Successful 2nd Mortgage Settlements

[pcn]

[CCsAreEvil]

There is already a very recent thread that was started on this exact same question, but I'm sorry that I'm lazy to search for it.

[iv65536]

I believe I could have stripped the lien in my case; the 2nd is junior to an interest only ARM and I don't believe current value would pay off the 1st. My plan is to keep paying on the 1st and use the leverage the 1st provides. Hopefully the 2nd will agree to my proposal; otherwise, they will in all likelihood have nothing to show for it except a few hundred a month in expenses from HOA dues and taxes, not to mention their expenses from foreclosing.

[SleepWellNow]

pcn - We just received a written approval today to settle our second loan. We modified the first while in active BK with the goal of settling the second. We plan to wire the money on Monday and once the money is received by the lender, the lien will be released and the note will be considered "settled in full". I will give details as soon as the money is verified as received by the lender (I don't want to jinx anything!) We had decided if the second wouldn't settle, we would let the house go. It is a rental property.

[albacore44]

I'd like to hear rom anyone who has had their 2nd sold to a JDB post discharge, and what was the outcome

[pcn]

Still searching... Lots of claims of "It's possible to settle for 5-20% of your 2nd mortgage" but very few success stories.

FWIW, to those also searching here is one similar link:

http://www.bkforum.com/showthread.php?t=50116

[iv65536]

I'm current on the 1st, which is for more than the value of my home, and happens to be an interest-only note of 2006 vintage (no principal to be paid on the 1st until 2016). I plan to have my attorney send the 2nd a letter offering about 1.6 cents on the dollar in exchange for a lien release, using a threat to stop paying the 1st (the 2nd would get nothing in a foreclosure) to force them to settle. Not as much leverage as an option ARM would have been, but still.....

Also, the Lavelle case in the Eastern District of New York may be worth a look.

[pcn]

Also, the Lavelle case in the Eastern District of New York may be worth a look.

Yes. It is discussed over in the ch13 forum in the Lien Strip thread. Unfortunately not much support for it setting a precedence.

[chad9162]

To OP, your question is hard to answer because there are variables. The variables are the banks that hold your 2nd mortgage. Some banks are willing to negotiate some are not. My credit union told me, it was charged off and they no longer cared. They even said, You filed BK so you don't have anything to worry about. Anyways, from what I've read , its easier to deal with Junk Debt People, people who buy these loans. Usually they buy these debts for small amounts and are more willing to wheel and deal. Good luck

[pcn]

To OP, your question is hard to answer because there are variables. The variables are the banks that hold your 2nd mortgage. Some banks are willing to negotiate some are not. My credit union told me, it was charged off and they no longer cared. They even said, You filed BK so you don't have anything to worry about. Anyways, from what I've read , its easier to deal with Junk Debt People, people who buy these loans. Usually they buy these debts for small amounts and are more willing to wheel and deal. Good luck

Not really looking for variables, just those who have actually done it, and details on how they did it.
Only two choiecs: Either tried and it worked. Or, tried and it didnt work.

[Phil]

Confused

I am confused, if you didn't sign a reaffirmation for the second, and you had it discharged, how could it be sold to a junk debt collector?

[chad9162]

I am confused, if you didn't sign a reaffirmation for the second, and you had it discharged, how could it be sold to a junk debt collector?

Because the lien still survives BK. They are buying the lien (pennies on the dollar) and hoping to make some $$$ off you to remove the lien. Obviously they can demand payment but they can asked you if you want to remove the lien.

If you ever try to sell your house, guess what, that 2nd mortgage lien is still there.

[chad9162]

Not really looking for variables, just those who have actually done it, and details on how they did it.
Only two choiecs: Either tried and it worked. Or, tried and it didnt work.

WOW, nice response to someone who's trying to help you out! If you actually used the search feature you'd see others and myself talking about this exact subject matter!!! From my first post I clearly stated I tried to work something out with my 2nd. I would have gotten further talking to the wall!

The variable is the bank you are dealing with. Some Banks are willing to negotiate more than others. Its just like Loan Mods some are more willing and some are not.

You also need to be talking to the right department! Collections or Mortgage Departments want ALL monies owed. Loss Mitigation and/or BK departments want to cut their losses and get as much as they can.

I think the information you seek will be difficult to find because this is such a new strategy people are trying. Most people who are trying this strategy are using time as an ally. Banks aren't always willing to talk to you right away about losing money. Sometimes you have to discharge your liability before the bank realizes they should negotiate a settlement.

Oh and listing your Bank would be helpful.

[chad9162]

Because the lien still survives BK. They are buying the lien (pennies on the dollar) and hoping to make some $$$ off you to remove the lien. Obviously they can demand payment but they can asked you if you want to remove the lien.

If you ever try to sell your house, guess what, that 2nd mortgage lien is still there.

And it should say....can't demand payment

[chad9162]

I'm current on the 1st, which is for more than the value of my home, and happens to be an interest-only note of 2006 vintage (no principal to be paid on the 1st until 2016). I plan to have my attorney send the 2nd a letter offering about 1.6 cents on the dollar in exchange for a lien release, using a threat to stop paying the 1st (the 2nd would get nothing in a foreclosure) to force them to settle. Not as much leverage as an option ARM would have been, but still.....

Also, the Lavelle case in the Eastern District of New York may be worth a look.

I don't think that strategy will work, especially if you are current on your 1st. Banks aren't dumb they are greedy. If you have filed BK and are still current on the 1st they know you want to keep the house. Its obvious and thats their leverage. Technically, if you filed BK they already know they are getting nothing because they can't sue you. The best strategy is usually time. The more time the more willing they will negotiate and settle.