Settle a 2nd mortgage

[jenbow]

I have been reading that sometimes its possible to settle the 2nd mortgage by offering a 10% settlement.. do people normally do this before or after filing chapter 7?

I have about $20K in a rollover 401K that I was thinking I can take out, pay the penalties and interest and then give the bank $12,000 or so to settle for my second that is about $100,000.

This sounds like I might be dreaming as I cannot think that BOA will take this offer but my house is appraising for $120 and I owe $200,00 on the first. We had put about $80,000 in upgrades so we will never get our money back and we love our house to death.

Thanks all for information. This board has been a lifesaver and I am reading it constantly. I feel I am on a scavenger hunt...

[iv65536]

The way I view it, what you are offering them is the opportunity to get a sure thing, knowing full well you can make sure they get absolutely nothing if they don't agree o terms.

[Brazzy]

The way I view it, what you are offering them is the opportunity to get a sure thing, knowing full well you can make sure they get absolutely nothing if they don't agree o terms.

Can tell you up front. Thats not how they think.

[browneyes]

Consider a chapter 13

Depending on your situation, if the second mortgage is completely underwater, the 13 would save you from the second mortgage, and your payments on unsecured depend on your residual income. I have heard of people that file chapter 13s just for this reason with no payback on unsecured. Search the board, consult your attorney, just a thought.

[daytona]

Here's the thing...real estate values would have to come back A LOT in many cases to ever make it worthwile for the 2nd to foreclose...When you start getting 50k+ over the 1st then maybe...you have a long time to save and try to settle with the 2nd...they are not going to foreclose and they cannot garnish, sieze assets, etc unless they foreclose as they are "considered" secured.....If you don't reaffirm then they are even less likely IMO as they can't get anything from you...their ONLY out is if the value of the home makes it worthwile to foreclose....Technically, you could let the 2nd sit for 5-10yrs or more...again until it is worthwhile for them to take it back...look at it this way, either you will be able to settle "eventually" or they can have their collateral (much) later...Obviously you will never be able to Refi the 1st, as the 2nd would never agree to re-subordinate... What's interesting to me with all the HAMP mods is why would anyone ever "refi" a HAMP as most lock you into 30-40yr financing at ~5%....if you ever have to move for a job change, etc then just give the bank the house and get on with you life....2nd's are in a world of hurt for a long time and in the case of Ch7 no reaffirm, they can never recover their loan.....unless of course values come back....

[jenbow]

thank you so much for your input. this is going to be a long road. I really hope that it works out that I can settle my 2nd.. then I can feel right about keeping my house. otherwise, I really need to let it go as many people say its a business decision. I keep wanting to make an emotional decision

[CCsAreEvil]

Today, Zillow claims my home to be $15-20k over my first (which might be a load of crap). So, I'm still "sitting" on the 2nd while I keep paying my 1st. Stopped paying my 2nd 6 months ago.

Having the "option" to walk away at any point in the future is an interesting feeling. For the time being, we are staying. We probably won't offer a settlement to the 2nd at least for another 6 months or maybe even a year. Who knows if they will force foreclosure on us. If they do, good luck to them. They will waste their resources and get almost nothing in the end. If we receive a NOD from the 2nd (which I doubt but we are definitely taking the risk of them doing so by not paying), we'll just stop paying the 1st at that point and move elsewhere.

Having home prices depressed is actually a good thing for those of us who are post-BK who don't want to continue paying on an upside down loan (when the 2nd mortgage is factored in). Heck, in our case, our 2nd is a HELOC and we'd be paying interest only. The balance would only come down if we paid towards the principal.

Eventually, we'll try to offer 5% and then if they don't accept, move towards 10%. However, I can't see the gain in paying over 10% of what's owed.

Personally, I think home prices (in general) will not being going up in the next couple of years. The economy has been struggling and from what I can tell, is still struggling.