2nd mortgage

CCG

LoanSafe Member
Mar 12, 2018
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I have a 2nd mortgage that was opened up approx 10 years ago. I filed for bankruptcy and thought it was taken care of. The original was with countrywide home loans. Well I am trying to refinance my home and their is a Lein on my property from Bank of America. I contacted them and they said they took over the load from countrywide. I explained I filed for bankruptcy and then said I would have to pay it off to remove the lein. The loan was for $ 30,000. They now say I owe $95,000 bc I have not had insurance for the past 10 years. I have sent them all the info from my insurance company but still will not remove the insurance fees. They said I should have sent them my insurance info each year. I tried explaining I had no clue they took over the account from countrywide and never got a call from them. I need help!! I don’t know what to do
 

Jzone

LoanSafe Member
Jun 20, 2017
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I have a 2nd mortgage that was opened up approx 10 years ago. I filed for bankruptcy and thought it was taken care of. The original was with countrywide home loans. Well I am trying to refinance my home and their is a Lein on my property from Bank of America. I contacted them and they said they took over the load from countrywide. I explained I filed for bankruptcy and then said I would have to pay it off to remove the lein. The loan was for $ 30,000. They now say I owe $95,000 bc I have not had insurance for the past 10 years. I have sent them all the info from my insurance company but still will not remove the insurance fees. They said I should have sent them my insurance info each year. I tried explaining I had no clue they took over the account from countrywide and never got a call from them. I need help!! I don’t know what to do
This should of been explained by your bankruptcy attorney. The DEBT is discharged, but the lien remains. You are no longer legally liable for the debt, but the bank still has a lien on the property and that lien must be settled or released if you want to sell or refinance.

However, you certainly can still negotiate a settlement. The bad news is they know you want to refinance, so probably wont be as willing to accept a low offer.

First thing I would do is ask them to document how they came up with a balance of $95,000. This cannot be insurance fees as that would be $65,000 ( or about $6,500 a year for insurance). Insurance is probably less than $1,000 year.

Next, since this was discharged in bankruptcy, they legally cant talk to you about collecting the debt. Only release of the lien. I would start with a 5-10% offer to settle. See what their response is. Most 2nd mortgages can settle for between 10-35% of the balance. And I would use your $30,000 figure as the balance.

I'm in a similiar situation trying to settle my second. Bankruptcy was 6 years ago. It's a long process, but it depends on how eager you are to settle and get refinanced. In my case, Im not planning on moving or refinancing, so Im waiting for them to either accept or decline my 10% offer. And its been almost a year.
 
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cookiemom

LoanSafe Member
May 24, 2019
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I am in a similar situation and about ready to contact for a settlement.

Home purchased in 2006 with an 80/20 split mortgage with Countrywide for $211,000.
  • 1st $168,800
  • 2nd $42,200
BK7 discharged in 2008, with intent to keep home and reaffirm loan.
  • 1st mortgage was approved for loan modification with Bank of America fees taxes and interest @ $187,406.24 with interest starting at 2% the day the house went up for state sale. This loan has fully reached interest maturity at the 4.25% rate. Current payoff is around $143,400. My Loan mod states this loan at the original cost of $168,800 and note signed on same date, although the city tax shows the house technically sold again to me in 2008 when Modification went through. Currently home value according to Zillow is $190,000
  • 2nd mortgage was never affirmed and apparently sold to Real Time Solutions.
    • My issue is with this loan, now with Real Time Solutions that I have NEVER paid on per the advice of BK7 Attorney. Obviously, looking back it was my negligence, I was young when filling for the BK and renegotiating the loan modification, I just wanted to keep my home. I guess I did not understand the full terms of what was going on and that this loan was included in the BK7 but the lender lien would remain on home. Years back, I remember Real Time Solutions calling me to make a settlement offer, and I was skeptical since I never heard of them and could not find them online. At the time there were so many calls/letters etc. I was receiving form creditors I wanted them to mail me everything in writing. I was not just going to give some company I never heard of $9,000. I only received a statement, which did not justify anything for me to understand their hold on the home and I was sure that this was in my BK 7 and discarded. I only receive something in the mail from them (statement) about every 6 months. Recently, I received yet another statement from them, upon fully reviewing, I noticed on the back they posted the pay-off amount of $92,124. It has been collecting interest. I had a title company do a search and I guess there are 2 liens on the home.
So my question’s are:
  • Do I reach out to them and follow the 2nd settlement process recommended on here?
    • I cannot afford another payment, my expenses are maxed out to the limit, I recently just had a baby. How do I get this as low as possible? I have read time is my friend, well, there has definitely been enough time lapsed, per Michigan law this has reached the statue of limitation.
  • Should I hire a real estate attorney? What are the benefits in doing this?
  • Can they now take the equity in the house since I was able to pay it down so much from the help of the low interest?
  • Since there is interest does this me they own the loan and it was not just sent to Real Time Solutions from BOA for collections?
  • Will they negotiate the original note and dismiss this crazy interest that is more than the principle itself?
    • Any tips?
 

Jzone

LoanSafe Member
Jun 20, 2017
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Here are some suggestions:

1. Yes, I would contact RTS in writing. Do not call and let them know communication is only by letter. Make the letter short and sweet- stick to the facts. Make your offer and let them respond.

2. Im in Michigan also, and there is no time limit on property liens. There is a 6 year statue of limitations on debt, but your debt doesnt exist anymore. Your "debt" was discharged in BK. You are no longer liable for the debt. However, the lien remains. Your second mortgage holder/lein holder, does have the ability to foreclose, but it is unlikely because they would also have to pay off the first mortgage holder to start foreclosure proceedings.

3. I wouldnt hire an attorney until after a settlement is reached. At that point, have an attorney look over the paperwork and make sure it states the lien will be released for $xxxx dollars.

4. They can only take the equity if they pay off the first mortgage holder. Then they own the house and can do whatever they want. Again, very unlikely to happen.

5.They can add any interest and fees they want. However, you could argue since there is no debt, its simply a lien that they hold, not a loan. The loan doesnt exist anymore.

6. When they acquired the lien, they paid a certain amount based on the discharged loan balance. Probably pennies on the dollar. Use your balance that was stated in your BK filing as your starting point and offer 10% of that as a settlement offer.

You said you have 2 liens on the property. This is probably your 1st mortgage holder and RTS. You can do a free search at your county register of deeds to verify this.

Stay current on your 1st mortgage and you will probably never hear from RTS. However, the lien will need to be released at some point. If you are trying to sell , it certainly will need to be settled. If you are in no hurry to sell, I would just wait it. Contact them once or twice a year and wait for thier reply.
 

cookiemom

LoanSafe Member
May 24, 2019
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Here are some suggestions:

1. Yes, I would contact RTS in writing. Do not call and let them know communication is only by letter. Make the letter short and sweet- stick to the facts. Make your offer and let them respond.

2. Im in Michigan also, and there is no time limit on property liens. There is a 6 year statue of limitations on debt, but your debt doesnt exist anymore. Your "debt" was discharged in BK. You are no longer liable for the debt. However, the lien remains. Your second mortgage holder/lein holder, does have the ability to foreclose, but it is unlikely because they would also have to pay off the first mortgage holder to start foreclosure proceedings.

3. I wouldnt hire an attorney until after a settlement is reached. At that point, have an attorney look over the paperwork and make sure it states the lien will be released for $xxxx dollars.

4. They can only take the equity if they pay off the first mortgage holder. Then they own the house and can do whatever they want. Again, very unlikely to happen.

5.They can add any interest and fees they want. However, you could argue since there is no debt, its simply a lien that they hold, not a loan. The loan doesnt exist anymore.

6. When they acquired the lien, they paid a certain amount based on the discharged loan balance. Probably pennies on the dollar. Use your balance that was stated in your BK filing as your starting point and offer 10% of that as a settlement offer.

You said you have 2 liens on the property. This is probably your 1st mortgage holder and RTS. You can do a free search at your county register of deeds to verify this.

Stay current on your 1st mortgage and you will probably never hear from RTS. However, the lien will need to be released at some point. If you are trying to sell , it certainly will need to be settled. If you are in no hurry to sell, I would just wait it. Contact them once or twice a year and wait for thier reply.
Thank you so much for your feedback. It is bugging me that this is out there pending. I do not intend to sell the property any time soon, but at some point I will have the 1st loan paid off and I do not want them to be able to foreclose. What details/facts do I state within the letter? Are there samples within this form available to view?
 

bgriff

LoanSafe Member
Mar 11, 2012
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Why do you want to contact them ? If you are not selling and don't need to refi, why even draw attention to the loan. The longer you go, the better off you are. Liens do expire (eventually) and you could strip the lien once your states SOL runs. I know in NY it's 20 years - so your about half way there (if you lived in NY).
 

cookiemom

LoanSafe Member
May 24, 2019
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Why do you want to contact them ? If you are not selling and don't need to refi, why even draw attention to the loan. The longer you go, the better off you are. Liens do expire (eventually) and you could strip the lien once your states SOL runs. I know in NY it's 20 years - so your about half way there (if you lived in NY).
I live in Michigan. From my research a SOL only restricts collectors from contacting you, it does not release the lien on the home. Property liens do not expire in Michigan. Since this amount was included and discharged in my BK they cannot attempt to collect.
 

bgriff

LoanSafe Member
Mar 11, 2012
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Michigan may have different rules but eventually the lien becomes unenforceable. It will remain with the property until it is removed. This is usually done by a mortgage satisfaction, when payoff the balance - but in your case, there is nothing to pay. I would contact a RE lawyer since the SOL is 6 years (for BK7) or 10 years for non-payment in Michigan. They legally cannot come after you for the balance but could try and foreclose - but you have a valid foreclosure defense in the SOL.

But again - if you are not planning on selling or doing a refi - why the need to contact them and start a settlement process?

Check with the RE lawyer, but I'm pretty sure you could save the settlement $'s as you have a valid foreclosure defense. Once you decide to sell, you could strip the lien via a court filing.
 

TM1

LoanSafe Member
Jun 5, 2019
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I’m also in similiar situation:
1st mortgage 2006-2007 Countrywide to B of A
2nd mortgage 2006-Amercicas wholesale Lender (From my understanding this goes back to countrywide fiasco, BofA was servicer for loan)
I Filed chapter 7 BK 2012- 2nd loan was discharged and is now with RTR-never reafirmed the debt with RTR- tried to contact them once to settle about a year ago and they refused-of course balance just keeps increasing
1st Mortgage is current after bankruptcy BofA sold loan to another lender

I dont plan on moving or selling anytime soon-would like to re-fi but not sure how 2nd mortgage would come into play. My questions are

How do I know that RTR has a right to try and collect?

Liens on property- at this point I am not even sure who appears on property for lien is it RTR or AWL(original lender)—how can I pull title on property to verify liens?

Does california have SOL on liens?

Doing some reasearch on web about RTR and BofA I ran across an article where in July of 2018 a class action suit was filed in orange county california where B of A was sued over countrywides 2nd mortages and RTR was also named as a defendant in lawsuit-I cant seem to find any details or related articles about this law suit-does anyone have any info on this or know where I can find info?

Do I have any legal recourse as far as trying to have the lien stripped from title for the 2nd mortgage whether it’s in original lender name or RTR being that maybe loan was part of the entire countrywide/awl/BofA fiasco and also since debt was discharged?

Is it best to talk to either real estate attorney or bk attorney to discuss 2nd before re-fi? I do have equity in property dont want to raise any red flags to where I can potentially lose my home because of not paying on 2nd mortgage....its my understanding though that it will be hard to re-fi if second is not up to date- but with that said if only way lien can be removed is to either pay in full or perhaps settle with RTR I would consider trying to roll second into re-fi if there are lenders out there that do that?
Help....Any advice is appreciated..thank you
 

bgriff

LoanSafe Member
Mar 11, 2012
162
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You won't be able to refi until the 2nd lien is taken care of - they more than likely will not subordinate (remain in 2nd position). When they do the title search, they will come across the 2nd lien and that will need to be taken care of. You can try and settle but if they know you want to refi, they'll most likely want 100% of the balance.

You could reach out to a RE lawyer to find out what the SOL is CA. The BK7 gives you more leverage as technically there is no mortgage and they do lose the ability to enforce the lien at some point. Each state is different but the SOL will come into play at some point.
 

Jzone

LoanSafe Member
Jun 20, 2017
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I live in Michigan. From my research a SOL only restricts collectors from contacting you, it does not release the lien on the home. Property liens do not expire in Michigan. Since this amount was included and discharged in my BK they cannot attempt to collect.
I would not contact them. But as I said earlier, if you do contact them, simply make an offer and nothing else. And of course only do this in writing. No phone calls, no email.
Ive been in similiar situation in Michigan for about 8 years now. There may be an advantage to having a real estate attorney look at this, but probably not until you are ready to sell or refi. Why wake up a sleeping bear!

Property liens in Michigan NEVER go away. They are not like "unsecured debt", which does have a SOL in Michigan. The question is what is the value of the lein. The value of the loan when its discharged in BK is ZERO. They can never collect on the debt, but could foreclose because they hold the lien.

I had an excellent BK lawyer who explained everything to me and it turns out he was right about everything so far. His advice was:
1. Dont reaffirm either 1st or 2nd mortgage.
2. If you want to stay in the house, keep current on the first only.
3. Offer a settlement to the 2nd during or immedieately after discharge and see what the response is.
4.. Once a year, verify with your county register of deeds, who actually holds the lien because they can be assigned or transferred without notice to you.
5. Keep communication to a minimum with lien holder. Do not give out any financial info like yearly salary, where you work, balance on 1st mortgage etc... You make an offer and let them respond.
6. If you don't hear anything back, dont worry. Send the same letter once a year and rest easy!