Bank of America Second Lien Mortgage Debt Extinguishment Q&A

bkakca

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Jul 5, 2013
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HELLO The letters in the upper corner are CRMMFCLRF,,,i do not believe this is good,,,it also says Your property has been referred to foreclosure.
Okay, that coding is not one of the one's mentioned above, but we still have no idea if this is a scare tactic or not. I have read some posts where the bank even filed something with the County Recorder, then cancelled the Sale several times. We have a place to go if BoA decides to foreclose, so we are just waiting to see what they will do. Do you have somewhere to go, a back-up plan, just in case this is real? Moe says "Be Prepared."
 

lostincredit

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Jul 9, 2013
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Okay, that coding is not one of the one's mentioned above, but we still have no idea if this is a scare tactic or not. I have read some posts where the bank even filed something with the County Recorder, then cancelled the Sale several times. We have a place to go if BoA decides to foreclose, so we are just waiting to see what they will do. Do you have somewhere to go, a back-up plan, just in case this is real? Moe says "Be Prepared."
YES ,,
Thank you we do have a place.
How can they scheduale asale without even filing a case?
Wouldnt they have to go to court,and all the other things.
 

bkakca

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Jul 5, 2013
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YES ,,
Thank you we do have a place.
How can they scheduale asale without even filing a case?
Wouldnt they have to go to court,and all the other things.
Yes, they would definitely have to file and record the paperwork, etc. and go through the process. They would have to do all that, and notify you of any sale date, etc.
 

moretrouble

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Nov 14, 2009
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Hi lostincredit, did the letter have any coding listed in the upper corner? There have been a few comments (above) about various codings on the letters, but no one has given an update as to what happened after receiving them. One is by moretrouble and the other one by MCMSKM, so I am following along with them for updates. Was the letter sent Certified Mail, and have you checked your County Recorder's website for any recent filings? That may give you some clues. Our letter said they "may refer the house for foreclosure", but did not say they had yet, and nothing is showing up in our County Recorder yet.
The latest BOfA letter was dated Aug 7 (DOJ code). I replied to them stating I am ready to litigate on Aug 24 via Certified Mail. Still waiting. Will update if anything happens. They better hurry up, SOL is coming. Nothing new recorded.
 

lostincredit

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Jul 9, 2013
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I just got off the phone with the bank tried to talk about settlement,they said that may be an option BUT we must first get denied for a modification and they are asking for a lot of items,and I totally will not sign a 4506T .Is it possible to do this without signing it?
 

bkakca

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Jul 5, 2013
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I just got off the phone with the bank tried to talk about settlement,they said that may be an option BUT we must first get denied for a modification and they are asking for a lot of items,and I totally will not sign a 4506T .Is it possible to do this without signing it?
I think this is a tactic they use to get your financial info... telling you that you'd need to provide it all first and get denied for a modification before they can discuss a settlement. I don't know if they would accept the rest of your documents without a signed 4506T. Perhaps you should post your question in other forums also, to see if someone can help with the question. I know on the two rental Helocs we settled with BofA, we never sent any financials, just a hardship letter. At that time, they seemed to be settling a lot of the Helocs at BofA, that was February of last year.
 

moretrouble

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Nov 14, 2009
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Just got a package from Mediation Service saying that BOfA has requested to meet with me. They have to offer the homeowner a opportunity to mediate before initiating foreclosure (mandatory mediation requirement in Oregon). I plan to meet with them but will not apply for loan mod. Whether they will go ahead with the foreclosure is too early to tell.
 

bkakca

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Jul 5, 2013
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Just got a package from Mediation Service saying that BOfA has requested to meet with me. They have to offer the homeowner a opportunity to mediate before initiating foreclosure (mandatory mediation requirement in Oregon). I plan to meet with them but will not apply for loan mod. Whether they will go ahead with the foreclosure is too early to tell.
Interesting, I've not heard of that before. I don't believe they need to do that here in Arizona. Keep us updated.
 

bkakca

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Jul 5, 2013
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Well I do not know what this means ,but as of today I go to my B of A screen to check the the balance of my heloc, which is still showing a balance.I click on it and it does not show me anything ,,,and a box pops up and says to call bofA for more information.
Any input?
This is now the case with our Heloc as well.......It stills shows the balance due, but when I click on it, it will not show me transaction history, statements or payments due....nothing.
 

Michael Shurtleff

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Aug 3, 2012
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Just got a package from Mediation Service saying that BOfA has requested to meet with me. They have to offer the homeowner a opportunity to mediate before initiating foreclosure (mandatory mediation requirement in Oregon). I plan to meet with them but will not apply for loan mod. Whether they will go ahead with the foreclosure is too early to tell.
I've litigated about 60 judicial foreclosures since being on here last. Moretrouble. Please do not be offended if I say things you already know or jump in the middle of the thread and don't know what is going on. I am not a very good thread follower so hopefully something I say is helpful whether or not it takes into account all that has been said on these oregon threads.
I have represented a number of homeowners at these mediations. The reason they are offering the mediation of course is so that they can get their certificate of compliance and go ahead and foreclose. I can't imagine any reason why they would not proceed to foreclose. The lender is never "scared" of litigation or hesitating about filing because of the threat of litigation. The only time they really start working on a loan mod or settlement as a reaction to homeowner claims is when you have actually filed strong counterclaims and survived a motion to dismiss or motion for summary judgment. Before that, everything that happens in terms of starting and stopping and pauses in the foreclosure process usually has to do with loans being sold, servicing transferred, and just the size of the piles that are on the foreclosing attorneys desks, time to put together numbers, get title reports, and all the other things that need to happen. They will of course hold off on foreclosures based on the CFPB rules and the mediation program requirements and therefore applying for loan modifications is a good way to get more time in the home since the most helpful CFPB rules are the ones that say they have to stop the process when you have a facially complete modification in and acknowledged (at which point the servicer sends a "loss mitigation hold" to the foreclosing law firm. Passage of time without resolution does more than anything to soften up the lender for some kind of larger cash for keys settlement or modification. Filing counterclaims and seeking loan modifications makes more time go by without resolution. I have also found that when you are in a situation where they improperly denied you for a mod or kicked you out of a trial payment plan or something that it can be very helpful to get into a new mod 2 or 3 or 5 years later because then it is much easier to calculate damages by comparing the two modification scenarios to each other. I am just settling a case with Chase in which my client was kicked out of a trial plan and then we got her into a comparable mod 5 years later. They have offered her 40K cash to offset the interest that accrued over the five years the loan was in limbo and they have offered to report the credit as on time for those five years. If we didn't have the new loan modification and we were just kind of litigating counterclaims with no loan in place that was being paid on, it makes it hard for a judge or the lender to arrive at any solution. if you are staying in the house you need a loan, it might as well be a modified loan rather than the original note. You do have to make sure they don't get ideas about saying that you accepted a mod and therefore you waived an claims of breach of a trial payment plan or something. Anyway. Seeking loan modifications can also be a good way to get fresh UTPA violations. Especially for those whose original issues happened prior to the new attorney general loan servicing rules became part of the UTPA. And, I would submit that it may be a good idea in many circumstances to turn in as many 4506T's as they ask for and keep all the ones that they partially fill out and ask them for the actual denial message from the IRS, etc. so that, if they are using the IRS as a handy third party to kill modifications you can then send notice of an organizational deposition to them related to their handling and processing of 4506T's. Any organizational deposition is one of the most powerful tools as things get bogged down and they are softening up for settlement because responding to an organizational deposition is a huge pain for them and can only cost them money and sending out the notice is really cheap on your side. Plus...you don't even have to go through it if you don't end up being able to afford it. The biggest reality for the lender is that no matter what your claims, if you get past a motion to dismiss or summary judgment they are stuck just throwing more money down the drain and so 30-60K is often an acceptable settlement range from their perspective for them to give you either as cash for keys or with a corresponding loan modification. Just to give some perspective though. I have handled a couple of hundred judicial foreclosures and I have only settled a handful of cases that included cash settlements. The rest of them were just getting loan modifications, short sales, and more time in the home. You basically have to have a trial payment plan that is upheld as a contract to really have a good case, but their are UTPA claims that have potential as well and perhaps other claims of fraud, misrepresentation, etc. but one of the realities is that the lenders play things out so long that you really have to watch your statutes of limitations on those claims. They can lull you along offering you modification application packets until all you claims SOL's have run.

I did see something about the lender's SOL running. It may be important to point out that a lien foreclosure doesn't have an SOL. If they were suing on the debt then perhaps the contract 6 year sol would apply, but there will be a lien on the house until the debt is paid and they can foreclose that lien 20 years from now if they want. Lender's have the choice to sue on the note or foreclose the lien. They can not do both. 99.9% of the time lenders choose to foreclose and take the collateral back rather than suing you on the note and garnishing your wages, and bank accounts. So anyway. Lien foreclosure has no SOL. If there is a lien and the note is in default, it can be foreclosed.
 

Michael Shurtleff

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Aug 3, 2012
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Yes, they would definitely have to file and record the paperwork, etc. and go through the process. They would have to do all that, and notify you of any sale date, etc.
In oregon, If for some reason they have a wrong address for you, or you are renting the place out and your tenants don't inform you or you evade service they will file a motion for alternative service. Often the form of alternative service te judge will allow will be to publish the sale in the paper for four consecutive weeks at which point you will be deemed served and they will take a default judgment against you. If the process server says he served you and he really didn't that can be very hard to prove that something didn't happen. If I wanted to know if I was getting foreclosed I would watch the county recorders office, for recording of notice of default and election to sell (for nonjudicial foreclosure) and recording of lis pendens (for judicial foreclosure). for a judicial you will be served with the summons and complaint - presumably. For a nonjudicial you are not "served" you just get the paperwork by certified mail. IN Oregon it is much easier and cheaper to drag out a judicial foreclosure than a nonjudicial. If you have actual viable claims then it can work either way, but if you just want more time and opportunity to get you income in the sweet spot to get a mod then you are much better off if they file judicially.
 

Michael Shurtleff

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Aug 3, 2012
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I closed on a short sale in Feb 2009 (in FL) which left a 2nd balance of 120K. I believe the SOL ran out in Feb of 2014 at which point I thought I was out of the woods. I got one of these forgiveness letters fedex'd last month from BOA offering to extinguish the 2nd and didn't think much of it considering it was out of stat. Then I got the letter from Mr. Green/Monitor about potential tax payment & liability.
So my question is:
1. If the short sale closed in 2009 doesn't it fall under the Debt Forgiveness Act that covers that year and be a non taxable event even though they didn't get around to forgiving it until 2015?

I apologize if this was covered in the previous 10 pages but thanks much to anyone who can answer this.
My thought is that in general in a short sale with two loans (here in oregon) there are two loans (or portions of them) that can potentially be forgiven. if there is not enough value to cover the first then at the time of the short sale a portion of that loan is forgiven. Whether or not any of the second is forgiven depends on how the short sale was structured. In many short sales the first pays a bit to the second and the second releases its lien and generally settles or forgives the debt as well. If the second was not paid off or settled for less than face value at the time of the short sale then no forgiveness would have happened then and it would instead be happening now. One thing to understand is that IRS rules state that if you filed BK on the debt or were insolvent at the time of the debt forgiveness then those are exclusions or exceptions to counting the forgiven debt as income that existed before and continue exist regardless of the blanket protection that was in place from 2007 through 2014. My understanding is that you determine insolvency at the time you still had the debt that is being forgiven. The best thing to do is talk to an accountant about whether you have to count the forgiven debt as income. It is not a given.
 

Michael Shurtleff

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Aug 3, 2012
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Free Wheelin, can you tell me what your Heloc balance was with BofA? We have a Heloc that's larger than our first mortgage at this point, and the highest Heloc amount listed here as being extinguished this go round seems to be $161K. Ours is $250K, house is still underwater and we're hoping to either settle or be miraculously chosen for an extinguishment, even with the tax consequences.
I may be completely making this up, but with the original rounds of second write-offs it seemed pretty clear that those involved in the AG settlement were just looking for as much credit as they could get for helping homeowners that wasn't going to cost them anything. It makes sense to go around writing off all the biggest seconds they can find - as long as they are completely unsecured and not likely to have a sliver of equity any time soon - they wouldn't be able to collect on them anyway so writing them off and getting credit for it makes sense. I don't know that they would be as willing for seconds that are actual secured at all by the asset. That is the question I would be wanting to find out from all these group members. Did anyone's loan get written off that was clearly secured by the property. Of course with the automated valuation models they use, they could certainly be way off on the property value and that could affect the accuracy of their decisions to write off even if the underlying value is a critical criteria
 

Michael Shurtleff

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Aug 3, 2012
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I wonder if they are not charging it off or accelerating it so they don't have to deal with Statute of limitations taking the whole loan out
Unless we are talking about a line of credit that is not secured by the house, then a SOL is not really an issue as the lender can foreclose a voluntary trust deed or mortgage any time they want. There is no statute of limitations on foreclosing a lien. If they have a lien and it is in default they can foreclose it. Until the lien is released it can be foreclosed. That is not true for suing on the debt. Presumably the states statute of limitations for a contract would apply to their ability to sue on the note. I am an oregon attorney so my comments should be taken with the understanding that I only know Oregon law. (and I only know what I know even when it comes to Oregon and I find out new things I don't know every day)
 

Michael Shurtleff

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Aug 3, 2012
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Hi pggolf, we had two helocs that we settled last year, (they weren't forgiven/extinguished) but we kept watching the County Recorder's website until we saw the releases recorded for each heloc. That took about 4 months for BofA to get them recorded.

We're waiting to hear we have a lucky ticket on the heloc on our primary residence now, but it appears that everyone who is getting an extinguishment had filed BK, and we have not......so not holding our breath. Maybe we can settle this one too, even thought the tax consequences would be huge. Still hopeful, but just received a Notice of Intent to Accelerate on the Heloc, ( not certifed mail, just regular mail) but it's underwater by at least $40K, plus the $40-50K it would cost BofA to foreclose, so we're just waiting. Only 14 months since we stopped paying, it'll likely be awhile.

Congrats to you on your Golden Ticket !!
Makes sense that they would forgive the BK's as there is no ability to sue on the debt. For those who have seconds that are way under water they can still go ahead and sue you on the note any time they want and garnish your wages and bank accounts. Therefore that is debt they can still sell. There is an outfit out of Eugene oregon that is preaching their business model all over the country. They specifically look for those who have a first they are paying on and have a second they are not paying on. they buy pools of these seconds and come in and play bank and try to get people to settle the seconds. Its too small beans for a Wells or Chase or BofA but it is a good business model for them. Not a lot of this going on yet I don't think, but its out there.
 

bkakca

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Jul 5, 2013
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Makes sense that they would forgive the BK's as there is no ability to sue on the debt. For those who have seconds that are way under water they can still go ahead and sue you on the note any time they want and garnish your wages and bank accounts. Therefore that is debt they can still sell. There is an outfit out of Eugene oregon that is preaching their business model all over the country. They specifically look for those who have a first they are paying on and have a second they are not paying on. they buy pools of these seconds and come in and play bank and try to get people to settle the seconds. Its too small beans for a Wells or Chase or BofA but it is a good business model for them. Not a lot of this going on yet I don't think, but its out there.
Too bad they're not doing the bigger banks, we would love to settle our Heloc. The other two BofA Helocs we had were charged off after 6 months, balances went to $0 in online banking, which was a good sign. Settled them with two different CA's for 7.5% at about 18 months. This one still shows a balance in online banking, however just recently the ability to click on the account and see statements, etc. has been disabled, and replaced with verbiage in red stating something about "the account is no longer available for online activities & viewing, and to call BofA for information". No idea what that means to the process, could be years before they do anything. We're still a decent amount underwater on the 2nd.
 

moretrouble

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Nov 14, 2009
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I've litigated about 60 judicial foreclosures since being on here last. Moretrouble. Please do not be offended if I say things you already know or jump in the middle of the thread and don't know what is going on. I am not a very good thread follower so hopefully something I say is helpful whether or not it takes into account all that has been said on these oregon threads.
I have represented a number of homeowners at these mediations. The reason they are offering the mediation of course is so that they can get accounts. So anyway. Lien foreclosure has no SOL. If there is a lien and the note is in default, it can be foreclosed.

Thank you Michael for taking the time posting. I am in somewhat special situation. I have not made a payment in six years. Assuming the foreclosing (BOfA) has legal claim and all documentation and offering me a loan mod, the normal course is they will add all the arrears to the principal and maybe offering 3% rate. The new payment plus insurance plus taxes + other expenses will be higher than renting. That does not make economic sense for me because two of my older kids are leaving for college and I won't need a big house. Also my RV is ready. I've nothing to lose. I am too old to take on a new mortgage. On the other hand, my debt was discharged ( BK 7 )before it was sold to the Sponsor, the Depositor, the Trust. So they, the Sponsor, Depositor, the Trust bought a discharged loan and has no right to foreclose. It 's like shooting yourself in the foot and asking somebody else to pay your hospital bill. I agree with you , if there is lien, it can be foreclosed but not anybody can foreclose. Otherwise, I don't have enough house for them to foreclose. I want to have my day in court to expose their scheme to the public. The outcome does not really matter, it's the principle.
Thanks again.
 

moretrouble

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Nov 14, 2009
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Before that, everything that happens in terms of starting and stopping and pauses in the foreclosure process usually has to do with loans being sold, servicing transferred, .
You are right about loans being sold. They tried to foreclose every 2-3 year. The new buyer wants his money right after he buys the loans. They tried in 2010, 2012 and now 2015. Must be the new so-called investor.
 

bkakca

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Jul 5, 2013
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I just got off the phone with the bank tried to talk about settlement,they said that may be an option BUT we must first get denied for a modification and they are asking for a lot of items,and I totally will not sign a 4506T .Is it possible to do this without signing it?
Hi Lostincredit, update on our situation. Bank of America recorded a Substitution of Trustee ( Turstee is now MTC Financial dba Trustee Corps) and a Notice of Trustee's Sale. Sale date is scheduled for February. We may formulate a letter and send it off to them to discuss a settlement, since they haven't mentioned it to us, or maybe not. Same as you, they want a whole Borrower's Response package filled out with all of our info and financials. We did not provide anything but a hardship letter and a settlement offer last year on the other two helocs we settled with them, and we're sure not going to provide any now. If they foreclose, they do. They'll have to pay off the first mortgage which we're current on, and there is an Arizona Anti-Deficiency Law that states the foreclosing lender/entity cannot sue for a Deficiency Judgment after the foreclosure on single family homes on 2.5 acres or less. So, the first will be paid off as it's all in the money, and the Heloc that's foreclosing will have to take what they get. And we can move on... Any update on your status?