2nd Mortgage Charged Off - Need Help with Settlement

myloanmod

LoanSafe Member
Aug 29, 2012
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Yes your credit will take a hit...mine did. B of A charged off my loan 2 yrs ago - I was getting nowhere!!! I finally contacted B of A's Pres of Lending via his email and after a few letters back and forth I was sent a NOTARIZED Release of Lein! It has been a long haul and at times I thought I would be getting a eviction notice or my payroll checks would start being garnished. I still have (1) credit card that I am worried about. In the State of AZ the CC company's could wait up to 6 yrs to come after me..... I'm 3 yrs in.
snance,

can you send me a copy of the letter you sent the CEO - i'm going to try my luck?

altin um AT hotma il com
 

Christina Marie

LoanSafe Member
Mar 14, 2017
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snance,

can you send me a copy of the letter you sent the CEO - i'm going to try my luck?

altin um AT hotma il com
Hi


I am having a second mortgage issue with
Sun trust. We faulted about 4 years ago
Asked them about starting to repay after
We got another job was told the loan was
Gone. We had modified the first with sun
Trust so I thought they just wrote it off.
Recently received a letter from a debt
Collector attorney suing they say on
Behalf of sun trust. Of course it's
Unclear who has the real assignment
Of the note and/or the second mortgage .
Prices in my community have come
Back a little so I have a contract on my
House. But there is an open lien still
In the second will the attorney debt
Collector settle this for less than the
100k we owe. And if I pay the debt
Collector and the note mortgage has
Been split and assignment is still with
Sun trust I am scared the lien will still
Stay open . I have read many articles
On this subject but very confused. Can
Someone point me in the right direction.
 

needhelp123

LoanSafe Member
May 19, 2017
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Hi,
This forum have been very helpful and I appreciate any advice anyone can give. Here is my situation. I bought my house back in 2007 during the real estate bubble. I recently tried to remodify my 2nd mortgage with BOA at 8.675% interest which they refused. They offer me a 4 month repayment plan only. I haven't pay my second since Dec 2016. I currently owe 80k on my second and 370k on my first mortgage. My first mortgage was recently modified and as part of that remodification, they requested an appraisal on my house which came in at 475k so not under water. Given that there is a small amount of equity with the house, what is the chance that BOA will pursue foreclosure or consider settlement? Unfortunately I have already provided BOA with all my financial information. Am I better of just going with their repayment plan or hold out in the event that they would settle? Thank you.
 
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Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
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Loan Safe Mortgage
Jan 14, 2011
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Update to this thread:
If you have received a charge off on your 2nd lien and is older than 4 years we have the ability to refinance that loan (even if it is currently behind) under a regular conventional program. There are a few members within this forum that I have already helped accomplish this.

If you're not getting anywhere with a settlement offer or if they are threatening foreclosure, let's chat about different options available. Give me a call at 619-379-8999 or e-mail at [email protected]
 

landlord in olympia

LoanSafe Member
Mar 3, 2012
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Update to this thread:
If you have received a charge off on your 2nd lien and is older than 4 years we have the ability to refinance that loan (even if it is currently behind) under a regular conventional program. There are a few members within this forum that I have already helped accomplish this.

If you're not getting anywhere with a settlement offer or if they are threatening foreclosure, let's chat about different options available. Give me a call at 619-379-8999 or e-mail at [email protected]
Refinance just the first? Or the first and charged off second? I would like the 1st option, but not the second.
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
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Jan 14, 2011
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We would have to combine the two loans, a charged off 2nd lien will not subordinate unfortunately.
 

OneHugeMess

LoanSafe Member
May 30, 2016
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Update to this thread:
If you have received a charge off on your 2nd lien and is older than 4 years we have the ability to refinance that loan (even if it is currently behind) under a regular conventional program. There are a few members within this forum that I have already helped accomplish this.
I'm actually kinda curious. I'm far from an expert... but I feel like under Conforming Guidelines, you wouldn't be able to refinance even a first lien (unless it was HARP) with any sort of 90 or 120 Day Late Mortgage payment on the borrowers credit report, that is so recent. Wouldn't the last 90 or 120 Day Late have to be seasoned at-least two years? I know there is some sort of FHA Program for excruciating circumstances, but even that is difficult to get funded. Just curious -- mostly. I know there are Alternative Non-QM loans out there that ignore circumstances like this.
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
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Jan 14, 2011
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San Diego, California
www.loansreduced.com
Hey OneHugeMess,
It definitely is a bit confusing and until I dove deeper and have funded a few deals I didn't believe I could get it done either. Under conventional we're only going to be looking at the charge off date of the 2nd lien and making sure that has been 4 years. Because it's been charged off there wouldn't be any mortgage payments made but it doesn't fall under the same rule as a first mortgage. If a first mortgage is behind in conjunction with a charged off 2nd the borrower would not be eligible.

Now of course we do have to order a payoff demand on the 2nd lien or go by whatever they are agreeing to settle.
 
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OneHugeMess

LoanSafe Member
May 30, 2016
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Hey OneHugeMess,
It definitely is a bit confusing and until I dove deeper and have funded a few deals I didn't believe I could get it done either. Under conventional we're only going to be looking at the charge off date of the 2nd lien and making sure that has been 4 years. Because it's been charged off there wouldn't be any mortgage payments made but it doesn't fall under the same rule as a first mortgage. If a first mortgage is behind in conjunction with a charged off 2nd the borrower would not be eligible.

Now of course we do have to order a payoff demand on the 2nd lien or go by whatever they are agreeing to settle.
Very Interesting. I guess when the loan charges off - it stops reporting as late every month. As long as the first lien has been kept somewhat current, it would open up some possibiltles for the homeowner to refi.

Care to share -- what the response has been for those (charged-off) loans you requested a payoff quote for? Did the servicer respond? Did they offer to subordinate?
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
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San Diego, California
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We're actually in the middle of funding one right now, it should record next week. I just sent her a message and asked if she could jump in and share her story, why she did it and how the experience has been so far. She mentioned she found me here but doesn't have an account. Whenever she gets back from vacation I'm sure she will chime in.

We had to go based on the actual payoff for hers, she didn't have a settlement agreement but I know they were threatening foreclosure in some way shape or form. The loan has to be paid off via a cash out refinance (combo'd the 1st with the 2nd). Our plan with her scenario is doing a loan with a very large lender credit to offset closing costs because cash out refinances do come with a bit of a premium. In 6 months we're going to jump back in and do a rate & term refinance with lower rates, and of course whenever I have a repeat client especially that soon I waive lender fees and usually will pay for the appraisal out of my pocket.
 
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Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,107
181
63
San Diego, California
www.loansreduced.com
I didn't see your other question in regards to subordinations, charged off liens will not subordinate. It's really all or nothing in these cases (meaning the 1st and 2nd together in one new loan).
 

OneHugeMess

LoanSafe Member
May 30, 2016
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Some loan programs allow you to refinance/require you to pay charge-offs. The Four Years isn't really a guideline, but more a suggestion for a Loan Program.

One thing worth noting -- before it charges off, it'll be really hard to get ANY sort of mortgage approval for at least two years. Having a 60 & 90 Day late payment on a mortgage will automatically kick you out of a lot of lender underwriting programs. Some will not touch you for three years following a 30 day late. But once that loan charges off - it does affect your credit a little less, and make it a little easier to refinance it.

Once upon a time, with just 10% down -- you could get a brand new mortgage, 1 day out of foreclosure. You didn't even need to prove your ability to repay it. Ooooh - have times changed.


In your case Lory - the most important thing is Equity, Equity & Equity. If the home is not completely underwater on your first mortgage, you do not want the 2nd to go, Delinquent, as it's entirely possible they will foreclose to recover even a partial balance. If your one of the "lucky" ones who got 80/20 Financing and watched the value of your home drop by 30/50% and it's not entirely recovered.... you may be a great candidate. If you live in an area like San Francisco and you have plenty of equity, I'd be really worried. A lot of these 2nd Lien servicers are moving ahead by ordering BPO's and foreclosing to recover anything they can gobble up.
 

Lory

LoanSafe Member
Apr 2, 2016
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We are in South OneHUgeMess. Our house WAS completely under at the time of charge off 3 years ago but now prices have been going up. Still somewhat under water if you incluse the charged off equity line but inching closer to not. We tried settling before charge off but got nowhere. Trying to figure out what to do next...the refi with charge off settlement seems like an option but this is the first we've heard of it so trying to find out what I can.
 

OneHugeMess

LoanSafe Member
May 30, 2016
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We are in South OneHUgeMess. Our house WAS completely under at the time of charge off 3 years ago but now prices have been going up. Still somewhat under water if you incluse the charged off equity line but inching closer to not. We tried settling before charge off but got nowhere. Trying to figure out what to do next...the refi with charge off settlement seems like an option but this is the first we've heard of it so trying to find out what I can.
So your first mortgage is no longer underwater. But your 2nd is partially underwater. Eh. I mean... it was pretty conceivable that prices would never fully recover in FL a few years ago, and I'm not entirely sure how they have come so close. Anyway, In your case... you should definitely try to settle or refinance when the house is fully above water. I wouldn't actively reach out to the 2nd Line Holder, because they will order a BPO and notice you have some equity. But something will have to be done at some point because they will eventually catch on :(

Do you have a really good modification on your first? I mean... later down the line, you could try to open a HELOC and move the portion owed on the 2nd into the HELOC. That way you could keep your low rate (if you received one of those 2% Mods) and bring the 2nd current.

Also - Who is your servicer for the 2nd? Did you file Bankruptcy by chance? Do they still send monthly statements?
 

Lory

LoanSafe Member
Apr 2, 2016
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the second is an equity line through Bank Of America for 90k...we have not gotten statements for a long time. It shows up on one of our credit reports but not the other 2 (not sure why that is). We never modified on our house so we are paying 6% on the original 1st mortgage.