What are my chances?

[BCA2009]

I have a 145K first and a 136K second. I should be discharged in mid April. I am not re-affirming. The house is worth between 195 -205 (I think). so the second is upside down about 80K. After discharge I would like to try to negotiate a settlement on the second. I can get about 30K from my parents.

So has anybody tried to settle a second where there was equity? If they would take 30K (I would start with less negotiate up if necessary) they would be getting about 50% of their equity. But if they had to foreclose instead of accepting a settlement, they would obviously have to buy out the first, pay foreclosure costs, pay realtor fees to re-sell it, etc. So I don't think they could come out any better than 30K anyway.

If I can't settle, I still want to stay in the house.

1) In order to get in a position to settle, I would have to miss at least 3 or four payments. If I miss those payments and they won't settle, will they let me catch up and get current again? I assume so, but since I'm not re-affirming do some banks automatically foreclose after 3 or 4 payments are missed?

I am about 30 days from discharge. I am an asset case, so the case will not be closed for a while.

2) If I choose to try this settlement route, can I stop making payments now? Could that affect my discharge? I need the payment amount on my means test to qualify for BK. If I stopped paying could the trustee re-evaluate the means test?

3) Is there anything the bank would do? Like notify the court that I have stopped making payments?

I'm kinda thinking that I should continue to make payments until I am discharged, they quit making them. But I'd hate to waste 2 months payments if I could avoid it.

In the end, I'll want to stay in the house even if I can't settle. I will put the payments in savings in case I have to catch back up.

thanks fo any thoughs/advice,

[Mensa1]

No effect on your discharge if you stop paying the 2nd now. The TT could care less about this, since the house is under h2o. I would start being delinquent asap because that is what will motivate them to settle.

Do you mind saying who is the mtg holder on your 1st and 2nd mtgs? May have had some experience in negotiating with them, which could shed some light on things for you. The one thing that will make this somewhat more difficult than the avg roll-up of a 2nd mtg is that the 2nd is in an equity position, even worst case. Your assessment of the lender having to payoff the 1st mtg if they foreclose isn't always accurate. A 2nd mtg can foreclose "subject to" the Sr mtg, which means the 1st mtg is till there and in tact and anyone buying at foreclosure sale is essentially just buying the 2nd mtg position, not the property. Technical I know, but it is possible to do it that way. What state are you located, as this also varies from state to state, but it is a function of how the suit or complaint is written and what they are attempting to accomplish. They can also foreclose just as you described and payoff the 1st mtg too.

Your negotiations may also depend on whether the 2nd mtg is insured by any PMI. If so then it involves another layer to negotiate with and it insulates the lender from losses, so they could be less motivated to deal with it, they jsut collect on their ins. The loan could be insured and you know nothing of it because it could be lender paid PMI.

What the 2nd mtg lender will do upon your default is to run a credit bureau on you and they will see that you are still current on your 1st mtg. With them in an equity position this will tell them certain things about how they may negotiate with you. Did you reaffirm your 1st mtg? Is not, you may also consider missing an equal number of payments on the 1st (of course bankrollinng the pymts to catch-up later). You have to look the part of someone who is going to default, and if the pymts on the 1st are current the 2nd mtg may not be rattled...

Oh well, I am rambling here, but suffice it to say you can prelly settle this thing; not confident on the 30K number. At sale there would be 40-50K or so for the 2nd and they aren't likely to accept less than that, IMO. But purely a guess at this point.

[BCA2009]

Thanks Mensa for the info. I live in Florida. My first is with BOA and Second is with Chase. I have not re-affirmed either loan.

I have read all of the closing documents and there is no reference to PMI in there. If they took it out themsevles, is there anyway I could find that out? Probably not I guess.

I really want to stay in the house even if I have to keep paying both, so I don't want to jeopardize that. I couldn't rent something that would fit us for any less than I'm paying now on both notes. But I am not going to re-affirm because who know wht the future brings and I'd really like to get out of the second.


I really apprecaite your input.

[Mensa1]

First off, Chase is a bear to deal with. I really don't think you will have much success until you force them into a corner; high stakes poker with your house.

So ideally the best thing to do (and I am just talking out loud here, not really suggesting this at the moment w/o lots more research to be done), would be to strategically default on BOTH mtgs........ yes, I know you are nervous about it. That way they can look and see that both loans are in default. You are bank rolling the pymnts for catch-up upon buyout or settlement. Actually I would default in the 2nd mtg first, wait 3 months then default on the 1st....

Somewhere down the road Chase will prolly sell the paper to a JDB. Once it is in the hands of the other party you will have your best chance for a settlement. Chase is just too darned big to give a darn, really. So it is going to be a journey, no... make that an excursion, to get this done. it isn't going to happen with a phone call or two.

For your info, I actually have and do buy defaulted 1st and 2nd mtg from lenders such as above, so I know the process that they go thru here. I have never dealt with Chase so I can't offer any specifics there except that I know they are horrendous to deal with in every case.

What I would do if I were you (assuming you know your way around the courthouse a bit) is to research assignments of mtgs from Chase to ???? See if you can p/u any kind of a pattern there. Also check for foreclosure lawsuits that have been filed by Chase, and I would specifically only focus on 2nd position mtgs foreclosed. You may not find any, which would be encouraging. There is much to be learned here by spending a day, two or three combing over docs in the courthouse. Better than just winging it, which I do not suggest. I would be far better to have an idea of how they will react to your default. The biggest negative here is that your situation is much different than the typical 2nd that is completely under h2o since there is still 50K of equity.

What county are you located, if you don't mind... or pm me if you would rather not post that. Maybe I can find some specifics about Chase in that county via online search; not sure.

[BCA2009]

PM sent

[BCA2009]

Another interesting fact. Which I don't know if it makes any difference. I got a letter from chase (on my HELOC) on monday of this week that said my loan had been sold. I can't remember the name of the new lender, it was just a bunch of letters. I remember it started with a C. Somthing like CNDI, I will look tonight. It said to keep mailing payments to the same address and that nothing would change.

I was wondering if this is some sub group of chase that they transfer BK loans to for accounting reasons or something. I can't imagine a company buying loans that are in active BK. At this point I haven't missed a payment. And I indicated I was going to re-affirm on my BK documents. How would chase value a loan in this situation?

Mensa, Are you familiar with this? I'll find out the exact name of the new comapny and post it.

Also I didn't receive a statemnt for this billing cycle. I did for the first two months after I filed. I find it weird that 2/3rd's of the way thru the BK that they stopped sending statements. My payments are interest only so the payment viaries slightly month to month so I need a statemtnto see what I owe.

I assumed the missing statement might related to my loan be sold. Who knows???

[SMinGA]

Quick question - since the mortgages are NOT reaffirmed, there should be no late payments reported. I think I'm right on this which would mean #2 would not know if you're paying #1 or not.

[BCA2009]

Quick question - since the mortgages are NOT reaffirmed, there should be no late payments reported. I think I'm right on this which would mean #2 would not know if you're paying #1 or not.

I hadn't even gave that any thought, I wonder how the first would know? they might have some other listing or somethig where they share that kind of information. I really don't know.

[Mensa1]

The fact that Chase has SOLD or maybe internally transferred the loan is a good thing, IMO. Once you have the exact name we can figure out more from there about internal or arms length transfer.

I was poking around elsewhere and found this thread that you may wish to read, it mentions Chase transferring 2nd mtg to Oxford, and that maybe they were just an agent for Chase; hard to tell.

The fact that they haven't sent you a statement is also good IMO. I would sit tight and see what gives.

Another stratgegy that you might consider... if resources were available, is to engineer and internally controlled short sale. That is if you had someone that would be able to pay off the 1st mtg or refi in their name... like parent or sibling. If so, I would wait a while, again not paying the 2nd... then come up with purchase agreement selling the property to xyz entity for $ 165K lets say. Present that offer to 2nd for short sale, then negotiate away and see what they are willing to do as to discount. Now you may not even intend to complete the short sale, if and when they agreed to a number that was doable to you for the 2nd, then xyz could simply offer to purchase the note and mtg for the appx net to the 2nd mtg holder. It is a way to find out the answer of what they are willing to take, then change the rules of the game on them mid-stream.

That is what I would tend to lean towards at this point.

SMinGA is correct about the 1st and 2nd no longer reporting to cra. I had forgotten that as I wrote my diatribe before. Good catch SMin... gotta keep me on my toes... LOL

[BCA2009]

More information:

The letter I received earlier this week says:

"Your mortgage loan has been sold or transferred to CPCC Delaware Business Trust, (Chase). Chase is the New Creditor of your loan."

But my original loan was with Chase Home Financial LLC. So I guess it is a shell game moving the loan from one entity within Chase to another.

It also says the the loan transfer will be recorded in the county where the property is located. So it is a legitimate transfer of ownership.

I just curious as to the reason of selling the loan while in BK. Anyone else have there Chase loan sold from one chase entity to another while in BK?

Thanks,

[Mensa1]

CPCC = Chase Preferred Capital Corp

The entity is formed as an REIT, and as such is a separate company, the value of which Chase simply needs to report the net asset value of the stock. The transfer of you mtg to CPCC essentially gets the mtg off the books for Chase and onto a wholly owned entities books. I would think that it eliminates some questions that they may have to answer as to default rate, etc in the eyes of the Bank Examiner, ala FDIC. It is essentially suspending the asset into a hermetically sealed room so that they only deal with the financial fallout and not the regulatory fallout. Smart.

Another point here is, if your mtg holder (now CPCC) decided to cut you a deal (ala settle, discount, short sale, etc) it in now way relates to anything that Chase did. Teh importance here is that what Banks operate on largely is reputation. If word got out that Chase made a huge discount to lots of people and I have a Chase Mtg (which I do btw), then why wouldn't I want the same deal or be motivated to stop paying, etc. Just a theory, but it seems to make a lot of sense plus be a good business move on the part of Chase. It will be interesting to note the dealings of CPCC with you vs. Chase itself. I don't think it hurts you one bit considering your goal of a decent buyout, not that they are going to settle w/o a fight.

From a 10K report filed with the SEC indicating % of ownership by Chase:

Chase Preferred Capital Corporation
Delaware 100
CPCC Delaware Statutory Trust
Delaware 100
CPCC Texas Limited Partnership
Texas 99 .5
CPCC Massachusetts Business Trust
Massachusetts 100

[BCA2009]

Thanks for the inof. I keep you posted on how it plays out.

[Mensa1]

BCA2009: I did a bit of research in your county and I find NO evidence of any action taken by CPCC, EVER. No foreclosures, no ownership, no assingments, etc. So once they complete the assignment at the county level it would be good to know the actual "legal name" that the assignment is filed in.

Currently Chase Home Finance owns 8 properties in your county. I also checked most of the foreclosure cases filed in those actions and they were ALL based on 1st mtg defaults. So unlike your situation with Chase, now CPCC, holding a 2nd mtg. So little top be gained from that info.

Once you have a little more specific info on the assignment I could do some more poking around and see if a pattern can be determined. Most of these lenders use a similar business approach in most cases and their behavour pattern is useful when determining how to negotiate with them and obtain what you want in the end. Kind of like reading the last chapter of a book and knowing how it ends before you finish. Sort of like a cheat-sheet.

[BCA2009]

Thanks again, ever bit of knowledge helps to make more informed decisions. that's awesome that you we able to find all of that out. I'll keep you posted.

[ben1381]

My Chase and Citibank Situation

I see some smart people on this thread and wonder if they have ideas for my situation. My wife and I own a house in Rockland County NY. I have 158K first mortgage with Citi and 123K with Chase. I recently had two appraisals of my property done about two months apart by the same guy,one intended for BK purposes and one to use to try and get my property taxes lowered. I currently am not in BK but plan to file CH7 in a few weeks. I've been trying for over a year to get a mortgage mod on either or both mortgages and got a one year forbearance from Chase which expires in April 2010. Any ideas on how to negotiate with either lender would be appreciated.