second mortgage settlement

[carlos74]

Hi folks,

I was discharged of Chapter 7 in 2007, didn't reaffirm any of my two mortgages. I stopped paying the second one over a year ago. After reading several posts here I've called SunTrust bankruptcy department which holds my first fixed rate loan and my second (equity line) to offer a settlement on the second one for 5%. I owe 104000 0n the first one and 29000 on second one; my home value is around 124000. The person told me that a settlement will be at least for 9000 because of the home value and the amount owed. I've explained this was my last chance for me to stay in the home; otherwise I will have to walk out. I told her that there was a home trying to sale for over two years without luck two houses from me and also 2 foreclosures in the same area. She told me they will send someone to investigate the true value of my home. She took a verbal offer and asks me to call back in a week.

Based on your own experiences, do you think they will take the offer? Or should I just walk out?

[Drazil65]

Get it in writing and DO NOT count on it until you get it in writing! Good Luck!

[HHM]

5% is a bit optimistic especially on a low balance 2nd, ($1,450 on a $29,000 note, that is a tough sell no matter how upside down the house); 10% is more realistic. And even then, still tough. The lower the balance of the 2nd, the harder it is to get small "percentage" settlements. Understand, they can go sell this debt on the junk debt market for about $2,000-$4,350 right now, believe it or not.

[Jf24]

I thought is was not possible to settle 2nd if both are from the same lender. Or is it just harder, depending on the lender?

[HHM]

I thought is was not possible to settle 2nd if both are from the same lender. Or is it just harder, depending on the lender?

Except for true in house loans, which are rare. (generally only see those with credit unions and even then, not that common), the fact that the mortgages are being "serviced" by the same company does not really impact the ability to settle. Reason being, the investors behind the mortgage (and therefore the investor guidelines) are different. Also, in this particular case, the OP has not being paying on the 2nd for some time, so if there were going to be issues, they would have surfaced. I just think, given the amount of the 2nd, a true "low ball" settlement is not likely, I am thinking more in the range of $3,000-$5000 will be the "true" settlement point for the lender.

[Jf24]

I'm with Navy Federal Credit union so my chances are even more slim? Owe $55000 on 2nd and behind 5 months. Filing 7 end of this month.

[btbeme]

Most second lien holders get reimbursed and accept payoffs of around $3000-5000 from the first mortgage holder when the house is sold at short sale. As HHM says above, they can get that or more from a debt buyer. Settling for less than that range would be tough to do.

[carlos74]

Ok thanks guys, I will keep you posted once I call on monday. Wish me luck!!!!

[HHM]

I hope I am wrong, I hope you get a settlement that makes sense.

[carlos74]

Updated: Bank offered 4000.00 settlement and my final counter offer was 3500.00. Waiting for answer!

[HHM]

Cool, keep us posted.

[carlos74]

They just called me with positive news. They took the 3500 offer and will send me a letter for me to pay in 15 days.
The problem is I don't have the money and will have to borrow it. The good news is I only owe 104000 on the first one and the home value is 125000.

[HHM]

The problem is I don't have the money and will have to borrow it.

LOL, the 1st rule of settlement is to "have" the money.

Good settlement, 12% For a low value 2nd on a house that is not completely upside down, that is a good deal. Hopefully you can get the money.

[carlos74]

trust me, I will!!!, thanks for all the help!!!

[carlos74]

Ok, I received the letter and they don't mention that the deed of trust will be released at the county office. They will accept a full settlement for 3500. It says that they agree to forgo any collections activities related to this acct. They also mention about the 1099-C. Filed and discharged BK chapter 7 in 2007. Mortgages were never reaffirmed.

Should I just send the certified check or ask for a new letter clarifying the deed part?