2nd Settlement Question

[Mizzou13]

I have some money coming in at the end of this year or early 2011 and desperately want to try to settle my 2nd with Bank of America. Based on the below information do you believe Bank of America would even consider a settlement? I realize there is some equity right off the top but after considering foreclosure costs there would be nothing left for them. I want to stay in this home but I also want to lower my monthly payments. If I felt there was a possibility I would stop paying immediately and then make an offer after several months.

Information:
1st WF $224
2nd BOA $25K
FMV ~ $240K
Discharged 7/09, current on both 1st and 2nd, did not re-affirm either loan

[tcreegan]

Hi Mizzou13,

Is the FMV value from an appraiser that BOA would accept? If not, I would ask BOA who they use in your area, get an appraisal from them, then talk to BOA. Maybe try talking to someone in BOAs "loss mitigation" dept. Not sure if this is the right way to go, but some folks have reported that the lender did not want to talk until they had missed a few payments.

Good luck, hope BOA will work with you!

Tom in Colo

[Mizzou13]

Thanks for the response Tom. Once I miss 3-4 payments I will contact them on the appraisal. I know I will be subject to penalties, but I'm uncertain whether BOA will not be able to increase my interest rate due to the late payments as the variable rate is only 3.99% currently.

[tcreegan]

I know I will be subject to penalties just late fees right? And if you are going to settle, what difference does it make?

able to increase my interest rate this depends on the terms in your contract, can't be arbitrary

Good luck Mizzou, let us know how things turned out!

Tom in Colo

[Mizzou13]

I'm not concerned about the penalties either way. If the settlement does not work out for whatever reason, I was concerned whether BOA could increase the interest rate due to late payment. I reviewed the agreement and did not find anything specific which would increase the interest rate.

[tcreegan]

I was concerned whether BOA could increase the interest rate due to late payment Doesn't matter, you aren't going to be paying them anymore, right?

Tom in Colo

[Mizzou13]

Good question. The plan will be to work out a settlement. If for some reason we cannot reach a settlement, I will either have to pay the balance (whether that is a catch-up payment or upon selling the home) or let the house foreclose. I highly doubt BOA would foreclose based on the numbers above, but I am also not interested in letting the house go to foreclosure as I don't want to restart the three year waiting period.

[tcreegan]

The 2nd is worthless, BOA will not foreclose. Stop paying for 6 months then approach them for a settlement, pennies on the dollar. In the meantime, find a contact in the BK dept of BOA so you aren't dealing w. people who don't have the authority to do a settlement. Settlements on empty 2nds have been going down, from 10% range to 4-5% range.

Do a quick search on the forum, lots of folks in your boat,

Tom in Colo

[Ann]

Yes, mine too is an empty second. I contacted my bank last week and made an offer. She laughed and said it would never fly. I proposed a 5% settlement and was told she would call me back. That was last week and I haven't heard a thing from them. I will call again tomorrow and demand to speak with someone who can assist me with my request. No way will I go up to 10%...these people I'm dealing with are a bunch of clowns.