Anyone settle a 2nd mortgage after BK7 discharge?

[Road2Freedom]

I was discharged from BK7 in 2009, did not reaffirm, and have been paying the first and second mortgage consistently. My wife did not file (bad idea... I know). We want to move in a couple of years and it seems like if we are going to have a chance at it I need to do something about the negative equity. I was working on an FHA streamline for the 1st but that requires the second to subordinate again, which from what I heard isn't likely. I've spoken to the 2nd about modification in the past and they pretty much dismissed it.

1st Balance: 115k (6%)
2nd Balance: 52k (11%!!)
Home Value: 100k

Because my wife didn't file, and since we are in FL, walking away does not seem like an option. I've read elsewhere that many people have had success by ceasing to make payments and waiting out an offer, with the thought that they would have to foreclose before they would sue and they won't foreclose from a negative position. From what I understand about this lovely state though, they don't need to foreclose to sue and with a judgement, garnishment is entirely possible. Our situation has improved quite a bit since I filed so she would not qualify for BK7 on her own. I'm running out of ideas.

Has anyone settled a second mortgage after being discharged?

I'm planning to meet with my original attorney to see if they have any opinions or options to help but I'm not very optimistic. Thanks for any input.

[Drazil65]

Hi, so the debt was discharged in the chp 7? Why do you think that they could garnish you or sue (judgement) you on discharged debt? You did not reaffirm the debt so the obligation to pay is gone? With negative equity the 2nd is not likely to foreclose anyway they will not get anything for their work so if you stop paying the first as well they will eventually foreclose and you save money for the move in the mean time.

Of course if your wifes name is also on the house and she did not file as you say then I guess she would have the problem with the garnishment or judgement and they would go after her. I did not file either but everything was in my husbands name and I had no debt (very, very little) so we decided that only he would file. Good luck with the house!

[Road2Freedom]

Yeah, I'm not worried about me at all. This is all about my wife and what could happen to her, which of course affects both of us.

Off topic: I wish my BK attorney was more assertive and had us both file. Instead we are still digging out of 40k CC debt and these mortgages AFTER I already went through the hell of BK7.

[ValleYum]

And your wife can't file now??

[Road2Freedom]

She wouldn't qualify for a 7 and a 13 would be no different than what we are already doing between the snowball plan and trying to pay this down, imo. We are already putting about 3k/mo towards debt.

[ValleYum]

Okie dokie. Just thought I would ask.

Good luck!

[Road2Freedom]

No, I appreciate any ideas or thoughts. While I think I've thought of everything, between this board and another I frequent, it seems I learn something new every day.

[Road2Freedom]

I'm meeting with the attorney this afternoon... hopefully I'll have some direction soon.

[pcn]

Please update after you meet, we are in the same boat and cant find much information either. thanks! All the claims that we read here about settling were apparently just that, claims, not actual experiences. Now when it comes time to actually follow through finding those with actual experience is almost impossible.

[Road2Freedom]

Well, the attorney basically confirmed everything I already knew and posted above. Because we are in FL, if we stopped paying, they could easily sue my wife and get a judgement without the need to foreclose first. He said we could attempt to settle at that point, but by then the damage has been done. He pitched the ideas of her filing BK (which he agreed with my reasoning not to do so), and even a short sale, but really that's no better than a foreclosure as far as her credit is concerned.

He suggested I contact the company that holds the 2nd to gauge their interest in settling. If they bite, take it as far as possible via phone. If they scoff, try again in writing and see where that gets me. They are willing to help with the negotiations and/or to look over any settlement but he was completely honest that it may be cost prohibitive and he would be surprised if they take less than 30%, especially since I'm current and the laws here heavily favor the mortgage lender.

So, I'll call them tomorrow and get the ball rolling.

[Road2Freedom]

First call was unsuccessful. I spoke to a rep and a manager and they basically told me that the lender has no policy in place to settle in exchange for releasing the lien.

So I left a vm for another person in the company that others have had some success with for HAMP. I'm not looking for a mod, but maybe he can point me in the right direction. He was out of the office and is due back next week.

If I don't hear anything by the end of the week, I have a letter I'm ready to fire off to the CEO.

[newphoenix]

We did settle our second. It had a balance of $100k and we settled for $5k. It had been discharged in our chapter 7 but we both filed. If they can still go after your wife than I would not take our approach. We stopped paying our second and approached them about settlement after nine months of no payment.

Good Luck!

[daveinIL]

We are currently in the process of negotiating a settle on our second. Nothing final yet though.

[pcn]

We did settle our second. It had a balance of $100k and we settled for $5k. It had been discharged in our chapter 7 but we both filed. If they can still go after your wife than I would not take our approach. We stopped paying our second and approached them about settlement after nine months of no payment.

Good Luck!

Newphoenix, who was your 2nd with, and what did it take to reach an agreement? How far underwater was it, and how did you convince them of that? An appraisal? Thanks for any help!

[newphoenix]

Our second was with US Bank. We had stopped payment for three months when we contacted them via a faxed letter giving them permission to contact us for settlement. With that fax I sent copies of properties that had sold in our area and some properties that were currently listed. Using those as comps it showed our house was about $100k underwater. We didn't hear anything for six months and we were contemplating walking away completely from both mortgages is we couldn't get a settlement so we contacted them again. They asked what our offer was and we said $5k. They took it.