I was right! (CA law regarding seconds)

[upward]

Hubby spoke to Wells today. They said they had started the preliminary things for the forclosure. He told her that we are upside down on both and there is negative equity. He asked her if they would have to first buy out the second, which is underwater, to get nothing. She then said, well yes that is true. He then said we would like to offer a settlement. She then gave him her fax number to send the letter to. We put something together today. Told them that we have been paying them 530.00 for the past 27 months since the discharge and would pay them another 100 a month for the next 10 months, which is over 20% of what we owed since the discharge. It's a start! Keep each other posted!

[2manybills]

My letter will be faxed in the morning. I'm going with 8 cents on the dollar for a start. I'm also including information about the foreclosure behind us that just sold at auction for about we owe on our first. I figure it can't hurt. I'll post when I hear back.

[gonetomorrow]

I am watching with excitement! I have an upsidedown HELOC with Citibank that I really want to stop paying on. My 7 was discharged over a year ago. I have saved some money to give them a lump sum. I just cannot seem to get to the right person on the phone.

[2manybills]

I am watching with excitement! I have an upsidedown HELOC with Citibank that I really want to stop paying on. My 7 was discharged over a year ago. I have saved some money to give them a lump sum. I just cannot seem to get to the right person on the phone.

I will post as soon as I hear anything from Wells. The woman on the phone said it would take about 2 weeks to hear anything.

[liboton21]

Anyone had experience with BofA. Basically, I was discharge last month on BK7. Both 1st and 2nd belongs to BofA with interest modified thru NACA. I was very underwater almost half of what I owe. I want to keep the house. Would I be able to negotiate my 2nd (65K) for a 5% or 10%?

[onwards]

Anyone had experience with BofA. Basically, I was discharge last month on BK7. Both 1st and 2nd belongs to BofA with interest modified thru NACA. I was very underwater almost half of what I owe. I want to keep the house. Would I be able to negotiate my 2nd (65K) for a 5% or 10%?

No one knows, really. There aren't any guidelines for this anywhere; it depends on your ability to negotiate with the bank, who you end up talking to, the actual circumstances of your loan, and so on.

Remember this: they don't HAVE to negotiate, they don't HAVE to work with you, but if your house is severely underwater, they also do NOT HAVE many cards to play.

[onwards]

Update

Alright, so I have an update on our situation from the more tricky one, which is USAA (the second lender).

A couple weeks ago we received the revised assessment from the county, at $441,500. We hastened to forward it to USAA to prove our point.

My wife got a call from them today. It seems that our loan was part of a portfolio they insured against default, and is now being transferred to the insurance company. At least from what she was told, and from USAA's perspective, they don't care; they are getting paid through insurance.

In about three weeks we should be able to negotiate directly with the insurance firm. Note, however, that USAA will be out of the game at that point, AND that the loss will have been recorded on the insurance firm's books. Considering their lack of option to recover ANY funds, I'm guessing our cash offer should sound pretty good to them. We'll see, but this is a pretty good turn of events as far as I can tell.

Also, in a couple days we will be making the third and final trial payment on our HAMP trial with GMAC. So I'm expecting to be having a chat with those folks in mid-august as well. All told, looks like August will bear many tidings.

[Shuganon]

The discharge really makes this a no-brainer. It's the true ace up your sleeve. Think about it; even if the bank decided to buy off the first so they could take action against you, they know in advance they can't do that (since the debt has been discharged). It's pointless. So they won't. And they can't REALLY do this out of spite, for the simple reason that it would be a breach of fiduciary duty and open them up to shareholder class action.

I have not heard of this. Are you saying the 2nd cannot buy the 1st and therefore cannot FC if they are different investors?



I see three avenues:

1) they sit on the loan until the house appreciates enough to make action worthwhile in terms of recovery (good luck with that; don't forget that the statute of limitation in many states will make this strategy self-defeating in a few years)

Is this true? I was not aware that having a lien on real property was subject to a statute of limitations. The mtg is discharged, but the lien remains.


2) they sell to a CA, with whom you deal later

3) they settle with you.

I am betting that 2 or 3 happens, because 1 carries liability. We'll see.

m

[onwards]

m

???

Was that an aborted response?

[Shuganon]

???

Was that an aborted response?

Sorry, my questions are within the quote.

[onwards]

I have not heard of this. Are you saying the 2nd cannot buy the 1st and therefore cannot FC if they are different investors?

Oh no, I'm not saying they CAN'T. I'm saying they WON'T. Think about it. The house is worth $440K according to the tax assessment. The primary loan is over $570K. Thus, the second has to pay the first $130K out of pocket in order to acquire a loan that they cannot collect against because of the discharge against that loan. That would be a breach of fiduciary duty.

Is this true? I was not aware that having a lien on real property was subject to a statute of limitations. The mtg is discharged, but the lien remains.

Sure, the lien remains, but once there is no associated debt, I can file a motion to quash, or pay them a small amount to do so themselves. It's not guaranteed to work, but the important part is that under this approach, the loss is RECORDED on their books and thus any offer I make becomes a GAIN.

That's the main point here, and why I am happy to hear about the insurance company. Due to the rules that came out during the meltdown, banks are now not required to record the loss on such loans until it is realized, which is why you have so many zombie loans and so much resistance to writing down principal. As long as the loan is on the books and "alive", it's not a loss. Once it BECOMES a loss - as, it would appears, is the case here - then any money I offer becomes a gain, a profit, and much more attractive.

[onwards]

Part I - SUCCESS!

Wanted to update my thread:

I am right now in possession of a permanent modification agreement from GMAC.

Loan is modified to a new 30 year fixed loan, with the following terms:

2% for the first 5 years
3% for the next year
4% for the next year
4.5% for the remainder of the loan

Thus, part I of the plan is successfully completed.

Also, USAA had charged off the HELOC two weeks ago, and it is now in possession of United Guaranty. I expect to be able to negotiate with them directly soon.

[onwards]

Even better!

OMGOMGOMG...

This is better than I thought.

I was reading through the entire document carefully to make sure nothing sneaky was going on. Then I hit upon a couple of interesting clauses...

... without quoting the entirety which would make this post confusing, it seems that by not distinguishing between my wife and I, the lender has also relieved HER of the financial obligation for the loan. I just checked with my lawyer and he agrees that the language is very clear on this.

Just to reiterate: I filed and was discharged under chapter 7, but my wife was NOT included. Therefore, while MY obligation was discharged, HERS was not.

I continually insisted on making sure this was respected in the loan mod, the agreement we received does indeed respect that, and the language specifically absolves me from the personal obligation to the note (quote: "except that the Note, and the payment obligation created thereunder, are not enforceable against me personally").

Here's the thing: they did not distinguish between us! we are BOTH bound by this agreement. I spoke to my lawyer and he agreed that basically, this absolves my wife of her personal obligation as well, meaning that she gets the benefit of a discharge without having to actually go through a BK.

Funny world.

[2manybills]

OMGOMGOMG...

This is better than I thought.

I was reading through the entire document carefully to make sure nothing sneaky was going on. Then I hit upon a couple of interesting clauses...

... without quoting the entirety which would make this post confusing, it seems that by not distinguishing between my wife and I, the lender has also relieved HER of the financial obligation for the loan. I just checked with my lawyer and he agrees that the language is very clear on this.

Just to reiterate: I filed and was discharged under chapter 7, but my wife was NOT included. Therefore, while MY obligation was discharged, HERS was not.

I continually insisted on making sure this was respected in the loan mod, the agreement we received does indeed respect that, and the language specifically absolves me from the personal obligation to the note (quote: "except that the Note, and the payment obligation created thereunder, are not enforceable against me personally").

Here's the thing: they did not distinguish between us! we are BOTH bound by this agreement. I spoke to my lawyer and he agreed that basically, this absolves my wife of her personal obligation as well, meaning that she gets the benefit of a discharge without having to actually go through a BK.

Funny world.

Keep us posted. I have just approached payment no. 7 missed. Hopefully Wells has charged this loan off by now. How did you find out your HELOC was charged off?

[onwards]

Keep us posted. I have just approached payment no. 7 missed. Hopefully Wells has charged this loan off by now. How did you find out your HELOC was charged off?

Credit report monitoring basically.