Alabama: Question about 2nd foreclosing

[tiger4life]

I have been talking to the BK department at SunTrust and trying to negotiate a cash settlement and started really low and now up to $25K but not sure how to proceed. This all started a year ago when I called about missing a payment and I told them we could not pay that missed payment, that's when she eluded to us being able to possibly offer a cash settlement.
I am still getting a vibe that the 2nd will settle but with a little nudge. I talked to a lady and they turned down my last offer of $25,000 on the $118,000 but she eluded too the $73,600 of equity they think is there, I just know there is not that much equity there but I am sure how they figure it different. I did get an address for SunTrust so that my letter unlike talking to some office girl on the phone might make it to someone that can make a decision. Letter has been sent about a week ago.
1st $180,000 -+ CURRENT
2nd $118,000 -+ Behind one payment
Total $298,000 +-
The house on the market would fetch $340,000-+
I know there is equity but after all lawyer fees and realtor fees is there really that much left.

I would like to know if I quit paying 2nd and put back payment in an account then if foreclosure started would I have time to pay it up and stop foreclosure. My main objective is to try to make them settle if even to a higher amount. I can go to about $50,000.
Also what type of lawyer would be preferred.

Thanks in advance for any help on this

[justbroke]

While discharging a mortgage (first or second) in a bankruptcy can be a good negotiating tool, you still need to be in a negotiating position.

I don't see why any lender would negotiate a settlement when you have equity above the value of all encumbrances (mortgages). I'm pretty sure they ran some sort of AVM (automated valuation method) against your home and have an idea what it is worth. that's why 10%, 15%, or even 20% is not going to work. Just think, even if they did foreclose and the place fetched $275,000 after fees and costs, that's a $115K. So, the bank is probably thinking, we can get 80% to 100% of the note.

Your position is not strong. Have you considered asking them what they would accept? If they are still saying, full value of the balance, then they are not in a negotiating mindset.

[despritfreya]

JB is right. Your second has absolutely no incentive to settle and may very well eventually foreclose if you do not stay current. I imagine that as each week goes by the value of your home increases. If you cannot afford to pay the second and cannot refinance both 1st and 2nd into one loan (not advisable) put the property on the market and at least get some money out of it (on top of the $$ you already pulled out assuming the 2nd is not a purchase money loan). Based upon your numbers, after 6% cost of sale you should net approximately $20,000.00.

Alternatively, stop paying both mortgages and bank the money. Probably, by the time the property is foreclosed you will have put in the bank more than the $20,000.00 estimated above. Just make sure you continue to pay the HOA if you have one. Only bad thing about this is that the foreclosure may show up on your CR.

Des.

[tiger4life]

Thanks guys for the advice, like I said we have sent a letter so we will see what response we get. We did have the house on the market but decided we wanted to stay in the house since we put a lot of blood, sweat, and tears in it when we built it. Hopefully we will hear back from the letter, and go from there. I might just come out and ask what if any the'll except, can't hurt.
My wife is dead set that we need to go as far as we can with this. But I know she does NOT want to loose the house.

I'll post when ever I hear back