2nd mortgage sent me a letter

[albacore44]

Ok, so I was just discharged from Ch-7 5/21. Yesterday, received a letter from HSBC dated 5/19, (2nd) saying I was in default, and have 30 days to cure or loan will be accelerated. During my BK-7 HSBC never acknowledged they I had filed BK. I am 70 days past due, and I believe i am underwater, or slightly above. I think this is just the standard letter they send out. I does state, if you are in BK this is not an attempt to collect a debt.

OK so what now ??

Interesting thing, this morning I pulled my credit report, and it showed my BK-7 as Discharged 5/21, and when I paged down to HSBC it was just updated to state "account closed (Paid)" so i'm not sure what that means, I certainly did not pay them.

thanks for any advice

[neorecon]

Almost in same boat with our 2nd (Citi). Got similar letter. I think they are just preparing to move forward with foreclosure. For our situation if they did, they'd get nothing. We bought our house for 350K (96K is Citi) and the three foreclosed homes in our neighborhood which are a bit larger and newer than ours are selling for 230K... So I'm guessing they are hoping that now that we're out of BK we'll want to 'retain and pay' since we didn't reaffirm our mortgages.

If you aren't under water and there is some equity as you state, they may be more agressive...especially if they think they will get $$$. In foreclosure the primary must be paid first in the proceeds and the secondary liens get what is left over. As such your situation may be different.

[albacore44]

Almost in same boat with our 2nd (Citi). Got similar letter. I think they are just preparing to move forward with foreclosure. For our situation if they did, they'd get nothing. We bought our house for 350K (96K is Citi) and the three foreclosed homes in our neighborhood which are a bit larger and newer than ours are selling for 230K... So I'm guessing they are hoping that now that we're out of BK we'll want to 'retain and pay' since we didn't reaffirm our mortgages.

If you aren't under water and there is some equity as you state, they may be more agressive...especially if they think they will get $$$. In foreclosure the primary must be paid first in the proceeds and the secondary liens get what is left over. As such your situation may be different.

Yes, but believe the way the process works is they would have to pay off my $417k Citi 1st to take possesion, and i am paying that. I really don't think in this stage of the game they have analyzed the situation enough to decide what to do. My hope is they sell the Lein to a JDB who I can settle with in the future.

[neorecon]

I don't believe it makes a difference if you're paying the first or not. Since they have a lien on the house it is within their right to pursue foreclosure if they think there is an opportunity for them to get paid.

They would, as you suggest foreclose and pay off the first with the proceeds and take whatever is left (up to what you owed them).

If you were upside down, and your market area has homes that have been foreclosed recently that provide an idea for what that market is drawing I think your chance for them to sell it off would be higher, but when there is potential equity, they seem to get bigger daggers and bring out the wolves to get their money.

[2manybills]

Albacore: I just got the same exact letter from Wells. It says I have until 6/18 to bring the account up to date or they will accelerate their rights. I think this is just part of their form letters that they send out. I'm going to call the guy that I've been dealing, I will keep you posted.

[Brazzy]

Sounds like a standard default letter, typically required by state law. They have to go out and set a deadline. Once the deadline is not met the bank can move forward with foreclosure or repossession.

[albacore44]

Well i did some strategic thinking and some research today, and i really believe nothing is going anywhere. About 1 in 5 homes in my neighborhood are in some process of Foreclosure and more coming, driving values down. the tax assesors website has my property valued right at what I owe on the 1st. I think if they take a close look they would realize they would get nothing, so they will just wait or offer to settle. who knows ?? nothing about banks makes sense, if it did we would not be in this housing crisis.

On top of that with my BK discharge, they have no other recourse but to foreclose and collect nothing. so i would imagine they will just charge it off and wait for me to settle (I hope). i still have some money in my 401k left to settle if they will be reasonable

[WanabeFree]

Well i did some strategic thinking and some research today, and i really believe nothing is going anywhere. About 1 in 5 homes in my neighborhood are in some process of Foreclosure and more coming, driving values down. the tax assesors website has my property valued right at what I owe on the 1st. I think if they take a close look they would realize they would get nothing, so they will just wait or offer to settle. who knows ?? nothing about banks makes sense, if it did we would not be in this housing crisis.

On top of that with my BK discharge, they have no other recourse but to foreclose and collect nothing. so i would imagine they will just charge it off and wait for me to settle (I hope). i still have some money in my 401k left to settle if they will be reasonable

Hey Albacore,
We have been in touch over on another forum.
I have been thinking about your situation and it occurs to me that perhaps they (HSBC) believe you are now in a better position to pay now that you are or they knew you were soon to be post BK. I know you said they sent there notice a few days prior to your discharge but I have to believe they probably new the situation even though they did not acknowledge it.
They could be willing to proceed with a Foreclosure now because even if you have little or no equity for them to collect now, you are now basically debt free accept your for your mortgages. They could even do a judicial foreclosure and seek wage garnishments or seize any assets you might have protected in BK. As I understand it you now have no options to protect any assets other then filing a new BK13? This is one of the reasons I have not Filed BK yet is I want to hold that last card till the very end.
I am not trying to scare you or anything but my take on HSBC is they do not play with the same deck of cards that other lenders do. They seem to be ruthless and do not want to give an inch, If they smell blood they may well attack. I don't have a crystal ball and really am just guessing here so take it for what its worth.
Good Luck, Dave

[newbie2]

Hey Albacore,
They could even do a judicial foreclosure and seek wage garnishments or seize any assets you might have protected in BK. As I understand it you now have no options to protect any assets other then filing a new BK13? This is one of the reasons I have not Filed BK yet is I want to hold that last card till the very end.

Good Luck, Dave

No. They cannot collect on the debt anymore, it doesn't exist. The note was discharged in bankruptcy. No wage garnishment, no asset seizure, no $200 and pass go.

The only thing they can do is foreclose, and that would be incredibly stupid considering they have to pay off the 1st lienholder.

[WanabeFree]

No. They cannot collect on the debt anymore, it doesn't exist. The note was discharged in bankruptcy. No wage garnishment, no asset seizure, no $200 and pass go.

The only thing they can do is foreclose, and that would be incredibly stupid considering they have to pay off the 1st lienholder.

Now that I think about it I guess you are correct about the debt being discharged and noncollectable accept for foreclosure. This may all be a scare tactic or first step to foreclosure with HSBC who knows.

[2manybills]

Now that I think about it I guess you are correct about the debt being discharged and noncollectable accept for foreclosure. This may all be a scare tactic or first step to foreclosure with HSBC who knows.

I think Brazzy is right, this is a letter that they are required to send by law to protect their rights. I got the very same thing from Wells.