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Success Stories in Settling 2nds

Discussion in 'Debt Settlement' started by TomEason, May 5, 2011.

  1. TomEason

    TomEason LoanSafe Guide Staff Member

    I'm starting this thread at the suggestion of cahomeowner, who thought it might be helpful to those members who don't have the time to read through pages and pages of comments in search of a success story.

    If you're curious which strategies have worked, and what the circumstances were for those individuals, you will likely gain value from this thread.

    I've read on these boards settlement success at prices ranging from as low as 2 percent of the balance (unusually low) to about 40 percent of the balance (very high). Typical settlement prices seem to be running in the range of 5-10 percent of the loan's balance.

    The challenge is those posts are spread out among many different forums and threads.

    Hopefully this thread will help consolidate those stories, and will thereby facilitate a member's personal choice of his/her own negotiation path.
    Last edited: Jul 20, 2012
  2. readytogoaz

    readytogoaz LoanSafe Member

    Tom....I'll add mine.

    I did "walk" from my home, and I was happy to go, so mine was more of a strategic foreclosure. I had a first of about $135k and a second of just under $55k. I stopped paying on my first (Wells Fargo/Fannie Mae) in August 2010, and my second (GMAC) in November.

    I waited to stop paying on the 2nd because I was still researching at the time what my consequences might be and was still a bit unsure. I also had this idea that maybe if I was at or close to foreclosure (initiated by Wells) when GMAC was close to charging off my 2nd, that they might be more likely to want to settle since they would be pretty certain that they would be stripped of their lien.

    I'm in AZ and the 2nd was probably recourse but it was a bit of a gray area, which is why I was a bit nervous as I did/do not have the funds to pay it off.

    About 3 months after I stopped paying Wells, GMAC sent me an unsolicited modification letter (to reduce the interest rate) which I ignored, because foreclosure was about 2 weeks away. After foreclosure, GMAC then sent me an unsolicited offer to settle for about $4200, or about 8% of my balance. My mother was willing to provide these funds and I sent them off. The deal was "full and final satisfaction" of my obligation.

    I don't know if waiting to stop paying helped; from what I've read on here, GMAC seems to have seen common sense and figured out that settling how they will lessen their losses most, without all of the angst of lawsuits.

    Hope that helps others! Best of luck.
  3. Spectrum

    Spectrum LoanSafe Member

    Hi tomreason, good idea for the thread. I did a stratigic default with 1st and 2nd in California. !st was non recourse, 2nd recourse as was refinanced. Stopped payment in May 2010 for both 1st and 2nd, Aurora was servicer for 1st on a Fannie Mae loan (actually a MERS mess, but that is for a different thread) of approx $197k and Chase had 2nd with a balance of $112k when I started. I took the route of calling and faxing in a settlement offer about three months after stopping payment. I also ended up sending a C&D as the calls got to be silly. Eventually this charged off at appox 150 days (bit earlier than expected, but OK). The original dept that had the late was not really useful and a waste of time to deal with (this is the group that does short sales, approves settlement, but only if large percentage of balance with all financials, etc). This first dept insisted Chase would never settle without financials, and the lowest they would ever go was 40 percent of the balance. Well that got them nowhere.
    After the loan was charged off it went to the "recovery" dept where things got more traction, but initially still wanted 30 percent to settle and all financials. I was offerering about 10 percent. Eventually as the house got close to FC I upped my offer to 17 percent, with a simple one page offer faxed to the dept. Again told it would never happen, but as the sale date for down to the last week I was called and asked if I could make good on the payment withing 3 days they could accept. Well I could not pull the money that fast so we agreed to a first payment of about 5K done with electonic check, with the balance due in 2 weeks (this gave me time to pull money). This was contigent upon them sending we a written offer with the terms agreed upon per my settlement. Took them 24 hours to get the settlement agreement faxed to me, and it did not contain the wording that I wanted as "paid in full", but instead "settled in full for less than full amount". After a couple of back and forth conversations I decided that was good enough for my needs as I was also settling a couple of CC so the credit report was a secondary consideration. I was a little nervous about the electronic check (where you give them routing info and they pull from your account) however since I had a written agreement (versus offer, be sure you know the difference) if they played any games on the account it would federal wire fraud on Chase, not something any company is going to do.
    Made the two payments as agreed, account was closed with agreed upon verbage on the credit report, and a release of lein was recoreded with the County Clerk about 3 months later. For me it was about 17% of a final total of $118k (proprty was worth down to $175k at this point). All in all I was very happy to put the whole thing behind me. Hope this helps others.
  4. whypay

    whypay LoanSafe Member

    tomeason,

    Thanks for all you do mate, let's see the success stories accumulate!
  5. TomEason

    TomEason LoanSafe Guide Staff Member

    Hi whypay. Thanks for your rhyming comment!
  6. cahomeowner

    cahomeowner LoanSafe Member

    Tom I was unable to figure out how to PM you directly so I apologize in advance for posting here.

    First I would like to thank you for setting up this thread. I think it will be extremely beneficial and a huge time saver if we can have 1 place to list just the success stories. As you can see your original thread is quite popular and new folks would be wading through pages and pages just to find info that would be helpful and most importantly applicable to their situation.

    Now having said that I will say in order for this thread to be successful (just my 2 cents) you will need to remind posters from time to time to just keep this thread about success stories(along with specifics of their financial data, lender, investor, interest rates, how far behind, etc) and not get into a separate discussion or banter which defeats the purpose.

    here is a similar thread I created for NACA success stories so you can see how I managed it.
    http://www.loansafe.org/forum/naca-...ure-please-post-your-results-help-others.html

    * NACA works it just doesn't work for everyone. I tried to compile the info so people could see what was working which really came down to certain lenders/investors participated in NACA's 2% permanent loan modification while others followed the HAMP program.

    Also when you find someone who has success settling their 2nds in other threads, I would encourage you to invite them to post their success stories here (this is what worked for me on my thread) I know folks can get a little touchy and may feel like your hijacking their threads but the intent is truly to help and organize information for the benefit of all. These forums have been extremely helpful but no one has hours and hours to weed through all the pages and pages of discussions. I like to see what IS working and what the circumstances were that led to that success. Every situation is different and therefore the results are going to differ. Any chance you can make this a sticky?

    Keep up the Great Work It is very much appreciated!!!
  7. TomEason

    TomEason LoanSafe Guide Staff Member

    cahomeowner
    Thanks for your comments. FYI, Moe had to turn off PM capability for everyone several months ago, due to security concerns and the required heavier filtering. Although I personally do not have the capability to make this a sticky, I will request that Moe make it one. And you are certainly welcome to assist me in reminding visitors at other applicable threads of this threads existence, and in inviting successful settlement posters to re-post their stories here. Thanks again.
  8. TomEason

    TomEason LoanSafe Guide Staff Member

    readytogoaz
    Thanks so much for posting your success story. As I understand it, your actual settlement with GMAC was after the foreclosure. Hence, you decided to settle with a "sold out junior," not a secured 2nd lender. While I'm sure you had your reasons for doing so, settling with a sold out junior lender after a FC when the property is gone is much different and much easier than settling with a secured lender. I don't mean to question your decision, but I want to make it clear to other readers that I would personally never consider settling with a sold out junior, and do not recommend it.
  9. TomEason

    TomEason LoanSafe Guide Staff Member

    Spectrum
    Thanks so much for posting your success story. Can you clarify something for me and other forum members? Do you still own the property or did Aurora foreclose and you no longer own the home? The reason I ask is that the goal of settling a secured 2nd is to having the 2nd lien extinguished and to retain ownership of the property. However, if the 1st forecloses and wipes out the 2nd, it is no longer a 2nd, but is now an unsecured sold out junior loan. Settling with a secured 2nd is a more challenging proposition than settling with the owner of a sold out junior debt. In fact, I recommend a debtor never settle with a sold out junior lender. There is no reason to do so, and as of this date, I've seen no evidence of any sold out junior lender in any state sue a borrower, even though they may not be legally barred from doing so.
  10. readytogoaz

    readytogoaz LoanSafe Member

    I shouldn't think you would question my decision as you complimented it in another thread of mine where there is more background data :)
  11. TomEason

    TomEason LoanSafe Guide Staff Member

    readytogoaz
    Thanks for your post. I complimented your having settled on the other thread because you chose the path that was right for you, and you accomplished your goal. Every borrower should make the decision for which path to follow. I personally would have chosen a different path according to my own situation and personal attitude. That difference wouldn't make me any more correct or right than you. I started and titled this thread for those who have success stories in settling 2nds; I wasn't picking on you, but wanted to point out to readers the difference. Please don't take offense as none was meant.
  12. readytogoaz

    readytogoaz LoanSafe Member

    No offense taken, hence the smiley face in my previous post. Since my mother was willing to pay the 8% settlement, and it would completely finish this process (as opposed to not being 100% sure it was ended for the next 6 years, which is the statute of limitations in AZ), it was a good option for me. Your advice is always greatly appreciated!
  13. TomEason

    TomEason LoanSafe Guide Staff Member

    readytogoaz
    Thanks for that! BTW, your smiley face isn't visible in what I can see in your post.
  14. readytogoaz

    readytogoaz LoanSafe Member

    Tom...do you use firefox? I find that emoticons are only visible in ie explorer. Or maybe you're on a mac :)
  15. leftcoastadv

    leftcoastadv LoanSafe Member

    Smilies are not visible on Google Chrome either.
  16. TomEason

    TomEason LoanSafe Guide Staff Member

    readytogoaz
    Yes, I use Firefox - so that's why. Thanks.
  17. TomEason

    TomEason LoanSafe Guide Staff Member

    FYI, I've started a new thread entitled "Sold Out Junior Loans" in order to address the occasional confusion between a 2nd and a sold out junior. The thread is here. Sold Out Junior Loans
  18. flatlander

    flatlander LoanSafe Member

    TomEason suggested that I tell my success story so here goes . My original thread is here. I stopped paying my HELOC at the same time as my first. I was able to get a HAMP mod on the first by hiring a very good lawyer out of Oxnard CA. Anyways the HELOC went to two different collection agencies. I found a template for a very strong counter offer on the web and customised it to my situation. Any time they sent me a nasty letter I sent my counter offer back in their envelope 10% was it bottom line. I also got rid of my land line so they couldn't call and harass me anymore. They finally came back with 30% and I just sent back my 10% counter again. Out of the blue yesterday FedEx shows up with a letter from CHASE stating "You have been approved for the full extinguishment of your second lien home equity loan under the HAMP program. This means that all amounts owed on your loan including the full outstanding principal balance interest fees and other charges will be forgiven.You will no longer have to pay these amounts" My jaw hit the floor! I faxed my lawyer a copy and he says its legit and that I am a very lucky man and this is very rare. Good luck to everyone else and just don't pay then a penny and be stuborn till they cave in. Itworked for me!By the way it was all purchase money none of it went in my pocket.
  19. TomEason

    TomEason LoanSafe Guide Staff Member

    flatlander
    Thanks for posting your great success story here; I appreciate it!
  20. JonSK

    JonSK LoanSafe Member

    CONGRATS!!!
    Where can I find a copy of that counteroffer template?

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