Settle a 2nd Mortgage with USAA?

[Chowder]

Chowder, My first is with B of A, HELOC with USAA. First is current, second is underwater with no incentive to foreclose.

BoA is the investor? They own some but generally they only service mortgages. Regardless it's good it's not the same outfit.
Still, check out Zillow and what King County has your property valued at. As long as you're below what you owe on the first, you're relatively safe.

Being under by what amounts to the value of the second gives them incentive to wait you out. And in our area values change quickly.

[Pandora]

This is interesting as I was not aware of this. If this were to happen and you settle with the JDB, and the lien still exists, what happens then?

Laura,

In order to get it released you'd have to have the org. lender take back the loan from the JDB; usually the JDB only purchases the monetary right to collect part of your loan - not the actual rights (lien). If the JDB refuses to give it back to org. lender and/or doesnt hold the lien rights OR if the org. creditor refuses to take the loan back - then you'd have to settle with both, respectively. Trick is what is the magic number each is willing to accept...the longer you wait, the more likely they'll go into the 5-20% range for settlement & release.

[laurannm]

Thanks Pandora...so I could potentially paying a settlement to both the orig lender and the JDB. Is this common?

[Chowder]

It's VERY common for a JDB to offer some settlement amount, the debtor to pay it and not have the matter settled.

[laurannm]

So am I better off not settling with the JDB altogether? sorry for all of the questions, just trying to be prepared for the various scenarios.

Although in my case, since the mtg was discharged and not reaffirmed, I would think the debt would be less attractive to a JDB since they legally cannot contact me about the debt

Thanks!

[Chowder]

There's two schools of thought. If you're significantly underwater, the Creditor/JDB has incentive to settle rather than wait the possible 5 to 10 years for values to catch up to balances owed. OR. They have nothing to lose by waiting, because it's money n the bank.

Seems like if the note holder is willing to sell the debt to some collection outfit they'd be open to a settlement.
That notion may make too much sense though.

As far as paying a JDB. I have a hard fast rule of never acknowledging their communication.
If I choose to make payments. I make them only to the original creditor.

[laurannm]

I think is a concern that I have with trying to settle. Although I am reading of more and more instances of lender's who are settling, if mine doesn't and decided to hold on to the lien, then that threat of foreclosue is always looming, even if it is 5-10 years down the road