Home Loans and Support

Officially started the settlement process

Discussion in 'Debt Settlement' started by hooligan, Oct 16, 2013.

  1. hooligan

    hooligan LoanSafe Member

    Well, this is the first month we haven't paid the 2nd mortgage on our house.

    The calls are starting to roll in. Here is a copy of the cease and desist that I will be sending this week - anyone have any thoughts on it?

    Our name and address

    Mortgage co. name and address

    Re: loan number

    Dear Debt Collector:
    Pursuant to our rights under federal debt collection laws, we are requesting that you cease and desist communication with either of us, as well as our family, friends, co-workers and employers in relation to this and all other alleged debts you claim we owe. You may contact us by mail for the express purpose of negotiating loan settlement terms.

    You are hereby notified that if you do not comply with this request, we will immediately file a complaint with the Federal Trade Commission and the {our state} Attorney General’s office. Civil and criminal claims will be pursued.

    Our names

    I'll admit that this is a pretty unsettling time for us. I'm sure everyone here can understand.

    Our scenario:

    1st mortgage: ~$160K with Wells and current - refinanced a few months ago under HARP.

    2nd mortgage: ~$70K

    Current CMA: $192K

    Does anyone know the average sale price on distressed/foreclosed properties? I don't, but I'll assume 95% just for the purpose of these calculations, I assume that's likely generous.

    95% of $192K = $185K

    $185K - $160K = $25K

    Now out of that $25K, they will have to subtract their costs associated with foreclosure, any realtor fees with reselling the house, cost of any needed repairs, etc. Given the $40K+ number I see used on this forum it would appear that our property is still well under water.

    Wish us luck!
  2. Evan Bedard

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

    Hello Hooligan,

    Your property is still a significant amount underwater, you seem to be in the perfect position to eventually settle this account for pennies on the dollar.

    The cease and desist letter seems suffice, however you may just want to cite the applicable debt collection law (i.e. Fair Debt Collection Practices Act (FDCPA) Section 805).

    Good luck!
  3. hooligan

    hooligan LoanSafe Member

    Thanks, Evan. I will definitely add that reference to the C&D. I appreciate the advice.
  4. Evan Bedard

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

    My pleasure Hooligan! Just curious, have you been keeping a close eye on home values in your area over the last year? This may not apply to you, but home values are appreciating quite fast in certain areas.
  5. hooligan

    hooligan LoanSafe Member

    Yeah, prices are slowly rising around Charlotte, NC, but it has been slow. In our development there are new townhomes going up directly across the street, with comparable square footage and better finishes for the mid-190s so our CMA might be a bit high. Tough to compete with new construction when your home is 7 years old.
  6. hooligan

    hooligan LoanSafe Member

    Actually, we just got the official CMA back from our realtor who is handling the property as a rental - suggested list price of $187K. So, even lower than what the realtor was spitballing as a list price earlier this month.
  7. TomEason

    TomEason LoanSafe Guide Staff Member


    Thanks for your posts.

    FYI, the average sales price discount for a distressed property off the sales price of a normal sale is in excess of 30%. And the overall costs that a FCing 2nd would bear in reselling that REO is at least $50K. Therefore you should add $50K to the balance of your 2nd.

    Hence your numbers are: 187 - 160 - 70 - 50 = - 93. As you can see, your property is way underwater and will likely remain underwater for a long time. Therefore your 2nd lender won't FC. I recommend you seek to eventually settle by following the guide at post #1 of the following thread.

  8. hooligan

    hooligan LoanSafe Member

    Exactly what we are planning on doing, Tom. All while (hopefully) having a renter in the townhome, representing at least a small amount of positive cash flow.

    I can't thank this forum, you and all the other gurus enough. You guys and gals are life savers!
  9. TomEason

    TomEason LoanSafe Guide Staff Member

    Hi hooligan

    Thanks for your gracious remarks. I applaud your plan to realize some rental income from the property.
  10. hooligan

    hooligan LoanSafe Member

    Minor update - The C&D worked like a champ to stop the calls from from the 2nd lien holder. Now we wait....

    Still no renter in the townhome, but given the time of year, we're not really surprised.
  11. hooligan

    hooligan LoanSafe Member

    Another brief update. My credit has taken a substantial hit now that they are reporting the late payments, even with all my other accounts/loans that are current. About a 75 point hit, so far. Hopefully this won't get much worse.

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