Chances of settling second

[RickyC]

We are in the middle of chapter 7 and will have a discharge toward summer.We owe approx. 200,000 on the first and the lender seems willing to agree to forebearance which is what we would need. The amount on the second is approx. 210,000 but the house is worth around 250,000.If the second wanted to foreclose how much could they expect to get? Also,do you think they would agree to settle for around 18,000-20,000 as this would be the max. we could scrape up.I know we have the option to walk away but I would like to stay if we could.Are there any other options to work out on the second?

[Mensa1]

If I were stepping into the mind of the 2nd mtg I wouldn't settle for 20K; maybe 35K, maybe 40K, based on the numbers you provided here.

You are asking the 2nd to take a huge haircut, no make that a scalping. They will likely agree to a large haircut, but tehy probably won't agree to five you equity in the property after their settlement; (20-30K equity)

[Ugh07]

The second may very well take 10 cents on the dollar, I have seen it many times. They will not do it though if they think there is equity that they can get their hands on.

[Mensa1]

The second may very well take 10 cents on the dollar, I have seen it many times. They will not do it though if they think there is equity that they can get their hands on.

Based on the numbers provided by the OP, 10 cents on the dollar would create 30K in equity in the property.
Doubtful that this will occur in this instance. Xmas is coming but not in that fashion.

[RickyC]

Based on the numbers provided by the OP, 10 cents on the dollar would create 30K in equity in the property.
Doubtful that this will occur in this instance. Xmas is coming but not in that fashion.

Do you have any idea what would be a good proposal on the second considering the situation and numbers ?

[Mensa1]

Do you have any idea what would be a good proposal on the second considering the situation and numbers ?

Too broad of a question to even speculate on, really. The only way to know is make an offer, (low) and attempt to draw some counter offer that may give you an idea what they are thinking. The facts are that they have two choices: 1) negotiate their best price today, and this price is driven by the value of the property... so if they want to play hard ball that is the same as refusing your offer flat out, IMO. It is valued at or near what they might get if it went to sheriff sale (foreclosure), and that might be between 20-40K based on your number. 2) they could purposely decide to wait out the mkt and see if and when values return, which in turn makes their paper worth more. Not a bad strategy if values return in a year, maybe two... but if the answer is 10 yrs, then they lose big time. Time is money, which is why they will likely settle for door # 1, but don't expect them to roll over and play dead so easily.

Plan on some slow negotiating and don't get emotional over this, which is what they would like to see. You should adopt the attitude that it really doesn't matter to you whether you keep the house or ditch the house. The latter move devalues their paper/mtg, so you want them believing that you are leaning this way unless something breaks in your favor, but this should be a suttle attitude not something you plan to impress upon them in just a few phone calls or emails... it may take some time, so be prepared for that.

[RickyC]

I appreciate any help.I'm learning and dealing with something that I know very little about.I asked my attorney who the best person would be to negotiate these things was and he said I was.I was hoping for an easier answer but I'll just do my homework and hope for the best. Anyway,Thanks again

[iv65536]

I offered a proposal to settle the 2nd on mine for less than 2 cents on the dollar before discharge. Never heard back from them.

They also cannot claim to have "objective evidence of worthlessness".

[Mensa1]

I appreciate any help.I'm learning and dealing with something that I know very little about.I asked my attorney who the best person would be to negotiate these things was and he said I was.I was hoping for an easier answer but I'll just do my homework and hope for the best. Anyway,Thanks again

RickyC: I do not agree with your Atty; "you being the best person" to negotitate on your own behalf. What works best is for a negotiator to be void of emotion. Most ppl negotiating on their behalf cannot eliminate the emotion from their discussion with the lender. I would recommend someone with experience in doing this, such as a real estate investor, although most re inv's don't specialize in this either. So you need someone with experience, that is for sure. Not sure who to recommend w/o knowing where you are located. What is the value of your 2nd mtg before discount?

I offered a proposal to settle the 2nd on mine for less than 2 cents on the dollar before discharge. Never heard back from them.

They also cannot claim to have "objective evidence of worthlessness".

Wow, less than 2 cents on the dollar offered. I'm not surprised that you didn't hear anything from them. You may be proving my point of the post above.

If you were the lender, could you honestly say that you would accept the offer that you made the lender? I surely wouldn't. There comes a point in time when an offer is simply too low and not worth a lenders time to have to deal with a release and the manpower to have an honest negotiation session. Less than 2 cents on the $ seems to easily fill that space.

[RickyC]

The first is 195000and the second is 205000and they say the house is worth 256000.Zillow says 279000.How about principal reduction.Any idea what a good deal would be in that direction.