Settle a 2nd Mortgage with USAA?

[ual319driver]

I just filed a ch 7 last week, I called USAA today about a settlement on my second mortgage which is under water. I was told that USAA will not settle on my 2nd. has anyone experienced otherwise?
Thanks!!!

[Pandora]

Its way to early to try to settle since you just filed BK last week. There are many areas that come into play when attempting to settle a 2nd; how upside down are you from loan-to-value on the 1st? How far behind are you thus far in payments to either lender (1st or 2nd)? If there is a chance of any equity in your house, that needs to be taken into account. Remember that a junior lien holder can foreclose any time they desire and that them accepting your offer to settle isnt fixed in stone.

It appears more and more junior lien holders are deciding to hold onto their claim vs. settle, that way they have the option to foreclose later down the line.

[ual319driver]

Thanks for the reply Pandora, I bought the house at the very Peak of the market in Seattle. Purchased for 492k, 1st is current, balance of 378k. My second is 98k and 60 days past due. I estimate the house is worth 350k, considering the Case Schiller Index is down about 30% in Seattle from the peak. When I spoke with USAA today the person on the phone readily agreed that they had no incentive to foreclose, and admitted the second was underwater. He stated that USAA has a policy that they will not settle on Second Mortgages. I assume that means they will sit on it until I sell or the house appreciates enough to warrant foreclosure. Is there a possibility that they will eventually sell the debt to a JDB? Perhaps I will have to wait to try to settle with CA or JDB. I am not reaffirming either mortgage and plan to pay and stay on the first mortgage.

[ual319driver]

Another question concerning the 2nd mortgage. I understand it varies from district, but what's the consensus on doing a ch13 after discharge from the ch7 with the purpose of doing a Lien Strip on the second? I've had two different answers from different attorneys in my district. How can I find out what the rules are in my district (Western Washington)
Thanks!

[laurannm]

Agreed with everyone else, way too early settle, and it all depends on how far behind are you on the 2nd and how much equity to you have (if any). However, I do disagree with the poster above though, just judging by many of the posts on this forum and other boards, we are seeing the opposite....junior lien holders (in which there is no equity) will try to use scare tactics to get you to pay, but in the end they will eventually show interest in settling. Lenders are beginning to understand that the chances of house values coming back anytime soon are slim to none, if they ever come back to the levels there were once at

[ual319driver]

Thanks laurannm, I think the best course of action for me now is to wait out the second lien holder and save my money in an attempt to settle later. Thanks to all who contribute to this site, I have been reading bk forum for almost a year in prep. for my bk. It has been invaluable. Knowledge Is Power!

[HHM]

At a minimum, you MUST wait to discharge anyway. The 2nd mortgage isn't even allowed to talk to you at this point.

Whether USAA settles or not, don't know. But you need to wait for discharge. Also, you probably weren't talking to the right people anyway.

[Pandora]

Is there a possibility that they will eventually sell the debt to a JDB? Perhaps I will have to wait to try to settle with CA or JDB.

Its possible, as many do - however be aware that if that occurs many times the rights to the lien are not transferred, which means that in order to release the lien you will have to get the org. creditor to take the debt back from the JDB. Rarely does that happen as most JDB's realize if they fail to get payment & agree to let org. creditor buy it back, they've failed at their job. Even if sold to JDB, the lien will remain on the property, so be aware of that.

As to filing a Ch. 13 to strip the 2nd after doing a 7 - it varies apparently. In my area, in order to strip a junior lien you must receive a discharge, so to go from a 7 to a 13, no discharge can be granted as timeframes apply between filings. There have been others on the forum that apparently have effectively done a Ch. 20 (7/13) and been approved for lien strip without a discharge. Guess it just depends on area/district.

[sealpup]

We had our 2nd mortgage with USAA. We were about 3 payments behind, and they filed a claim with United Guaranty and they are the ones that now own our mortgage. It's possible that they don't settle b/c they know they can file a claim with their insurance. You might check your loan documents, I think it says somewhere in there if they have insurance on the loan. If your loan ends up with United Guaranty, try to talk them down on your interest rate. Our original rate with USAA was 10.75%, when we were behind they temporarily lowered it to 5%. When it got transferred to UG, they thought that was our original rate and then offered us 3%. I haven't tried, but I have heard UG doesn't settle. Good luck!

[ual319driver]

Thanks all for the input! Is there a way I can find out the possibility of a ch20 (7/13) in my district? How do I research the case law in my district to see if it is possible?

[ual319driver]

Sealpup, I'm trying to figure out if my HELOC with USAA is Insured with United Guaranty. Did your monthly statements show that you were paying Private Mortgage Insurance? My loan with USAA is actually a HELOC, and I've never paid a PMI premium. Would USAA take out a PMI policy on my HELOC without my knowledge?

[Chowder]

Thanks for the reply Pandora, I bought the house at the very Peak of the market in Seattle. Purchased for 492k, 1st is current, balance of 378k. My second is 98k and 60 days past due. I estimate the house is worth 350k, considering the Case Schiller Index is down about 30% in Seattle from the peak.

First. Hello from the Olympic Peninsula.
Second. Look up your place on Zillow. The trustees (and other RE pros) around these parts use it. You'll get a close idea what your equity is, if any, as far as your first mortgage. Important info, is USAA the investor on the first.... They probably are on the second. If they hold the first too....well. You may not want to play chicken with them.

[Ann]

Just last week I gave all the information to my second mortgage company, PNC, to settle. They told me it would be about 10 days before I would learn of their decision. I was emailed on Friday that my file was moving forward. Just playing the waiting game now. I do not look for them to accept my offer. PNC are really hard to work with by my own experience and those of others who have attempted to settle with them. I will tell you my outcome when I get their answer. Good luck!

[ual319driver]

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

[laurannm]

[QUOTE=Pandora;512738]Its possible, as many do - however be aware that if that occurs many times the rights to the lien are not transferred, which means that in order to release the lien you will have to get the org. creditor to take the debt back from the JDB. Rarely does that happen as most JDB's realize if they fail to get payment & agree to let org. creditor buy it back, they've failed at their job. Even if sold to JDB, the lien will remain on the property, so be aware of that.

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?