Strategy for Settling Your 2nd

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TomEason

LoanSafe Guide
Jun 18, 2009
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MNman

Thanks for your post and your gracious remarks.

It's unlikely you'll be able to extricate yourself from your dilemma without your credit taking a hit. In fact, since you've not paid you GMAC 2nd in the last couple months, derogs may have been reported.

1) Nobody really knows what future purchase money mortgage qualification criteria will look like. Although, some claim to know, they're really just guessing, and engaging in wishful thinking. Almost everyone on these boards has suffered credit hits.

2) Most lenders use subscribed AVMs that are more accurate than the free AVMs like Zillow. Sometimes they'll send an agent by to do a curbside BPO.

3) It's unusual for a 2nd lender to send an unsolicited mod. They normally send a settlement offer. To me this is a signal that GMAC is worried that they'll ever see any more $$ on this loan. I applaud your intent to ignore the offer and follow the strategy.

Good luck!
 

labrn

LoanSafe Member
Jan 3, 2012
2
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Bothell, WA
Hello! I am new to this thread and I have found it very informative, especially that of TomEason's "Strategy for Settling Your 2nd". I am also in the same predicament. We bought our house for $474K in 7/2007. I have both my 1st and 2nd Mortgages with WF. My 1st Mortgage (interest-only) has a balance of $394K at 6% interest until 9/2012 and my 2nd mortgage (HELOC) has a balance of over $99K with the balloon payment due on 8/2012. As of Jan 2012, I am still current in paying both mortgages. Still, WF doesn't offer programs for my plight. I don't have the $$$ to pay my balloon payment. Bankruptcy nor Foreclosure is not an option...for now. Before I start NOT paying my 2nd mortgage this Feb (I am hoping to cancel mu automatic payments ASAP), am I understanding the "strategies" clearly and correctly that:

1. It is important for me to keep my 1st Mortgage current to avoid foreclosure?
2. WF will not foreclose on my home because I am not able to pay off my 2nd mortgage (HELOC) - Is this true for all states? I live in Washington.
3. I shall wait for the "settlement" from WF. My balloon payment is due 8/2012.

Is there anything else that I need to know? I am willing to sacrifice my good credit for this.

Thank you in advance for all your help.
 

TomEason

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

Thanks for joining Loansafe and for your gracious remarks.

FYI, since we don't know your home's value, you will have to figure this out on your own. Start by reading post #1. If, after reading it, you still have questions, I recommend you continue reading the posts in the thread. I don't believe there are any questions that haven't already been addressed.

Good luck to you.
 

jodyvs

LoanSafe Member
Jan 3, 2012
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Wow TomEason, my cup runneth over. If only I had found your beautifully articulated advice just a few days ago....

My house is about 130K under water. I'm letting my house foreclose. I live in Washington state so the 1st is "forgiven". It hits my credit as a foreclosure of course, but not much else. I stopped making payments on both the 1st and 2nd five months ago after I made the difficult decision to let the house go. My 2nd is at $69,000 and is through Wells Fargo. I found that they sent a settlement offer to my house. Until then, I hadn't answered one of the many phone calls placed to me and my work.

I thought great, lets start the negotiations. The mistake I made, which I'm wondering if I can recover from, is during my call, I gave them my financial info. I refused their offer, but now they have my "ballpark" income and my debts. After reading your sage advice, I'm a little sick to my stomach. I'm not a good liar, but can be firm and not give information if I know its not in my best interest. The loan has been "charged off" but is still within WF.

Please do forgive me if you posted to this prior when people have made the mistake of disclosing this information, but your very popular post is at almost 150 pages. I've been through 25. Would love it if you could guide me on what I do now. I'm going to ignore them from now on until they try and do a judgement of some sort. My goal would not be to pay more than $5000 to $6000 to settle that 2nd once it becomes unsecured debt.

Thanks so much for this forum and I very much look forward to hearing back...
 

kitkat01

LoanSafe Member
Jul 1, 2010
261
4
18
@TomEason

Sorry I'm posting here too. I did start a thread but I'd like to hear from you as well. Thank you in advanced for all your input, I really appreciate it. I couldn't have done all this without this forum. Anyways, I've posted above (#3665) and my other question is - I'm ready to make a phone call to the new company/servicer that now handles my HELOC (used to be WF). But is it ok to send them my financial info and hardship letter if/when they do ask?
 

labrn

LoanSafe Member
Jan 3, 2012
2
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0
Bothell, WA
labrn

Thanks for joining Loansafe and for your gracious remarks.

FYI, since we don't know your home's value, you will have to figure this out on your own. Start by reading post #1. If, after reading it, you still have questions, I recommend you continue reading the posts in the thread. I don't believe there are any questions that haven't already been addressed.

Good luck to you.
Hi again. Thank you for the quick reply. I was going to add my home's current value on my first post but I didn't get the chance to edit on time. Zillow values my home about $347K. We bought it at $474K in 2007.

Thank you again.
 

Ready2Run

LoanSafe Member
Aug 11, 2010
611
18
18
San Francisco Bay Area, CA
I'm ready to make a phone call to the new company/servicer that now handles my HELOC (used to be WF). But is it ok to send them my financial info and hardship letter if/when they do ask?
My first question would be.... Why are you contacting them? Have they provided you a settlement offer? If not, there is no reason to contact them and if they have given a settlement offer, then it's better to mail them a counter offer rather than speak with them.

As for financials.... Giving them financials would be similar to showing them a Poker hand during a Poker game. Others, feel it's the same as per-discovery during a lawsuit. There is nothing good that can come from showing financials. The only reason I can think of to even consider it would be to show or proved that you are an easy candidate for Ch7.
 
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jodyvs

LoanSafe Member
Jan 3, 2012
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Before I get verbally spanked I thought this forum was for settling all seconds..even ones that become unsecured debt after foreclosures. Disregard. I'll look elsewhere..
 

Ready2Run

LoanSafe Member
Aug 11, 2010
611
18
18
San Francisco Bay Area, CA
jodyvs

It sounds like you will soon have a SOJL (Sold Out Junior Loan) on your hands. This thread is for people interested in keeping their homes. You will most likely be better served at the Sold Out Junior Loan thread. http://www.loansafe.org/forum/debt-settlement/40758-sold-out-junior-loans.html

That thread is shorter and therefore I suggest you start by reading the thread. The general idea is that a SOJL is worthless and therefore paying anything on it would be a waste of money.

Good luck
 

kitkat01

LoanSafe Member
Jul 1, 2010
261
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My first question would be.... Why are you contacting them? Have they provided you a settlement offer? If not, there is no reason to contact them and if they have given a settlement offer, then it's better to mail them a counter offer rather than speak with them.

As for financials.... Giving them financials would be similar to showing them a Poker hand during a Poker game. Others, feel it's the same as per-discovery during a lawsuit. There is nothing good that can come from showing financials. The only reason I can think of to even consider it would be to show or proved that you are an easy candidate for Ch7.
The reason I say I would contact them is because I had another thread where Evan from the forum said he would contact them if it was him just to tell them that I am ready to settle. He probably said that because it has been over a year since my last payment to WF, and now the loan has been sold to a 3rd company. All I've received are letters introducing their company as the new servicer of my loan. I was just going to contact them to inform them I am willing to settle, that's all.

As for the financials, I asked that question because as I read posts here, some say that banks are not willing to settle unless they provide financial information, I think Chase is one of them. I am not planning on doing that but wanted to see what others would do. Thanks for your input.
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
85
48
SF Bay Area CA
kitkat01

Not sure why you want to follow "hearsay" advice posted by others who have never had success in settling a 2nd. But you will do what you think is best for you.

However, I recommend you read the guide at post #1. All your questions are answered there.

If you seek validation of the strategy, you might read the posts on the following thread.

http://www.loansafe.org/forum/debt-settlement/40564-success-stories-settling-2nds-4.html
 

dpf749

LoanSafe Member
Mar 5, 2011
13
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0
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.
Well all right! I called my agent again and asked him to provide a CMA. He said he will start on it right away.
 

kitkat01

LoanSafe Member
Jul 1, 2010
261
4
18
kitkat01

Not sure why you want to follow "hearsay" advice posted by others who have never had success in settling a 2nd. But you will do what you think is best for you.

However, I recommend you read the guide at post #1. All your questions are answered there.

If you seek validation of the strategy, you might read the posts on the following thread.

http://www.loansafe.org/forum/debt-settlement/40564-success-stories-settling-2nds-4.html
Thanks Tom! I really appreciate all the input I get from this forum. I don't think I coudl've done it without this forum. It's nice to know that thousands of people are on the same boat and I'm not by myself in the same situation. I will read though the guide again and the other Sucess Stories thread.

Btw, is Evan and Moe Bedard a moderator on this forum as well? that's whe Evan that I was talking about that said if it was him, he'd contact them just to inform that I want to settle. Either way, I appreciate all the input.
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
85
48
SF Bay Area CA
kitkat01

Thanks for your gracious remarks. Moe Bedard owns Loansafe; Evan is his son. Although I wear a moderator's hat, I'm an uncompensated voluntary contributor on the site.

Contrary to what Evan advises, if it were me I wouldn't communicate with your 2nd lender until they've sent you an offer. Contacting a lender to advise them you want to settle is playing a very weak hand and is a signal that you're worried. If your 2nd is underwater, they won't FC.

Bear in mind that you have the negotiating leverage here. I recommend you use it by being patient. Your lender will eventually worry they might never see any more $$ on this loan. They will get motivated enough to contact you with a settlement offer. When they do, I recommend you follow the negotiation tips in the guide.
 
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kitkat01

LoanSafe Member
Jul 1, 2010
261
4
18
TomEason
I have one more question for you and hope to get your input, and I'm done for a while until I get an update :). Not sure if you saw my earlier post about my situation but here it is. I just want to make sure that my 2nd is underwater and they won't FC on me. 1st w/ Chase $760K (modified and I'm current), 2nd was w/ WF now w/ Asset Ventures $60. And below is the letter they just sent me. I got a little worried as the title of letter says "Accelerated Foreclosure Notice". Sounds like they are accelerating my FC. Letter is below. Let me know your thoughts about the letter.

"Our records show that you account is seriously deliquent. In order to cure this past due account we will need a pyament immediately. Pls note that all partial payments must be tendered by certified check or money order. IN the event that payment is not received on or before JAN. 20th, 2012, Asset VEntures LLC has the right to accelerate the due date of the note which will lead to the initiation of FORECLOSURE and may lead to a publice sale of secured property. If the default is not cured on or beore Jan 20th, 2012, the mortgage payments will be accelerated with the full amount remaining accelerated and becming due and payable in FULL. and foreclosure proceedings will be initated at that time. As such, the failure to cure the default may result in the foreclosure and sale of your property. Please contact our office to make payment arrangements within 7 days of this notice."
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
85
48
SF Bay Area CA
No one here can give you any actionable advice without knowing your state and your home's value. If your 2nd is underwater, they won't FC. If they're in the money, I recommend you visit http://www.loansafe.org/forum/debt-settlement/41196-settling-money-2nds-4.html

For settling your underwater 2nd, you can find the answers to all your questions by visiting post #1 of this thread and following the guide.

Good luck.
 

kitkat01

LoanSafe Member
Jul 1, 2010
261
4
18
No one here can give you any actionable advice without knowing your state and your home's value. If your 2nd is underwater, they won't FC. If they're in the money, I recommend you visit http://www.loansafe.org/forum/debt-settlement/41196-settling-money-2nds-4.html

For settling your underwater 2nd, you can find the answers to all your questions by visiting post #1 of this thread and following the guide.

Good luck.
Sorry TomEason - I thought I covered that above but I guess I missed that info. Anyways, I live in CA, and my house value is about $740-760K. 1st loan amoutn is $760, 2nd is $66K.
 

subway

LoanSafe Member
Oct 13, 2011
8
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46
Hey guys! I received a 40% offer for my second,(havent paid in 2 years) to which i countered 2% but i have not heard back form the collection agency in several months (primary financial services) I am afraid to pay off any of my other debts for fear they will see it on my credit score and it will hurt my negotiations. Anyone work with these guys or can give a specific time frame of when i should recieve a counter offer? thanks!
 

TomEason

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

Thanks for your post. If it were me I wouldn't be at all concerned about activity shown on your credit report.

If your 2nd's underwater, it's not as if they have a choice in what to do. They can only wait and worry.

Unless you have a pressing reason for settling soon, I recommend you be patient and no longer even think about it until they send you another settlement offer, which could be many months from now.
 
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