Trying For Over A Year To Settle Heloc With Citi Need Advice


LoanSafe Member
Mar 12, 2016
We have a charged off HELOC on our house, the charge off happened in October 2010, 3 months after we stopped making payments on the loan. We had also just filed Chapter 7 bankruptcy where we reaffirmed both the first and the second (HELOC), this was May 2010. We ignored the charged off HELOC and continued to make payments on our first.

The first is held by Citimortgage and the second is held by Citibank. About 18 months ago I contacted Realtime Resolutions to inquire about the possibility of a settlement of the second. They sent a packet requesting financial information which I did not send back.

Several months later our second was transferred back to Citibank Recovery. I have sent a total of five letters over the past year to Citibank Recovery in an attempt to settle the second. Each time I have received a letter back with a counter offer of 25% (I started with 2.5% and the last one was 5%). They are willing to settle without the financial information that Realtime Resolutions said they required, however they are staying at 25%.

We owe 295K on our first
Our HELOC is at 103K
The home is valued by our county tax office at 267K, though Zillow is now showing 520K!

I am about to write another letter to Citi to offer 10%. We are starting to feel anxious about the difference between the tax office and Zillow and would like to get the second settled quickly. We are quite certain that the tax office is low and Zillow is high, however it is quite likely that in reality our house is no longer underwater.

I guess my question is do we just keep plugging away with the slow letters or is Citi making it clear that they will not budge on 25%? Should we jump from our offer of 5% to 10%? Should we be going higher than 10%?

Thank you for any advice and information!
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Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
Southern California

The standard advice on settling your 2nd mortgage is to sit and wait it out. Do not contact them first because it puts you in a place of weakness when negotiating because the other party now knows that your real motivated to settle. That is how most LoanSafe members settled their 2nd mortgages at an amount that was more favorable for them.

With that said, there also have been many settlements made here on LoanSafe when the members did not sit and wait it out and instead contacted their mortgage servicers to work out a deal.

If I was to guesstimate the average settlement made, I would say it is right around 15% with many falling in the 10-20% range. In my opinion, any settlement made at 25% or under is a success because you are getting 75% of the debt erased. So the amount you settle at is based on what you feel is a success and at an amount that won't break the bank in your household.