Bank of America Second Lien Mortgage Debt Extinguishment Q&A

moretrouble

LoanSafe Member
Nov 14, 2009
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bkakca:
So it looks like the code on the letter does not mean anything. The servicer just goes ahead with foreclosure. I am ready to fight. All these subprime deals are being called and the new junk bond buyer want to clean up the loan portfolio to re-securitize to realize his profits.
 

bkakca

LoanSafe Member
Jul 5, 2013
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bkakca:
So it looks like the code on the letter does not mean anything. The servicer just goes ahead with foreclosure. I am ready to fight. All these subprime deals are being called and the new junk bond buyer want to clean up the loan portfolio to re-securitize to realize his profits.
Hi moretrouble... it does appear that way, yes. We really don't want to drag our situation out. If Bank of America wants the house and all the repairs it needs, they can have it. It won't be at break even for years and years, much less have the equity it had in the boom days, that we were counting on for retirement. If they don't want to settle, we're fine letting it go, and putting the negativity of all this behind to start fresh. We need to focus on better health as we've had some major issues there, and hanging onto and fighting for this house is not going to help.

Keep us all posted, and best of luck to you in your fight !!
 

bkakca

LoanSafe Member
Jul 5, 2013
189
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bkakca:
So it looks like the code on the letter does not mean anything. The servicer just goes ahead with foreclosure. I am ready to fight. All these subprime deals are being called and the new junk bond buyer want to clean up the loan portfolio to re-securitize to realize his profits.
Oh, and of course, this lovely caveat, if BofA would settle the Heloc instead of going through with the foreclosure, we would have the tax consequences of a 1099 issued on the balance of the $250K heloc, as added income for us. We're honestly wondering whether we should even offer to settle, this being the case.

If they foreclose, no added 1099 income for us, and we just move into one of our rentals until we can buy in 3 years with an FHA loan. Only reason to even offer to settle would be no hassle of moving, as we're quickly losing any attachment to this house.
 

moretrouble

LoanSafe Member
Nov 14, 2009
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bkakca,

That's good thinking. So many people got attached to the house and make bad deals with the Bank and sorry later. I am loading up ammunition to fight. I know I have a good case. Also I spent a couple hours browsing sherriff's sale listing (from court judgements, judicial forclosures), then went down to the county recording office check out recorded docs on those sales. Most of them take 3 years or more from filing date to the sale (plus 6 months of redemption) so I am golden, my kids will be all gone in 2 years. Perfect timing. The best to you.
 

Al in SoCal

LoanSafe Member
Feb 23, 2014
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Oh, and of course, this lovely caveat, if BofA would settle the Heloc instead of going through with the foreclosure, we would have the tax consequences of a 1099 issued on the balance of the $250K heloc, as added income for us. We're honestly wondering whether we should even offer to settle, this being the case.

If they foreclose, no added 1099 income for us, and we just move into one of our rentals until we can buy in 3 years with an FHA loan. Only reason to even offer to settle would be no hassle of moving, as we're quickly losing any attachment to this house.
Congress JUST passed the exclusion - I believe for this year and next year (I think it is for 2 years).
 

workhardstayhumble

LoanSafe Member
Dec 14, 2015
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Ocwen "Forgave" my Second Mortgage in Chapter 7?
I am close to ending a chapter 7 bK
Both 1st and second are with Ocwen
Ocwen send a letter stating my second loan had been "forgiven" and the 2nd lien released
This seems fishy as I have no obligation once the BK is completed
It appears Ocwen is using this tactic to eliminate the second so they can sell the home to an affiliate.
The house is still quite underwater on the 1st but I have read that Ocwen makes money this way.
This also could be how Ocwen is meeting their promise to forgive principle in a very shady way since the BK already has made the loan uncollectable both because of BK and the house way way underwater
Is is a sham?
Can they foreclose on me while collecting trial payments on a modification and sell the home in CA?
Can anyone shed any light on this?
 

driftwood

LoanSafe Member
Sep 17, 2012
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Any lienholder can always foreclose on the property if the terms are not met, i.e. payments are not made under the original agreement. However if the property is underwater secondary lienholders, those that are not in first position, stand to gain nothing from FC. In fact they will likely loose money.

While the loan may no longer be collectible due to BK, unless the lien was strip during the BK case the lender can still FC on the lien. Essentially they cannot force payment however if you stop paying under the terms they can FC on the home. In your case they decided to do a forgiveness and lien removal most likely because the home is underwater and it will cost them more to FC than just forgive the lien.

Not sure what you mean that Ocwen can sell the home to an affiliate, unless you mean they can transfer the loan to another company. Yes they can sell it but the terms dont change and the same California laws that govern when they can FC or not would be in place for the company who owns the loan/lien.
 

workhardstayhumble

LoanSafe Member
Dec 14, 2015
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Driftwood,
I am much to cynical about all this it seems
Notable people on this website have said Ocwen is better to work with and this has been my experience
Still, I am not willing to trust until I see how they deal with me on the first
If they are forgiving the loan would that mean there is a recorded lien release?
 

Lory

LoanSafe Member
Apr 2, 2016
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Hi there...we are new here and are seeing over and over again in the threads that we have done a big no no and are interested in the "what now" info. We had a $90k equity line with BOA. Our house is worth less than our first and they have charged it off. We are now dealing with their "recovery department". My husband has been doing all the talking with them. We ignored the initial packet they sent us asking for every piece of financial info we had.In one of the last phone calls, he was told they would get back to him in 30 days with a response to his 5% offer. They called him the next day and said they brought another person in and needed a few pieces of info in order to consider the offer (as I know now after reading up here that was a lie). The requested info was not as extensive as the packet. There was no filling out of paperwork, just statements. As I said, we now know that is a big Don't Do. Any idea of what we may be in for now that we actually showed them what we do and don't have? We don't have much left at the end of each month so there wasn't anything to hide.
Thank you for anything you may be able to offer...this is so scary to me.
 

bkakca

LoanSafe Member
Jul 5, 2013
189
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Just an update on our saga....after two years of not paying our BofA Heloc, which is still underwater by over $40K + the costs to foreclose, Bank of America sold our home at Trustee's Auction Sale.

So, yes, our home was foreclosed on by the Heloc Lender, BofA.
BofA also services the First Mortgage, it's a Fannie Mae loan, which was always current, but we have obviously stopped paying.

Heloc was much larger than the First Mtg - Heloc was for $250K, First balance is about $160K, with late fees we owed about $420K combined. We had offered to settle back in November, offered $19K, they wanted all our financials, said nope.

Since they foreclosed from Second Position, they cannot 1099 us for the difference of what they did not get at auction. $250K - $142,900 (Winning bid for the lien.) AZ is a Non-Recourse state, they chose Foreclosure as their remedy, so they're done.

What's interesting is: Does the new owner KNOW there was a First Mortgage, and he bid on and won the house SUBJECT TO the First Lien? We had two investors at our home the morning of the sale, and I spoke with both of them...neither one knew there was also a First Mortgage....they saw the loan amount of $250K being foreclosed on, and assumed that was it.

Spoke with the Auction Company, they put out a Disclaimer saying each bidder must do their own research, and that they do not give any info on their site or verbally as to any other liens on the home.

So, we have moved into a lovely home we had bought just prior to the Trustee Sale, and used our settlement money for the down payment, about two miles down the road.

Have not received a Notice To Vacate from the new owner, Sale was on 4-26, recorded on 5-10. House is vacant, utilities are off, and pool will be going green soon.

Have cancelled the Homeowner's Insurance, and called BofA on the First Mtg to let them know they foreclosed on us from the Heloc position and we will not be making payments any longer on the First Mtg.

From what I have read, if the new owner does not step up and pay off the First Mortgage, the Bank can foreclose on the First Lien, sell the lien at another Trustee's Sale, and the guy who is in title and paid $142,900 on the Heloc, for the house, will have nothing.

Hmmmmm....
 

Fred

LoanSafe Member
Aug 27, 2014
24
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Just an update on our saga....after two years of not paying our BofA Heloc, which is still underwater by over $40K + the costs to foreclose, Bank of America sold our home at Trustee's Auction Sale.

So, yes, our home was foreclosed on by the Heloc Lender, BofA.
BofA also services the First Mortgage, it's a Fannie Mae loan, which was always current, but we have obviously stopped paying.

Heloc was much larger than the First Mtg - Heloc was for $250K, First balance is about $160K, with late fees we owed about $420K combined. We had offered to settle back in November, offered $19K, they wanted all our financials, said nope.

Since they foreclosed from Second Position, they cannot 1099 us for the difference of what they did not get at auction. $250K - $142,900 (Winning bid for the lien.) AZ is a Non-Recourse state, they chose Foreclosure as their remedy, so they're done.

What's interesting is: Does the new owner KNOW there was a First Mortgage, and he bid on and won the house SUBJECT TO the First Lien? We had two investors at our home the morning of the sale, and I spoke with both of them...neither one knew there was also a First Mortgage....they saw the loan amount of $250K being foreclosed on, and assumed that was it.

Spoke with the Auction Company, they put out a Disclaimer saying each bidder must do their own research, and that they do not give any info on their site or verbally as to any other liens on the home.

So, we have moved into a lovely home we had bought just prior to the Trustee Sale, and used our settlement money for the down payment, about two miles down the road.

Have not received a Notice To Vacate from the new owner, Sale was on 4-26, recorded on 5-10. House is vacant, utilities are off, and pool will be going green soon.

Have cancelled the Homeowner's Insurance, and called BofA on the First Mtg to let them know they foreclosed on us from the Heloc position and we will not be making payments any longer on the First Mtg.

From what I have read, if the new owner does not step up and pay off the First Mortgage, the Bank can foreclose on the First Lien, sell the lien at another Trustee's Sale, and the guy who is in title and paid $142,900 on the Heloc, for the house, will have nothing.

Hmmmmm....

I thought if the second foreclosed, the second had to pay off the first to take title to the house.
 

spike9999

LoanSafe Member
May 28, 2014
186
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Apparently, in AZ, they do a Trustees Sale on whichever lien they are foreclosing on, and the high bidder gets the house, subject to any senior liens, HOA liens or tax liens, and anything else ahead of that lien.

So, our home went to some guy, not back to the bank. He will have to clear up the First Mtg, or he won't have clear title to the home.
how do you get possession to a home that you have not paid in full or paid off the senior. Something doesn't seem right about it.
 

spike9999

LoanSafe Member
May 28, 2014
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so now the first can foreclose and sell the house again? Otherwise the 2nd stole all the equity in something it didn't have the rights too.
 

bkakca

LoanSafe Member
Jul 5, 2013
189
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so now the first can foreclose and sell the house again? Otherwise the 2nd stole all the equity in something it didn't have the rights too.
I've read some posts on a website for Investors called Bigger Pockets regarding this and Arizona,. Looks like bidding on a Second lien is a big rookie mistake, unless you've done your due diligence and are prepared to pay off the First and anything Senior to that lien. Buyer beware!
 

spike9999

LoanSafe Member
May 28, 2014
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Maybe that's why we haven't gotten a Notice to Vacate yet? But the deed giving title to the Buyer has been recorded in his name, we can see it in the recorders website.
Very odd to say the least. So he owns property that is subjected to the 1st. Pretty much like selling you my car when I still owe most of the balance to the bank. Good luck with that. From what I know- the first can then foreclose- sell the house and the buyer is left with empty pockets and 142k less than he had. ... I love AZ but boy their court system is a train-wreck.
 

spike9999

LoanSafe Member
May 28, 2014
186
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I have to tell you- its criminal what the HELO did in selling that property. They knew what they were doing and hoped some newbie would be their sucker. I just remembered why I hate banks.