Strategy for Settling Your 2nd

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jbutterfly3

LoanSafe Member
Aug 15, 2009
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Hi Tom,
Quick question for you.
Just to refresh, I am the client whos second lender is suing for breech of contract even though the security first rule applies.
The lawyer still has not dropped the suit and my lawyer now believe he may be striving for a judicial foreclosure???
Why would they do this when our first is 100,000 upside down and our second is completely worthless.
He says they may do it to get the judgement and therefore garnish wages... could this even be possible.
It will cost them so much money for attorney and court fees to do this, im thinking it will be less money for us to just pay the arrears and move forward as usual.. the attorney retainer is more than what we owe our bank as of now.
 

noonie

LoanSafe Member
Jun 11, 2011
163
1
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CA
I am thinking they may be trying to force you into bankruptcy, as it is a sure-fire way to avoid garnishment. Question is, do you qualify for a chapter 7? In a chapter 13, you can ask to strip off the second lien.

In my case, the same bank corp. holds the 1st and second, and not makes not one whit off difference if it is two different departments.. as it is the same bank (Wells Fargo). If the first does non-judicial in my case, the one action rule binds the 2nd.
 

jbutterfly3

LoanSafe Member
Aug 15, 2009
103
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thanks noonie, why would they force me into bankruptcy if it is a way for me to avoid garnishment? I believe they want to be able to garnish and bK would eliminate that for them.
No we aren't in any a position to qualify for BK. This is a strategic move
 

noonie

LoanSafe Member
Jun 11, 2011
163
1
0
CA
thanks noonie, why would they force me into bankruptcy if it is a way for me to avoid garnishment? I believe they want to be able to garnish and bK would eliminate that for them.
No we aren't in any a position to qualify for BK. This is a strategic move
I believe they use financials to perform a BK means test. If they run the numbers and think you can't qualify for BK, they know you won't be able to escape garnishment. This is why, to me, no HAMPster wheel divulging of financials is worth the risk.
 

GAmom

LoanSafe Member
Jan 12, 2012
26
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Home value 110k
BOA
1st Mort 137k
Purchase money-yes
BOA
2nd Mort 34k
Purchase money-yes

We are trying to decide if we should walk away from house, or just try to settle 2nd. We are not going to continue to live in house, but could rent in the meantime. Does renting affect your negotiating power on the house?
Is just defaulting on 2nd loan much better for credit than an eventual foreclosure? Would the 7.5 years start from missed payments on your credit report?
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
84
48
SF Bay Area CA
jbutterfly3

Thanks for your post. I don't remember the balance of your 2nd. But if your 2nd were to foreclose judicially (this just doesn't happen in CA), they would lose a bundle. Not only would they lose $$ after it's all done, they'd have to spend real money $$ in order to acquire the property free and clear. Banks just don't do that.

How could your attorney retainer be more than the balance of your 2nd? If that's really the case, I recommend you immediately cashier that lawyer.
 

whoopsies

LoanSafe Member
Jul 1, 2011
3
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CA
Hi Tom,

Thank you for the advice. Here's an update to my situation:

My financial situation has changed. I was laid off from my job in August. I've kept my mortgage current but have paid off the balloon payment for my HELOC. I don't think the HELOC was purchased $$ since it was used completely towards the house.

My question is what department as I suppose to be negotiating with? I started getting calls from Wells Fargo Home Preservation to see if I still needed assistance. I completely ignored those calls. I received a notice from Wells Fargo Home Equity Collections Servicing and started receiving calls from the phone number 1-515-324-8000 (although they left the return number as 1-866-992-0966). Should I be returning their calls to negotiate a charge off?

Thanks again.
Just read my last post and I think I need to get this mortgage lingo correct... whoopsies!! Are the following statements correct?:

1 My HELOC is purchase money since it went directly to the house and has never been refinanced.
2 Charge off is when the bank sends the loan to a collection agency?
3 I would need to negotiate a settlement, not charge off.

Another update. I received a certified letter from WF telling me that I may be eligible for PAYMENT RELIEF on my loan sent by the Home Equity Collections Servicing. The only options they listed in the letter are a lower interest rate, lower monthly payment and/or extension of time. I will be ignoring this letter and waiting for a settlement for a percentage of the loan.
 

Ready2Run

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

If all the money from the heloc was used to pay for the house (ie. 80/20 or similar) and you never refinanced, then yes it's purcahse money. Just make sure that in the escrow the loan money went straight to the seller and not a check to you which you then gave to the seller.

A charge off is simply an accounting term to acknowledge that the debt is most likely uncollectible. It doesn't necessarily go to a collections agency at this point. It could stay in house.

Yes, you are working on a settlement negotiation.

Ignoring that letter is probably a good idea. I have received three or four HAMP packages so far and just dated them "received on **/**/**" and file them away.
 

Ready2Run

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

Thanks for the kinds words. When I first read wolfeman's post, I thought "Wow really? I thought that info was here but maybe it was a different thread." Therefore I did a simply thread search and realized that this thread was indeed where I saw the questions answered. Therefore I decide to post the results I found and the search term to get them.

A thread of 150 pages and 3700+ post can be intimidating. Luckily we have not only the forum search function but the thread search function as well. Those make things a LOT more manageable.
OP search, the information is out there.
 

Moveon

LoanSafe Member
Jan 12, 2012
1
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State: MD
Value: $430-$$470 on market for over 1yr at $474

1st - GMAC
$450
Purchase money? Yes

2nd - BOA
$150
Purchase Money? Yes

Filed BK7 in 2009 and have not reaffirmed either the first or HELOC. We stopped paying BOA about 18 mths ago. I contacted them about 9 mths ago and was told the loan was charged off. During that call they offered to settle at 85%, which is ridiculous. I reduced my payments to GMAC to about 85% of the monthly payment amount since I figured we are really just paying rent to GMAC and the likelihood that they would foreclose would be low since they are also underwater on the property.

We really would prefer to keep the home if and would make GMAC whole if BOA would settle at a reasonable amount. I had not heard from BOA since my call 9 mths back so I sent them a letter about 2 months ago informing them that I could be contacted for settlement since I think they cannot contact me due the BK but have heard nothing.

I have read most of the thread and believe I am following the guidelines but is there anyway to kick start BOA. I fear that because the BK has precluded them from contacting me (and who knows if they received my letter or not) that I have to do something. Any advice?
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
84
48
SF Bay Area CA
Moveon

It matters not a wit whether BOA contacts you or not. Why? Because the generally accepted rule is for one to get their 1st permanently handled before worrying about the 2nd. Good luck.
 
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TomEason

LoanSafe Guide
Jun 18, 2009
12,390
84
48
SF Bay Area CA
New Posters

This thread deals only with settling 2nds. Please post accordingly.

Before posting a question here, review the Strategy Guide at post #1.

If there’s something you don’t understand in that guide, continue reading the thread, or use the thread search feature until you find your answer. Click on the “Search Thread” tab, then enter a key word / phrase.

If your situation isn’t addressed in the thread (unlikely), post a short, crisp query. Posts requesting validation of one’s individual strategy won’t be answered.

We won’t read your history, and venting isn't well received here.

State:
Property Value:
1[SUP]st[/SUP] Lender:
1[SUP]st[/SUP] Loan Balance:
Purchase money? Yes____ No____
2[SUP]nd[/SUP] Lender:
2[SUP]nd[/SUP] Loan Balance:
Purchase Money? Yes____ No____

Thanks!
 

redsoxinsocal

LoanSafe Member
Mar 28, 2010
39
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0
Lynnd - Do you have any idea why if WF charged off the loan they are still interested in what you pay the collections agency. Is it not the case that WF sold your loan to the CA and then it is up to the CA to make as much profit as they can? Also, has the CA threatened foreclosure? Can they actually foreclose, if you know?
 

scs30885

LoanSafe Member
Oct 2, 2011
7
0
0
FLORIDA
Hello Tom and all you other Gurus:

FLORIDA
PROPERTY VALUE $90,000
1ST: OWE $124,000
2ND: OWE $117,000
HAVE NOT PAID HELOC SINCE 3/1/10
CHAPTER 7 BK DISCHARGE

I communicated with CITI (2[SUP]nd[/SUP]) and told them they may only contactme for settlement purposes only. They did, and I submitted a $2000 offer assettlement just to see what happens. They proceeded to do a BPO and it cameback at $90,000.

Citi ended up rejecting my offer, but to my surprise the countered at $7000.(Thats 6%). From what I read 5%-10% is pretty good. I definitely thought they would 1st come backbetween 15%-20%.

I don't know what to do. I am thinking of countering the offer but I don't wantto get greedy and kill this whole deal. I was thinking about coming back at$3500. Do you have any suggestions on how to effectively counter?

I realize you might say wait it out, but to be honest I do not have the timebecause my money is an issue for me.

The other problem I have which is pretty major… is I don't have themoney...LOL. I realize that’s important, but wondering if any of you have heardof a bank giving somebody maybe 6-9 months to pay?


 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
84
48
SF Bay Area CA
scs30885

I suggest you send your counteroffer. Since you don't have any $$, that counter would provide a payment schedule.

Or, you might just choose to forget about ever settling this loan. That, of course, depends on your age and other factors. For those who never plan to sell, refinance or eventually leave equity to heirs, and/or plan to live in their home for the rest of their lives, a settlement might never be necessary or compelling.
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
84
48
SF Bay Area CA
redsoxinsocal

FYI, a CA is a collection agency, not a debt buyer. The owner of the debt contracts with a CA but still retains ownership.

However, if a person or entity were to actually buy that debt, then they would be legally entitled to foreclose on that loan.
 
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TomEason

LoanSafe Guide
Jun 18, 2009
12,390
84
48
SF Bay Area CA
Thread Closure

This thread has been closed to new posts as of January 13, 2012.

There have been 3,740 posts, and every conceivable question and situation has already been addressed at least once. There have been no novel questions or new situations in many months. The thread, while still very popular, has become overly long and unwieldy.

Although the thread is closed, all of the posts and information will remain accessible. It’s now an archived reference; the most comprehensive on this topic available anywhere.

Visitors can utilize the thread search tool to find answers, or just browse the pages and posts to learn more about the subject.

Here are some related threads that remain open:

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

http://www.loansafe.org/forum/debt-settlement/41196-settling-money-2nds-4.html

http://www.loansafe.org/forum/debt-settlement/40758-sold-out-junior-loans-13.html

http://www.loansafe.org/forum/debt-settlement/44308-how-handle-unwelcome-callers.html

Needless to say, should another forum member see a need, he/she is free to start a similar or related thread.
 
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