Any successful 2nd mort. settlements after discharge?

[maddog2112]

Has anyone had any success settling a second mortgage after being discharged in a 7. I had a first and second and did not reaffirm either loan. They are both fairly current. The first is 187k and the 2nd is 76k. The home value is very close to the total of both loans. I want to keep the house. The first with wells says, just stay current no problem. Ii would like to settle the 2nd with fifth third if possible. Any success stories with similar circumstances out there? Fifth third never contacted us about reaffirming or tried to lift the stay.

[HHM]

If the home is worth about the combined value owed on the mortgages, the chances of settling are slim. 2nd mortgage settlements are viable when the value of the home is worth significantly less than the value owed on the 1st mortgage, or the value covers only a small portion of the 2nd mortgage. If the value of the home covers both the first and 2nd, there is no leverage to motivate the 2nd to settle, they are mostly or fully secured.

[maddog2112]

I talked to the guy at fifth third today, just to see what he would say. He said if we don`t pay or modify the loan, that they would charge off and send to a collection agency in 61 days. Just out of curiosity, what would happen since the 2nd is discharged? I`m sure they don`t make any money when they charge off. What could the collection agency do and would they be more willing to settle? Any experiences out there?

[CCsAreEvil]

What? You mentioned both your 1st and 2nd were included in the BK but you did not re-affirm, correct? Did you tell the guy on the phone this? Because he cannot legally mark it as a charge off on your credit report, nor can he EVER collect on this debt again. Worst they can do is force foreclosure on your property.

[HHM]

Since your "personal" liability on the loan is discharged, the bank, or any collection agency only has a foreclosure right. They have 3 choices
1. Sit on the note until you decide to sell the house.
2. If real estate prices rebound, they could always initiate a foreclosure
3. Settle, but I don't think you would be looking at 10% settlements that people are getting for undersecured mortgages.

[maddog2112]

It wouldn`t be reported as a charge off. They would just send it to some collection agency. Just out of curiosity. If a collection agency sat on the note, would interest and fees still accumulate? Would they be able to hound me?

[HHM]

It wouldn`t be reported as a charge off. They would just send it to some collection agency. Just out of curiosity. If a collection agency sat on the note, would interest and fees still accumulate? Would they be able to hound me?

Yes, interest and fees would continue to accrue, but they could not hound you for the debt (they may try), but since you have discharged the debt to you personally, the ONLY things they can do is foreclose, or hold up a potentional sale of the home.

[maddog2112]

Thanks HHM