Decided not to walk (probably); Looking for advice

Discussion in 'CitiMortgage' started by walky_talky, Jan 5, 2014.

  1. walky_talky

    walky_talky LoanSafe Member

    Hello,

    I've been considering a strategic foreclosure for the past couple of years. Since I live in Illinois, my biggest concern was a default judgement. It appears that lenders are starting to go after Illinois residents who've walked away, so I'm now leaning toward staying and increasing my payments to reduce my principal.

    I bought my condo in 2007 for $166,000. It is now worth about $90,000, and I owe about $146,000. $123,000 is my primary mortgage with Citi, which I was able to refinance about a year ago. $23 is a 2nd loan with BMO Harris that was taken to cover my down payment. It is a balloon loan, my payments are mostly interest, and the balance of around $21,000 will be due in 2017.

    BMO Harris is not willing to work with me to modify this loan. My income is too high to qualify for a hardship program, but low enough to keep me trapped here.

    It seems that my only option is to increase my BMO Harris payment from $192 a month to over $600 a month to get it paid off by 2017. Even if I have it paid off at that point, I will still most likely be underwater.

    I'm looking for some advice on my situation. Is there any way to get BMO Harris to budge on this loan (lower the interest rate, principal, or extend the balloon payment due date)? Should I still consider a strategic foreclosure? I considered bankruptcy, but I don't qualify for chapter 7.

    Thanks in advance for your thoughts.
  2. TomEason

    TomEason LoanSafe Guide

    walky_talky

    Thanks for your post.

    I don't agree that your only option is to increase your monthly payments to BMO.

    2nd lenders rarely modify. FYI, a settlement is always a better deal for the borrower.

    Since your 2nd is underwater, BMO won't FC. I recommend you seek to eventually settle by following the guide at post #1 of the following thread.

    http://www.loansafe.org/forum/debt-settlement/37996-strategy-settling-your-2nd-94.html
  3. walky_talky

    walky_talky LoanSafe Member

    Hi Tom,

    Thanks for the reply! I actually read through much of that 'Strategy for Settling Your 2nd' a while back and have considered it.

    If Harris decides to sue me for the unpaid amount, how much leverage do I have to put myself into a position to settle for a fraction of what I owe? I think that lenders more aggressively pursuing in Illinois is a new development since that thread was last updated, but it may just be that I don't understand how the process works. If they know they can sue me for the full amount, what is their motivation to settle for a fraction of what I owe (maybe to avoid legal costs)?

    My other concern is the affect on my credit. My ultimate goal is to buy a house. If I stop paying my 2nd loan now, I wonder how long it will be before I'm settled with Harris and can qualify for a new home loan.

    I currently have my checking and savings accounts with Harris bank. I suppose I should move those accounts if I'm going to stop paying the loan.
  4. TomEason

    TomEason LoanSafe Guide

    Hi walky_talky

    Thanks for your post.

    I recommend you pull all or most of your funds out of your Harris accounts and move the $$ to another bank.

    Few if any of us will escape our present situations without suffering damage to our credit.

    I don't know about IL, but in my state, the Harris loan would be non-recourse because it's a purchase money loan. Furthermore, due to our "security first rule," Harris could not legally sue until after they FC.

    I recommend you consult with a good IL FC defense lawyer.
  5. rocoloca

    rocoloca LoanSafe Member

    Hi Walky-Talky,

    Do you have any update on this? I was in the same boat with the same scenario and lenders and stopped payments altogether after I got married and moved out of state and couldn't sell my Chicago condo (purchased for 250, now zillow says 177). I ended up going with a modification on my main Citi Loan and resumed payment and found a renter for the condo. However, I have not made payment on the Harris loan since August of 2012 when balloon came due and they would not offer a refinance as I don't make the same money anymore. I have received two or three letters from collections over the past few months regarding that loan but have yet to see a settlement offer.

    Illinois is a recourse state-- but the 2nd can't foreclose unless the first does (is my pieced together understanding). So-- I am following the strategy outlined for settling my 2nd. I just wish it would speed along.

    Good luck.
  6. walky_talky

    walky_talky LoanSafe Member

    Hi rocoloca,

    When I wrote my post in January, I had decided that I was going to stay and pay down my mortgage. Since then, I've changed my mind and I'm pretty sure I'm going to walk, but I haven't started the process yet. I really want out of my condo, and I'm willing to risk the deficiency judgment. In I worst case scenario, I have to pay the money that I would've had to pay up front to get out of here anyway.

    I had considered the plan to strategically settle my 2nd Harris loan. Now that I'm planning to walk, I'll be stopping payment on both loans and letting them foreclose.

    When I start my strategic foreclosure process, I'll post updates on this forum. If you wouldn't mind, keep me posted on what happens with Harris. Even though I'm walking away instead of strategically settling my 2nd, it'll be good to know how Harris handles these sorts of things.

    Good luck! I hope it works out and that you get by with a very reasonable settlement!
  7. rocoloca

    rocoloca LoanSafe Member

    I went back and forth and back and forth on walking or not walking and ultimately decided to keep the condo and keep it rented once I modified my loan and all my expenses were covered by my monthly rental "income" (mortgage and assessments)-- not an easy decision to make! If you are going to walk away, there are a few things that you have probably already seen on the boards that are good recommendations.

    For example-- you will have to still pay your assessments. Most condo boards will litigate in order to get their money so you will have to continue to pay even if you walk. Also, get a renter- you can pocket the money you make when you rent your unit and that can help you save or offset deficiency judgment if one is handed down. And finally-- Settle in! I started my strategic 2nd settlement strategy back in summer of 2012 and still have no tangible change other than recent calls from collections with a "payment plan" for the full amount. I get so anxious waiting for resolution on this second (and I still get anxious about the Zillow estimate of value declining).

    I will check back on this post and let you know of any developments on my end. Best of luck to you.

    (Also, there are a few good threads from people who have successfully walked in IL. Let me know if you need links!)
  8. rocoloca

    rocoloca LoanSafe Member

    Any updates here? BMO Harris has started sending me invoices again (after sending NOTHING for probably a year). I have received no offer of settlement either.

    It also looks like another collection agency is attempting to collect on it. Should I be concerned?

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