Need advice on 2nd mortgage settlement

[sp114]

My Chapter 7 was discharged in '06 and I did not reaffirm my 2nd mortgage. I recently got married and we are looking for a larger house. My only problem is that I am probably upside down on my mortgage and will not be able to get enough out of my house to pay off both mortgages. Has anyone successfully asked their 2nd mortgage company to settle for 10% of the mortgage amount? I've been told that I would have a better chance of settling if I miss some payments, but there is no way that I am comfortable with that. I have never been late with a payment since the BK and I would like to keep it that way. Any advice or suggestions?

[Pandora]

My Chapter 7 was discharged in '06 and I did not reaffirm my 2nd mortgage. I have never been late with a payment since the BK and I would like to keep it that way. Any advice or suggestions?

It really doesnt matter if you're never been late - you included it in BK, so it wouldnt be reported on your credit any other way other than "IIB". As to settling with the 2nd, there have been some success stories in doing so, but as mentioned in the other thread - you will have to get them to agree to release the lien and have all the $ upfront to do so. Otherwise, you'll have issues selling the house.

Then there is the concern of can you get enough $ from the sale to pay off your 1st mortgage and any fees associated with it since you reaffirmed it. You need to ensure you get enough $ for the house before you try to settle with the 2nd; anything less on the 1st and you'll need that settlement money to pay off the 1st. To do that, you'd need to get the buyer to accept the 2nd lien by lowering the price on the house; all the while you'd still need permission from the 2nd to sell it.

[sp114]

It really doesnt matter if you're never been late - you included it in BK, so it wouldnt be reported on your credit any other way other than "IIB". As to settling with the 2nd, there have been some success stories in doing so, but as mentioned in the other thread - you will have to get them to agree to release the lien and have all the $ upfront to do so. Otherwise, you'll have issues selling the house.

Then there is the concern of can you get enough $ from the sale to pay off your 1st mortgage and any fees associated with it since you reaffirmed it. You need to ensure you get enough $ for the house before you try to settle with the 2nd; anything less on the 1st and you'll need that settlement money to pay off the 1st. To do that, you'd need to get the buyer to accept the 2nd lien by lowering the price on the house; all the while you'd still need permission from the 2nd to sell it.

I am almost positive that I will get enough to pay off the first mortgage, and maybe a very small percentage of the second, but I will still probably be about $10,000 shy of paying off both. I guess I am just hoping that I can convince the second to settle for somewhere around $1500.00. Probably wishfull thinking, but might be worth a shot.

[Pandora]

never hurts to try . Just make sure that when you go to sell it you have wiggle room; buyers usually (and its customary) request the seller pay XX towards closing costs, then you have commission on top of that - but the biggest thing you need to ensure is how your contract is worded. If a smart buyer goes into a purchase, they will have a clause stating "contingent upon passing inspection" - so what does that mean for you? Well, it could mean a few things: if it doesnt pass, you will have to fix things, you end up lowering your price or getting a lower offer than you anticipated in order to conceded to repairs (if needed) - OR - your sale falls through because major things wont pass and the lender mandates they do.

Most lenders require it pass inspection at a minimum and while the buyer pays for the inspector to come out - any repairs they request will usually come back to the seller. Tons of things to be inspected that can fail yet are mandatory (water, septic, well, radon are some, then of course you have your generals - roof, foundation, heating / air systems, etc).

Then there's always the "AS IS" contract - however many times the lender will still require something for inspection - and an "As Is" sale generally results in an extremely low price.

Some things to think about before you put it on the market....

[sp114]

I made the call and spoke with the mortgage company to start the settlement process. I faxed my settlement offer of 5% to them and waiting for a reply. I will post the results after this is done for anyone that is interested.

[2manybills]

My Chapter 7 was discharged in '06 and I did not reaffirm my 2nd mortgage. I recently got married and we are looking for a larger house. My only problem is that I am probably upside down on my mortgage and will not be able to get enough out of my house to pay off both mortgages. Has anyone successfully asked their 2nd mortgage company to settle for 10% of the mortgage amount? I've been told that I would have a better chance of settling if I miss some payments, but there is no way that I am comfortable with that. I have never been late with a payment since the BK and I would like to keep it that way. Any advice or suggestions?

Yes, I have settled my HELOC with Wells Fargo for 10% of the balance due. Once I sent my settlement offer, we settled within 3 weeks. I have until the end of July to pay the 10%, but was told that I can have until the end of August if I need it. Wells sent a confirming letter to me and confirmed that they will release the lien within two weeks of receiving the funds.

[Ann]

sp114,
I'm very interested on how this all plays out for you. If you don't mind me asking who is your 2nd mortgage with? I've tried with PNC and they are HORRIBLE to work with.

[sp114]

Yes, I have settled my HELOC with Wells Fargo for 10% of the balance due. Once I sent my settlement offer, we settled within 3 weeks. I have until the end of July to pay the 10%, but was told that I can have until the end of August if I need it. Wells sent a confirming letter to me and confirmed that they will release the lien within two weeks of receiving the funds.

That's great news! Hopefully my mortgage company will do the same.

[sp114]

For anyone interested, I received my settlement offer today from GMAC. I offered 5% and they counter offered with 10%. The check will be in the mail tomorrow morning!!!

[justbroke]

For anyone interested, I received my settlement offer today from GMAC. I offered 5% and they counter offered with 10%. The check will be in the mail tomorrow morning!!!

You mean, the check will be in the mail as soon as you receive the actual offer in writing? (Not just an email saying they'll settle, but an actual settlement agreement.) Make sure everything is detailed enough.

Congratulations on your persistence.

[sp114]

You mean, the check will be in the mail as soon as you receive the actual offer in writing? (Not just an email saying they'll settle, but an actual settlement agreement.) Make sure everything is detailed enough.

Congratulations on your persistence.

N0, I recieved the actual letter with the details yesterday. The certified check will be in the mail today.

[justbroke]

N0, I recieved the actual letter with the details yesterday. The certified check will be in the mail today.

Excellent. Just making sure!