Question on Settling 2nd with Citi-Still Want to keep home.

[my2girls]

Hi,

First, I want to state we want to stay in our home. We are current on our first mortgage with WF. I've been reading on (loansafe.org) that you can settle your 2nd (our house is underwater) for a pretty small percentage of what you owe. My fear comes in that I don't want to jeporadize foreclosure because we are in default (about 90 days) on the 2nd. They are recommending playing the "waiting game" until an amount can be agreed upon. Is it really unlikely they'll foreclose b/c they are already out the $$. Any experience or thoughts on this?

I know the recommendation is to get out of a underwater home but we are determined to stay.

[HHM]

How underwater are we talking about?

Unless you file a BK and discharge your personal liability on the 2nd mortgage, it is actually very difficult to get the 2nd mortgage to settle. After all, they can eventually sue you personally and go after other assets, which is becoming much more common. This blog post outlines the overall strategy.
http://www.**********.com/blog/2011/...-7-bankruptcy/

I am sure there may be settlements of 2nd mortgage occurring without the need to file BK (probably only in non-recourse states); but despite all the internet hoopla (loansafe.org, etc) the only people that I have seen "actually" do a settlement have filed chapter 7 bankruptcy prior to the settlement.

Make no mistake, the 2nd mortgage has the absolute right to foreclose, but as you suspect, in reality, it is unlikely it will do so. But there is no way to make that risk zero. The risk isn't really the foreclosure, the risk is in the 2nd mortgage going after you personally. However, if they do pursue you personally, then it becomes easier to get a settlement (of course, whether you can afford the settlement that will be offered is another question).

[msm859]

Hi,

First, I want to state we want to stay in our home. We are current on our first mortgage with WF. I've been reading on (loansafe.org) that you can settle your 2nd (our house is underwater) for a pretty small percentage of what you owe. My fear comes in that I don't want to jeporadize foreclosure because we are in default (about 90 days) on the 2nd. They are recommending playing the "waiting game" until an amount can be agreed upon. Is it really unlikely they'll foreclose b/c they are already out the $$. Any experience or thoughts on this?

I know the recommendation is to get out of a underwater home but we are determined to stay.

I settled my second with Citi owed them 180k settled for 27k. It was relatively easy -- the hard part was modifying my 1st with Wells Fargo. But after they saw the first settle I told them I was considering filing for bankruptcy and doing a lien strip. They then came and did an appraisal to determine if I had any equity. I had to argue about that and show them comps to get them to come down on their offer. Basically they will only settle to the extent you are underwater. You need to be talking to the loss mitigation department.

[my2girls]

We have already filed for bk...actually today is day 60! I have not made a payment since the bk was filed back in Sept. I am hoping to settle once we get offical word of the discharge. We owe about $17K on the 2nd and $155K on the 1st. Homes in our area going for around $100-$125K. Any recommendations on what to offer? Also, how soon do you have to pay. I need some time to build up the funds.

[HHM]

Start with 5%; but expect to pay about 10%.

But with such a small 2nd, hard to say, in most short sales, the 2nd mortgage usually gets at least $3,000 if the house is totally underwater.