Strategy for Settling Your 2nd

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TomEason

LoanSafe Guide
Jun 18, 2009
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Grease Lightning

Thanks for your post and welcome to Loansafe.

Yes, the strategy applies to settling 2nds all states.

The reason there are so many CA members on Loansafe (many threads) is because CA has the largest population of any state, and because CA as well as AZ, NV and FL are the states with the most FCs per capita. These states experienced the most extreme booms and busts in the RE bubble.

If I were you I'd stop paying and communicating with Chase ASAP. Since you seem to be uncertain about your future disposition of the property. You'll want to first formulate your plan. Assuming you decide to keep the property, that would encompass determining that you'll be able to remain current on your GMAC 1st for the foreseeable future, or taking action to permanently deal with that lender so your loan will be permanently affordable.

Only after that is handled, should you turn your attention to your 2nd. FYI, you needn't read all the posts in the thread. Start by reading the strategy guide at post #1. You can stop there if you're clear on your path forward.

Good luck.
 
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Grease Lightning

LoanSafe Member
Dec 30, 2011
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Thanks for the quick response Tom. I am heavily leaning towards going to forclosure. I tried the loan mod last year and was declined due to sufficient income. We have no real hardship other than a couple weeks of lost work. Our morgage payment is well below the 31 percent barrier and is NOT a freddie mac or fannie mae loan. I'm wondering if i'm better off not even sending them my financial info as I'm fairly certain that a loan modifcation and or a successfull short sale would be a long shot at best. I've heard of people making "trial" payments only to be denied later. I certainly don't want to send any more payments towards this mortgage. Again thank you for your quick response. I will continue reading.
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
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Grease Lightning

Since your immediate problem is your 1st mortgage, this thread isn't applicable. I recommend you visit one of the many threads dealing with 1sts, and/or start your own thread.

Good luck.
 

DeepnSoCal

LoanSafe Member
Apr 1, 2011
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You are very close... Now I understand why they made the offer that they did. I have found that if its questionable whether or not your second is the money they won't budge.
Well sent back the counter offer of about 3 percent of the balance. Without the second being totally in the money I believe odds are in my favor for a good settlement. And given that the house prices don't seem to be going up its only gonna up the odds. Any suggestions are always welcome. Maybe we can get it done this year. The only thing I am concerned about is the debt forgiveness act ends this year.
 
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redsoxinsocal

LoanSafe Member
Mar 28, 2010
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Here my stats:

1. First loan of $450K, which was modified for 3.5% for the first five years;
2. Second loan of $300K (purchase money), which was with SunTrust but then written off and acquired by mortgage insurance company, United Guaranty. Currently owe just the principal of $300K, no interest, and this seems more like an ordinary, unsecured "debt" than a "mortgage". ST wrote off $150K of the mortgage as a loss;
3. Value of the home is likely $650K;
4. I can afford the first, but not the first and second together;
5. House is in (Nor.) Cal.

I have stopped paying on the second now for about 4 months. Have hired a debt negotiator to help me, but I think I could do as good of a job, if not better.

If I can't further modify the second or a settlement can't be reached, what is UG's recourse? Can they foreclose? Will they likely foreclose? Is there a difference between and/or in communicating with an insurance versus a mortgage company? Thanks for any thoughts / comments.
 

dpf749

LoanSafe Member
Mar 5, 2011
13
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On the verge in MI

My State: Michigan
Property Value: Zillow Zestimate $504,800; my estimate $350,000
1[SUP]st[/SUP] Lender: PNC
1[SUP]st[/SUP] Loan Balance: $235,000
Purchase money? Yes
2[SUP]nd[/SUP] Lender: Countrywide--BoA--Bank of New York Trust
2[SUP]nd[/SUP] Loan Balance: $250,000
Purchase Money? No

I live in Union Pier, which is on the Lake Michigan shore, 50 miles from Chicago by car or rail. This home is my current residence, but I would very much like to be rid of it. It was my weekend getaway house in flusher times when I had a condo and a job in Chicago. <Insert long sad divorce story here.> My ex retains 50% equity and is responsible for the HELOC payments, but we are jointly and severally liable and I have a job, she does not. She lives in another state and will likely default on her obligation, certainly she will when interest rates rise. The Real Estate market here is almost exclusively second homes/weekend cottages for Chicago folks; I am the only person on my street who actually lives here full time. Million-dollar homes on the beach are still selling, but places like mine are devastated by the current market and generally do not move. Very few people are so comfortable in their jobs right now as to purchase a pure luxury item like a summer home in a beach community, so there is really no market at all for my house at this time except at a major discount from any qualified appraisal. As weird as that sounds, the only RE closings here are at significantly below appraisal prices. The house needs work and will likely stay underwater for many years to come. I received notice from BoA in July that they had transferred the loan to Bank of New York Trust, however BoA is still the servicer. PNC modified my first in 2009. I do not want to invest any more into the house and I plan to follow the plan to the letter (thank you!) when the second goes into default. It seems like the best idea is to keep the first current, which I can do. Any ideas or guesses as to how this may eventually play out would be much appreciated, thanks.
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
85
48
SF Bay Area CA
redsoxinsocal

Thanks for your post. I assume you've read the strategy guide at post #1. That guide will tell you everything you need in order to eventually settle the 2nd yourself. If I were you I'd cashier your debt negotiator. If you follow the guide you'll do a better job on your own.

I recommend you not communicate with either St or UG. Good luck.
 

dpf749

LoanSafe Member
Mar 5, 2011
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redsoxinsocal

I recommend you not communicate with either St or UG. Good luck.
Tom, thanks. I have read most of this thread, including post #1. My main concern is that the collections may be more aggressive, considering the size of the loan ($250k). I have a relationship with a very good BK attorney and a real estate attorney as well. I have grounds to contest my liability for the loan (my ex was a con artist) and I have no intention to pay anything on it, and I will not respond to inquiries from BoA except to say that I don't owe them anything. I fired my divorce attorney already.
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
85
48
SF Bay Area CA
dpf749

Thanks for your post. I don't know your numbers, but, regardless of the loan size, f your 2nd is underwater they won't FC. If it's close, I recommend you get a recent accurate property valuation.

It sounds as if you haven't yet defaulted. If that's the case and you no longer intend to pay, I recommend you stop paying ASAP.

FYI, BK is very premature. And legally contesting your loan with a lawyer will likely be very expensive.

This statement "I will not respond to inquiries from BoA except to say that I don't owe them anything" leads me to believe you don't intend to follow the strategy, which prescribes no communication whatsoever. You will do whatever you think is right for you. Good luck.
 

dpf749

LoanSafe Member
Mar 5, 2011
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Tom,
Unfortunately my case is complicated by the divorce. My ex and I each own 50% equity in the house. I already modified my first which I pay and I have no need to default on it, at least not yet. My ex pays the HELOC. The house is underwater and I am sure she is going to default at some point, probably when interest rates rise and her $480 monthly payment goes up. I am looking at my options for when she defaults. Should I then default on the first immediately or keep paying it? My cheeky statement was a mis-step, thanks for correcting me. When the time comes, I will discipline myself and I will have no communication whatsoever with the HELOC servicer as the strategy recommends.

My immediate goal would be to get the bank to pursue her for the HELOC money (she has it) instead of me. She owns a business and is good at hiding assets, I am a W2 so I will look like the easier target. She will provide financial information about me to the bank as best she can, but any info she has is from 2009 and earlier, and I have 2009 discovery from her as well.

I did not sign the HELOC, she signed my name under a Power of Attorney. This gets very complicated, but the POA is a fraud. Proving the fraud and seeking quiet title is going to be expensive, I know. So the only exception to the strategy might be whatever communication is necessary for a quiet title lawsuit, which is via an attorney only, not through me personally. I have to file that before the statute of limitations runs out in Spring, 2013.
 

dpf749

LoanSafe Member
Mar 5, 2011
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And please don't bother telling me what an idiot I have been and how bad my divorce attorney was, I know all that. I also know that an appraisal is worthless because there are no comps, very little real estate sells here at all, the few sales which do make it to closing show pricing volatility which makes accurate appraisals incalculable. I am pretty sure that in a foreclosure, my bank (PNC) would be made whole and would charge enough in fees and penalties to keep all of the proceeds, leaving Bank of New York Trust/BoA in an SOJ position. My inclination is to keep paying my first, call it "rent" and hope for a win in the RE courts or a very low percentage settlement on the second, or walk away in a few years when I am better positioned to take a BK if necessary.
 

dpf749

LoanSafe Member
Mar 5, 2011
13
0
0
Here are my numbers again, from my original post "On the verge in MI"
My State: Michigan
Property Value: Zillow Zestimate $504,800; my estimate $350,000
1[SUP]st[/SUP] Lender: PNC
1[SUP]st[/SUP] Loan Balance: $235,000
Purchase money? Yes
2[SUP]nd[/SUP] Lender: Countrywide--BoA--Bank of New York Trust
2[SUP]nd[/SUP] Loan Balance: $250,000
Purchase Money? No
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
85
48
SF Bay Area CA
dpf749

Thanks for re-posting your numbers. If it were me I'd get a clearer picture of the value; your range is over $150K, a large deviation amount. A property owner can do this (usually for free) by getting a CMA from a RE agent experienced in your neighborhood.

Without a better handle on your valuation, it's difficult to ascertain where you stand and how much risk there is that the 2nd might FC.

As this thread deals only with settling 2nds, the rest of your situation is of little interest to me.

Good luck to you in sorting it all out.
 

Kimberly

LoanSafe Member
Dec 12, 2011
21
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What is the average percentage the HELOC's companies will settle for? Looking at what we can settle this year, but also thinking of the second mortgage. But looking to see what I need to put aside.
 

dpf749

LoanSafe Member
Mar 5, 2011
13
0
0
dpf749
Thanks for re-posting your numbers. If it were me I'd get a clearer picture of the value; your range is over $150K, a large deviation amount. A property owner can do this (usually for free) by getting a CMA from a RE agent experienced in your neighborhood.
Tom, I have consulted with my RE agent and with a local appraiser. Both have told me that they cannot estimate the value closer than within a $100,000 range. That is just the way it is. So the 2nd might decide to FC or they might not, what steps should I take in either case, any suggestions?
Thanks again.
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
85
48
SF Bay Area CA
dpf749

That's total BS. When you say consult, it means to me that you've done it on the phone.

Again, I recommend you get a CMA from an experienced agent, wherein he/she views the the interior of your home, and subsequently prepares a written report supporting his/her indication of value with recent sales comps and with other properties on the market, then marking up or down the value of your property based on the differences in features.

Or, even better, you can get a full appraisal, although you'll pay about $500 for one.
 

simply__me

LoanSafe Member
Jan 3, 2012
1
0
0
What a great thread. I've been considering what to do about my second with Beneficial. If anyone out there can assist with this question, it would be appreciated. How may I find out if Beneficial can't foreclose based on my second mortgage? Before I choose to apply the strategy, I wish to ensure my house will not be foreclosed.
 

pthomie

LoanSafe Member
Jul 15, 2011
6
0
0
What if they have my financials because I tried to short sell and it fell through? The forclosure date is in 2 days. The first and the second are in my name only. I am not working, but my husband is.
 

kitkat01

LoanSafe Member
Jul 1, 2010
261
4
18
Here's my situation, hope someone can give me advice. 1st loan is w/ Chase, $760K and was modified April 2011. 2nd is w/ WF, and I stopped paying Sept 2010, when I stopped paying my 1st at that time. Property is worth about $750K-$760K. 1st is now current. My 2nd was charged off by WF, sold to another company, and now to another company again. This new company kept calling my husband at work and I am going to send them a C&D letter to stop calling at work. The rep told me I need to send them my financial info and a hardship letter. Should I send the hardship letter? I'm not planning on sending the financial info. I only received 1 settlement offer from WF and that was for like 60 percent of the balance so that was way too much for me. I now received a "Letter of Accelerated Foreclosure" from thsi new company and not really sure that that is... Is that just their term to be able to collect money now? Do I stil have time to wait for them to make an offer since I stopped paying well over a year ago? With this situation, will they foreclose on me? I would love to stay at our home as I was so happy I took care of my 1st and is current. Will they take me to court for a judgement as this is not purchase money? I'm not so sure how the non-recourse and all that works as I've seen that term here in the forum...
 
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MNman

LoanSafe Member
Jan 3, 2012
1
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0
To Tom Eason (and/or anyone else willing to offer their insight):

Let me start by offering a sincere “thank you†for enlightening us with your wisdom and experience in dealing with a topic that is scary (maybe even terrifying) for most people. I commend you for taking the time to educate people, and helping us navigate through the fear and uncertainty.

Further, I understand that responding to all of these inquiries has grown rather tedious for you, which I can fully appreciate. However, I have read the first 45 pages and the last five of this thread (still working through the rest) and have also thoroughly utilized the search function to comb through all of the entries, yet I still have some questions. Any advice you can offer would be greatly appreciated.

The Facts:

State: Minnesota
Property Value: $173K (Zillow and the tax man) [Note: the market seems so soft that I think it would sit on the market quite a while at anything above $160K. There have been several foreclosures and short sales in our development offered at $25-50K below “market valueâ€, and they have still taken a long time to sell.]

1st Lender: B of A (formerly Countrywide)
1st Loan Original Amt: $214.5K – FHA 30 yr fixed @ 5.875%
1st Loan Balance: $178.5K
Purchase Money? Yes
Additional Info: Current, never late, unmodified

2nd Lender: Capital One, immediately sold to GMAC
2nd Loan Original Amt: $91.5K – 15 yr fixed @ 10.99%
2nd Loan Balance: $70K
Purchase Money? No. Consolidate CCs, cash
Additional Info: 60 days late, unmodified


Goal:

Our goal differs from most on this thread. We do not desire to stay in our home for the long term. Our hope is to settle our 2nd, so that once we are above water on our original mortgage, we can sell it conventionally (i.e. non-short sale) and hopefully purchase another home within the next couple of years. Not only is our 2nd unmanageable, but it presents a roadblock for refinancing or even short sale, so eliminating it seems the only plausible way to proceed. We would like to avoid foreclosing on our 1st if at all possible, because virtually all of our credit cards are through B of A, and I assume if we stop paying our 1st mortgage, our credit with them will be severely impacted.

Questions:

1. How adversely will settling the 2nd affect our credit? Specifically, will it be viewed similarly/the same as a foreclosure and prevent us from obtaining another mortgage for several years, as some on this thread have expressed? Our credit was quite solid (always current on all accounts) prior to this, and it has already dropped 50-75 points from just the “30 day late†hitting our file. I intend to discuss minimizing damage to our credit during settlement negotiations.

2. How will GMAC determine the value of our home when evaluating their course of action? Since the perceived (Zillow/tax) value is close to our original mortgage, I am concerned about them concluding we are above water, and proceeding with a foreclosure. I would presume, however, that they are savvy enough to realize that foreclosed homes often sell for well below their “valueâ€. I intend to seek out a CMA (w/ walkthrough) as you have previously recommended to others, but the fact that GMAC will be making their determination of value without this level of accuracy is troubling to me.

3. Today I received an unsolicited modification offer from GMAC. It is identified as a “Non-HAMP Loan Modification Agreement†and it lowers the payment by changing the loan to a 40 (yes, forty) year loan, and lowers the interest to 5%. It also forgives $2,600, which basically represents the two missed payments, plus accrued interest. For acceptance, GMAC requires that we sign the agreement and submit the first payment within ten days. We intend to ignore this offer, and continue to strictly follow your strategy of non-contact, as we have since the beginning of this ordeal. Does this modification attempt offer any insight into their position or suggest anything regarding their future intentions? I found it interesting how they were able to produce a modification without us providing any financial information whatsoever (although they did pull our credit file), when they always maintain that submitting complete financials is required for any sort of modification consideration.

I look forward to your thoughts on our situation.

Thank you!
 
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