me or have experienced something similar.
    No harm intended
  12. TomEason

    TomEason LoanSafe Guide Staff Member


    Thanks for your post. To clarify, you have the right to ask anyone you'd like to for advice on Loansafe. Or, just ask everyone, to see if any other members chime in.

    In my last post, I meant to say that it's doubtful anyone on these boards would have an answer about Ulster, a relatively obscure lender. Thus my comment that you'd be best served asking Ulster.

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