Citi Mortgage:settle 2nd After Bankruptcy/unsecured Portion Of Secured?

Jzone

LoanSafe Member
Jun 20, 2017
186
25
28
70
Looking for advice on settling 2nd mortgage with citimortgage.

Filed bankruptcy in 2013 and discharged 1st and 2nd mortgage. Did not reaffirm, but continued to stay in house and make payments on both. Have never heard from either mortgage company.

Local bank has first mortgage, 3.85% interest. Citimortgage has the second mortgage with current balance of $43,000, at 9% interest,with a lien on property.

Looking through my bankruptcy papers and noticed on Schedule D "Secured Claims", that Citimortgage had a secured claim of $53,000, but there is also a line next to it that says "unsecured portion of secured claim". That line says $23,000.

My bankruptcy attorney wants to discuss, but of course wants his usual fee. Thought I would seek some free advice if possible.

Question 1:
Second mortgage unsecured balance. Does that mean $23,000 of that second mortgage is unsecured and not part of the lien?
Seems to me that is what it means, but not sure. Have not seen this discussed in forums here. This would of taken the secured portion down to $30,000 at time of bankruptcy. ($53,000-$23,000 = $30,000)

Question 2:
What is the easiest way to go about settling this second mortgage? I've read the strategy about simply waiting for them to respond.
Since bankruptcy is complete, I think I have to at least contact them first, because legally they cant contact me?
My current thinking is to skip 2 or 3 payments, send a letter and make an offer.

I am current on both mortgages, and value of house is now just slightly over what is owed. House is worth $189,000 (comparing recent sale in subdivision) and both mortgages balances are $184,000, so a little equity.

Question 3:
If I make an offer on settling, shouldn't my offer be based on the secured portion of the debt? Which was only $30,000 of the total $53,000?

Thanks for any and all help. Will keep everyone posted as this continues.
 

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
2,094
174
63
San Diego, California
www.loansreduced.com
Question 1:
Second mortgage unsecured balance. Does that mean $23,000 of that second mortgage is unsecured and not part of the lien?
Seems to me that is what it means, but not sure. Have not seen this discussed in forums here. This would of taken the secured portion down to $30,000 at time of bankruptcy. ($53,000-$23,000 = $30,000)

- This may be because the property was not worth enough to cover the 1st and 2nd at the time and therefore it was deemed unsecured because there was no collateral to back it up. I could however be wrong as I'm not a real estate attorney.


Question 2:

What is the easiest way to go about settling this second mortgage? I've read the strategy about simply waiting for them to respond.
Since bankruptcy is complete, I think I have to at least contact them first, because legally they cant contact me?
My current thinking is to skip 2 or 3 payments, send a letter and make an offer.
I am current on both mortgages, and value of house is now just slightly over what is owed. House is worth $189,000 (comparing recent sale in subdivision) and both mortgages balances are $184,000, so a little equity.

This article is a good read for that: http://www.loansafe.org/forum/threads/strategy-for-settling-your-2nd.37996/

Question 3:
If I make an offer on settling, shouldn't my offer be based on the secured portion of the debt? Which was only $30,000 of the total $53,000?

Not a great question for me to answer, this is a bit unique and I focus on originating new home loans for our loansafe community that has experienced economic events like you are currently.
 

Jzone

LoanSafe Member
Jun 20, 2017
186
25
28
70
Thanks for the reply. Have read through this forum the last couple weeks and it is really insightful. I know my situation is kind of unique, so I guess Im just going to break it down and deal with it step by step.

The first step I am taking is becoming officially late on my payments. Taking the forums advice and will skip 2 or 3 payments and see if they reply. If I dont hear from them, I will send my first settlement offer.

Thanks again and I will keep everyone posted.
 

despritfreya

LoanSafe Member
Sep 8, 2011
369
53
28
Looking through my bankruptcy papers and noticed on Schedule D "Secured Claims", that Citimortgage had a secured claim of $53,000, but there is also a line next to it that says "unsecured portion of secured claim". That line says $23,000. . . Question 1: Second mortgage unsecured balance. Does that mean $23,000 of that second mortgage is unsecured and not part of the lien?
Absolutely not. It simply means that the bk program used by your attny automatically calculated the claim for statistical purposes. You did a Chapter 7. Chapter 7 DOES NOT in any way, shape or form, strip off any part of a properly recorded consensual lien against real property. While the lender cannot "ask" you to pay, it can simply refuse to release its lien if not paid the full amount owed under the promissory note you signed.

Des.
 

Jzone

LoanSafe Member
Jun 20, 2017
186
25
28
70
Absolutely not. It simply means that the bk program used by your attny automatically calculated the claim for statistical purposes. You did a Chapter 7. Chapter 7 DOES NOT in any way, shape or form, strip off any part of a properly recorded consensual lien against real property. While the lender cannot "ask" you to pay, it can simply refuse to release its lien if not paid the full amount owed under the promissory note you signed.

Des.
Thanks for the reply. I've stopped making payments on the second mortgage this month. When I do make a settlement offer, I will probably start at 5% of the original $53,000 balance as advised in this forum. Then hopefully settle for between 10%-20%.
 

Jzone

LoanSafe Member
Jun 20, 2017
186
25
28
70
One other thought.....

Since this is a second mortgage and has been discharged through chapter 7, I wonder how aggresive citimortgage will be?

I know they have the lien, but after reading more of this forum and other internet sites, it appears second mortgage holders very seldom will start foresclosure proceedings. Seems like after bankruptcy, lien holders only collect if 1st mortgage forecloses or house is sold.

I dont plan on selling for at least 5-7 years.

I'm thinking, or rather hoping, that this is the case with mine. First I will offer a 5% settlement, then simply wait it out.
 

Jzone

LoanSafe Member
Jun 20, 2017
186
25
28
70
Nothing from CitiMortgage yet, except the usual monthly statement that says I'm two months late. Of course with the usual bankruptcy language that they are not trying to collect a debt....

But today I did recieve a letter from Citi about the Service Members Civil Relief Act. Provided a couple of numbers to call, but I am not a member or former member of the military.

So it looks like at least someone at Citi knows Im late. The letter did provide an address to contact CitiMortgage which I had not seen before:

Citi Mortgage
P. O. Box 6728
Sioux Falls, S.D. 57117-6728

Im thinking about sending a letter to them next week. Just a very short "yes you may contact me about this debt" letter. I plan on following the strategy in the forum about settling your second mortgage, so will not provide any financial info. I will simply start my offer at 5% of the balance and see what happens.
 

Jzone

LoanSafe Member
Jun 20, 2017
186
25
28
70
Well, month number 3 and nothing new from CitiMortgage. Recieved my regular statement in the mail today and noticed something funny.

The total balance has not changed since I stopped paying 3 months ago. Ive saved all the statements and even though I have not made a payment for 3 months, the balance is the same for June, July and August.

This was released through chapter 7 bankruptcy and has the usual "not an attempt to collect a debt".

Each statement also says there will be a late charge assessed after due date, but doesnt look like its happening.

Did not send any settlement offer to them yet.

Anyone else tried this strategy and looked at their statements?
 

Jzone

LoanSafe Member
Jun 20, 2017
186
25
28
70
Month number 4 and no contact from Citi. Balance is still the same, though statement always says late charges added.

Really want to send them a settlement letter offer, but following the advice of the forum and waiting until they contact me.

Using the dollars from not making payments to create an emergency/settlement fund.

Also did some research for foreclosure in Michigan and found out that I have a year after foreclosure proceedings begin before you are basically forced out of your home by "sheriff sale".

Sound scary, but a sheriff doesnt actually show up at your house and kick you out. I figure if I have a year to plan my move, the emergency/settlement fund will work out rather nicely for me!
 

bgriff

LoanSafe Member
Mar 11, 2012
164
16
18
Month number 4 and no contact from Citi. Balance is still the same, though statement always says late charges added.

Really want to send them a settlement letter offer, but following the advice of the forum and waiting until they contact me.

Using the dollars from not making payments to create an emergency/settlement fund.

Also did some research for foreclosure in Michigan and found out that I have a year after foreclosure proceedings begin before you are basically forced out of your home by "sheriff sale".

Sound scary, but a sheriff doesnt actually show up at your house and kick you out. I figure if I have a year to plan my move, the emergency/settlement fund will work out rather nicely for me!
Just a quick note about BK7 and being contacted by the mortgage holder - they legally can not contact you unless have given them permission. You have to send them a letter that is ok to contact you regarding the debt. But don't hold your breathe, they may not contact you for a very long period of time, if at all. It all depends on how they view you and what the finances are of your situation (are you underwater? if so, by how much? If not, what is their break even point and so on).
 
  • Like
Reactions: Jzone

Jzone

LoanSafe Member
Jun 20, 2017
186
25
28
70
Have skipped June-Sept payments now. Latest statement just shows late payments due, but no interest or added fees. Balance has not changed on any of the statements, still shows original balance due from June statement. Also, no contact from citimortgage.

Since this loan was discharged in ch7 bankruptcy, was going to send them a letter to contact me about settling the lien, but decided not to. Sticking to the advice in this forum and will wait for them to contact me for now.

Since this debt has been discharged, Im only concerned with getting the lien released. First mortgage and second is now just below market value, so I doubt if second would start foreclosure anyway.
 

Jzone

LoanSafe Member
Jun 20, 2017
186
25
28
70
October payment skipped. However, I did recieve a letter from Citi with options. This was sent without any inquiry from me. Looks like a standard form letter with options for:
  • Refinance my loan
  • Modifiy my loan
  • Short sale
It also has the usual "not an attempt to collect a debt" wording. It does say my loan has been assigned to the Home Support Team and they would like to work with me on a hardship option.

They also have given me an email to help in correspondence, which I think I will consider. Faster than regular mail.

Im seriously thinking about sending them an email with a 5% settlement offer and see what happens.
 

Jzone

LoanSafe Member
Jun 20, 2017
186
25
28
70
Well, I emailed citi mortgage today. Offered 5% to settle. Will see what happens.

Here's a copy of the letter just in case others want to use something similiar:

Dear CitiMortgage Homeowner Support Team,
[email protected]
855-843-2549

This is in response to your letter of 10/20/17.

My loan number is -------.

I am asking for a settlement and release of the lien on my second mortgage.

As you are aware, this loan has been discharged in Chapter 7 bankruptcy.

I continued to make payments to stay in the house and continued to be current until May 2017.

I have done everything possible to make ends meet. Unfortunately, I realize now that it will be impossible to repay this loan, maintain the house and keep property taxes and utilities current.

My total payments to this mortgage since bankruptcy, now total over $22,000.00.

My payments of $22,000 is much more than you would have received from any discharged loan.

I made repeated calls after bankruptcy, in 2012, 2013 and 2014 to settle this loan and release the lien. Since I was not behind on payments, I was told each time that there was nothing available.

I would like to settle this loan for 5% of the May 2017 balance $47,375, or approximately $2,400.00.

My offer to settle is based on my payments after bankruptcy and the fact that this loan has been discharged. Again, you have recieved over $22,000 in payments from me for a loan I am not legally responsible for.

I would appreciate your consideration to accept this proposal for settlement and release of lien.

Please contact me in writing or email only.

Sincerely,
 

Jzone

LoanSafe Member
Jun 20, 2017
186
25
28
70
Admin:

Please close this post as I will start a new one. This post covered the last 6 months from non payment of mortgage until contact from citi.
thanks