charged off 2nd settlement question

[RickyC]

After our chapter 7 we wanted to see if we could keep the house.We called the 2 banks holding the 1st and the 2nd and the first said to send in the income info. and so on.The second mortgage bank said if you modify your 1st then call us back and they would work on it.They said it was a waste of time if the 1st didn't go through.Anyway the first was modified(extended term) and I called the 2nd back and they said it went to discharge.I called them later and asked if I could offer a settlement and they said that would be great.The house is worth (zillow) 300,000 and the first is 205,000.The 2nd is for 211,000.I'm hoping to offer 25,000 to 50,000 to settle. My question is should I apply for a home equity loan to see if or how much we qualify for, or offer and confirm a settlement amount after which I would have 30 days to come up with the money? Would applying for a loan look bad to the bank we are offering a settlement?

[2manybills]

After our chapter 7 we wanted to see if we could keep the house.We called the 2 banks holding the 1st and the 2nd and the first said to send in the income info. and so on.The second mortgage bank said if you modify your 1st then call us back and they would work on it.They said it was a waste of time if the 1st didn't go through.Anyway the first was modified(extended term) and I called the 2nd back and they said it went to discharge.I called them later and asked if I could offer a settlement and they said that would be great.The house is worth (zillow) 300,000 and the first is 205,000.The 2nd is for 211,000.I'm hoping to offer 25,000 to 50,000 to settle. My question is should I apply for a home equity loan to see if or how much we qualify for, or offer and confirm a settlement amount after which I would have 30 days to come up with the money? Would applying for a loan look bad to the bank we are offering a settlement?

Yes, I doubt that they are going to approve that. They do ask where you are getting the money from. So far in all of the emails, I have read, it is more about a hardship type of offer. If they think you can borrow money to pay them off, they will keep on uping the amount they want for settlement.

[SMinGA]

1st, you need a more accurate appraisal value than Zillow.

2nd, if your home really is worth $300k and you only owe $205k on your 1st, you have a big problem. There is equity in the 2nd, and a good bit. Why would they take $25k as a settlement when they could foreclose and net $50-75k after selling costs?

3rd, a home equity loan would be a 3rd mortgage when you have no equity in the house. You won't have equity unless the 2nd releases the lien. (And generally 2nd lien releases happen when you're upside down on the 1st.) I don't think a bank is going to lend you money on the house when you currently owe more than its worth AND you just came out of bankruptcy.

[Phil]

Did you reaffirm your first and second? If you didn't, why would you immediately turn around out of bankruptcy and put yourself in a situation by having that much debt on a house you didn't reaffirm? If something happens where you can't make your payment, you can walk, but not if you take out another loan.

[RickyC]

Did you reaffirm your first and second? If you didn't, why would you immediately turn around out of bankruptcy and put yourself in a situation by having that much debt on a house you didn't reaffirm? If something happens where you can't make your payment, you can walk, but not if you take out another loan.

no,we did not reaffirm anything. We were just trying to keep the house and get the 1st and 2nd below the value of the house.Our attorney advised us to walk but I'd rather go down swinging.

[SMinGA]

I'm still wondering how you expect to get a home equity loan when you already owe more than the house is worth?

[cantbreathe]

I had a professional Realtor come out and give us a CMA and actually checked it against our county tax records and they were right on. (38K less than we purchased for just 3 years ago!!! Good luck Ricky! I would love to keep our home , if possible, and pay what it is now worth. We are currently attempting a mod and are in the "we are working on it" stage with the mortgager BOA. I have resigned that it just may not happen. The hardest thing for me, really, forget the "stuff" , come and get it. It's less for me to have to move after being beaten by the economy, with my poor , tired mind and body! I can't see being acceptedrenting an apartment after a CH7, with my 3 dogs and a cat. They are like children to me. THAT scares me.

[tcreegan]

Holding house too long

Hello all, some observations.....

Over and over in this forum I have read about people trying to hold on to a house that is upside down and more debt than they can really afford.

Over and over I have read about people that finally let go of the house and move to something they can afford. In the meantime they spend a lot of $$ on mortgage payments.

Over and over I have read about people that quit paying the mortgage and live in the house until foreclosure, saving all the $$ they would have spent on mortgage payments.

RickyC.....GOOD move not reaffirming. Bad place financially.

BUT...did the modification require signing new papers? That moves the mortgage out from under the BK.....bad....

More debt to settle the 2nd, can you really afford that? Think about it.....

Good luck with everything,

Tom in Colo

[RickyC]

The loan mod docs. included a BK disclosure rider that states the loan mod does not affect our discharge.Our attorney would not let us sign it otherwise.Our 1st loan payment is less than rent elsewhere would be.I know very little about any of this stuff,but so far things have worked out in our favor which is why I still have some hope.We won't stay in the house if it remains upside down.As far as a 3rd mortgage it would only be used to settle and remove the lien on the original discharged 2nd.I suppose they are not supposed to do that but with the current situation so prevalent maybe they might bend the rules a little bit,I don't know.All I can do is try and if things fail just move on(maybe its time?)