Notice of Default - SLS Second Mortgage

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walkinginCLT

LoanSafe Member
Aug 31, 2011
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I received a letter today with this heading:

Notice of Default and 45 Day Notice of Intent to Foreclose

Gives me amount past due and how to cure the "breach".

I assume they are now about to actually try and foreclose? My House is worth about $240k. I have a 1st mortgage of 145K. My total to fully pay of second is $72k. That includes all missed payments and the principle. Totaling about 72k. Haven't made a payment in exactly 9 years.

This is a rental property currently. I couldn't sell it for payoff when I moved so I rented it out. Now it has recovered. I could pay off the $72k and then sell it but I'd prefer not to if I don't have to. Meaning if they don't intend to actually foreclose. I've tried to settle with them for as high as $15k but they refuse to budge. They offered to settle for about 12k back in 2017, but I didn't have the funds at the time.
 

Moe Bedard

Call 1-800-779-4547
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Loan Safe Mortgage
Aug 10, 2007
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In my opinion, there will be very little negotiating with mortgage servicers moving forward. This is not 2008-2012. It is a totally different ball game. I do not think that loan modifications and great loan workouts are on the table for hardly any struggling homeowner.

If I were you, I would sell or cure the loan and then sell so you and cash in on that equity before they foreclose. Then count your blessings and cash that you went 9 years payment free and move on.
 

walkinginCLT

LoanSafe Member
Aug 31, 2011
21
1
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My biggest issue is that this is currently a rental with a lease agreement in place until June 2021.

I can afford 72k to completely pay off the second, but I can’t afford to be without that until June of 2021.

This home is in North Carolina for what it’s worth and I am in Florida.

Are they really going to pay off the first and foreclose? I’m trying to research others this has happened to but I can find almost no first hand accounts of it actually happening.
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
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Southern California
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They may but that leaves very little equity after all is said and done so it may be a bluff. I would think about selling because that is probably the only guarantee of walking away with some cash and keep the cash you have. Moving forward into the Greatest Depression ever, you may need that money to live through the economic turmoil.
 

OneHugeMess

LoanSafe Member
May 30, 2016
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Yes. I would say there is a 90% chance they are going to move forward. This is not a missed payment letter, but a NOD. I don’t know what the current plan is in NC, but I would put money on them hiring a law firm (they probably have already) and being serious about forcing a trustee sale.

I know a woman in Union County, not far from your home. She owed $130k on her first, $16k on a second HELOC from CW. Out of the blue, after not making any payments since 12/2008, SLS filed a notice of sale and actually scheduled it.

She had to file for personal bankruptcy, and than sale the home. She didn’t have the ability to make the repayments of delinquent interest, and principal over 5 Years.

Bear in mind, this was 2019. I have no clue what’s going on now, and if your state is blocking or allowing these foreclosure sales.
 

walkinginCLT

LoanSafe Member
Aug 31, 2011
21
1
3
Here is my dilemma. I owe second $72k. I could pay this if I have to. 401k withdrawal and put back after sale, whatever. The tenants in the home currently have a lease until June. My concern is that the market tanks between me paying them off and June impairing my ability to recoup my $72k I have no emotional ties to the property but would like to keep it but not by cashing out SLS and holding onto an asset that may nose dive in the near future.

Does anyone know the laws in NC? What is the process of a foreclosure of a second mortgage? Are they just selling the lien subject to the first or are they required to payoff the first before a trustee sale?
 

Survivor_IN

LoanSafe Member
Jun 2, 2008
291
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NC is non-judicial foreclosure. (ie quick)

After the 45 day mandated letter (NOD) they will file at the courthouse (where property is located). Another section of law says this notice must include alternatives to foreclosure 30 days before filing. If they didn't then you have something in your defense. From there they will schedule a hearing with 10 days notice. This is the actual foreclosure. They can also do the "hearing notice" by posting it for 20 days locally in a newspaper or such (saying you are unreached or sending notice to property address which you don't get or is returned cause you moved or something), which means you may not know if you don't get served. You will very likely lose that hearing, but you could also request additional time if you can show good cause, such as trying to settle. Hearings can be done on zoom or by teleconference during COVID. Its actually easier for you since you may be in Florida. Then 45 days to sale date. Given that this property is not owner-occupied, these proceedings may proceed quickly even in spite of COVID. (Your tenants are protected, plus they have a lease. I would avoid involving them or disclosing such as you don't want to disrupt income on the property and scare them off when you may be able to settle.)

If you delay this too long without a resolution, the property is likely going back to the lender as REO in a full bid at the foreclosure. You will have a foreclosure judgement on your record. If you have not already BK'd this mortgage, then you will owe a deficiency. This deficiency is going to be their costs and fees and all the legal wrangling they have to do to make arrangements, get approval, from the first lienholder. I'm sure they have the numbers on how much equity you have left and SLS is a grunge debt collector who may see you as a good way to infuse some cash into their operations.

You are better off attempting to negotiate and pay off. Taking any discount you get is better than having to pay an extra 2500- 6000 in legal costs tacked on top of the 72K. Write them a letter and offer settlement and include a legal request to pursue foreclosure alternatives for 60 days. Ask them to accept proposal in 10 days. Let them counter. Tell them, upon acceptance they will receive payment in 30 days (or something pre-determined). Hopefully this will delay the legal filing in order to attempt a cure or reduced payoff. How long does it take to cash-in a 401K? FYI don't disclose that, just keep in mind. Do you really want a foreclosure on your credit? It could hurt you. Even if it doesn't affect your job, you may get increased rates on credit cards, car loans, etc. If it doesn't hurt you, then if the lender subsequently buys it, you can outbid lender by 1k if you top their offer within 10 days of sale. You can also pay up (reinstate by paying past due or payoff in full) so many days before the sale.

Alternatively, this could be a bluff. They may have a known difficulty getting a sale date on an occupied property (moratoriums and what not) and/or difficulty in getting First lien holder to allow it. You never know. You could possibly get a deferral on payments during COVID and stall a bit by filing the requests.

Here are basics of North Carolina foreclosure:


 

Survivor_IN

LoanSafe Member
Jun 2, 2008
291
24
18
Just so you know, they can post the notice on the property, which automatically informs your renter. May as well resolve quickly if you can, the longer you wait the bigger the debt. You can always hold the property and keep renting until the market returns.
 

walkinginCLT

LoanSafe Member
Aug 31, 2011
21
1
3
Because of time, this account no longer shows in my credit report. If I pay this second in full what would the result be credit wise? Would I re-age this and now have 7 years of late payments show up all of the sudden?
 

Survivor_IN

LoanSafe Member
Jun 2, 2008
291
24
18
Because of time, this account no longer shows in my credit report. If I pay this second in full what would the result be credit wise? Would I re-age this and now have 7 years of late payments show up all of the sudden?
I doubt it. Keep in mind that anything is negotiable. I suspect it would be reported as either "paid in full" or "paid for less than full amount" depending on what you ended up agreeing to. Get it all in writing and request that no further reporting be made with respect to credit reporting. If you've already bankrupted them they shouldn't report anything. Maybe others will chime in on this one.