Settling a 2nd mortgage after chapter 7 bankruptcy discharge

hipster

LoanSafe Member
Dec 4, 2013
34
6
8
Hello all here is where I am at. We have just been discharged from chpt 7 and are current on our 1st and 2nd mortgage but it is still a little tight.

1st mortgage $93k with Green Tree
2nd mortgage $40k with Popular Community Bank (Banco Popular)
House is worth maybe $125k
If they sold it a sheriff sale , maybe $90-100k

I am not sure where to start in trying to get the second settled , or if I can even try? Any input would be greatly appreciated. Should I also try to HAMP the 1st mortgage ? Thank you all
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
1st mortgage $93k with Green Tree
2nd mortgage $40k with Popular Community Bank (Banco Popular)
House is worth maybe $125k
If they sold it a sheriff sale , maybe $90-100k

I am not sure where to start in trying to get the second settled , or if I can even try? Any input would be greatly appreciated. Should I also try to HAMP the 1st mortgage ?
Welcome and thanks for joining the LoanSafe community.

The first thing I recommend you do is contact a local RE agent and request a CMA so you have a better estimate on hand, also inquire about home prices in your area to see if they are in the rise. Given the numbers you listed you're about $10K underwater and the 2nd mortgage holder would endure significant fees foreclosing on the account. After consulting with the agent if you find that your numbers are correct, I would follow the strategy listed in the following thread to help settle your 2nd for pennies on the dollar. Keep in mind that we have never seen a settlement on a current account, typically servicers won't begin settlement talks until the account is 180+ days behind and/or charged off.

http://www.loansafe.org/forum/debt-settlement/37996-strategy-settling-your-2nd.html

In regards to your first mortgage, HAMP has strict guidelines and your current mortgage payment must exceed 25-31 percent to qualify for assistance.
 

hipster

LoanSafe Member
Dec 4, 2013
34
6
8
I think I would be within that 25-31% range. Does that include taxes and insurance?
My mortgage is $660/month 1st mortgage $320/month 2nd mortgage. I pay they taxes and insurance which my taxes are approx $200/month and my Ins is approx $110/month.

I am wondering if I might stop paying on the 2nd mortgage. Both of these mortgages are bad. They are both 15yr balloon loans 1st at 6.8% and 2nd at 8% .

I am a little scared because I am not sure that after my bankruptcy if they can foreclose faster. We did not reaffirm either mortgage.
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
I am wondering if I might stop paying on the 2nd mortgage. Both of these mortgages are bad. They are both 15yr balloon loans 1st at 6.8% and 2nd at 8% .

I am a little scared because I am not sure that after my bankruptcy if they can foreclose faster. We did not reaffirm either mortgage.
I agree, both mortgages have very high interest rates and are certainly not the most favorable terms. It will be difficult to secure a modification on your 1st mortgage given the fact that the payment (including taxes/ins) is only about 27% of your gross monthly income. If it were myself I would keep current on that mortgage and not jump through hoops trying to modify the account.

Your mortgage servicer must abide by state foreclosure laws and cannot expedite the foreclosure because the loans were discharged through BK. Wait until you hear back from a local realtor before deciding whether or not a settlement is a viable option, which if your numbers above are correct likely is.. Which state are you located in?
 

hipster

LoanSafe Member
Dec 4, 2013
34
6
8
I live in Ohio.
I will have to see about a realtor. I hate to waste their time. But I will start checking around online
 

hipster

LoanSafe Member
Dec 4, 2013
34
6
8
How much underwater would be a safe # or safer # to try to get a settlement? I know that their is probably not a absolute number , but I was just wondering off hand. I am looking at some foreclosures around here selling for $80k-100k. I am not sure that if the 2nd foreclosed, that they would actually recoup anything from a sale. But it is a tricky gamble I guess.
 

hipster

LoanSafe Member
Dec 4, 2013
34
6
8
Thanks for the replies. I am really considering trying to follow the "Strategy" above. I think that my house might only be underwater on the second by $5k-10k. if you do not take into account cost for foreclosure proceedings and whatever the cost premium is paid at a sheriff sale to the county. If you do take those costs into the equation , I believe it would be at a greater loss than that. Since I have a chapter 7 discharge and they are barred from contacting me for payments, how would I go about allowing them to contact me about settling in the future?

I am also wondering if it would be a waste of time to try to talk to Green Tree who is the 1st to see if they have an inhouse mod , if I cannot qualify for HAMP.
 

hipster

LoanSafe Member
Dec 4, 2013
34
6
8
Also, just curious, what is the average cost to the lender to foreclose on a second mortgage? Thanks for everyone's time.
 

hipster

LoanSafe Member
Dec 4, 2013
34
6
8
So , a market analysis has my home at $136k
my 1st is $92k
2nd is $40k
total $132k

Looking throughout the forums , which is vast, I have to come to the conclusion that the house will never go for $136k in distressed sale. Also, it is mentioned that the cost for a lender is around $50k to foreclose. So if I go by those numbers, the second is underwater even though the market could be almost even, without commission fees etc? Does this seem about right? Thank you !
 
  • Like
Reactions: jay

hipster

LoanSafe Member
Dec 4, 2013
34
6
8
Well, after much reading and combing through these forums, I figured I am going to start the strategy. I imagine that it will take a bit of time but I think it will be worth it in the end. I imagine that I will stop paying on the second and wait about 6 or so months before I send a letter to Banco about being able to contact me for settlement purposes only , because of our chp 7 discharge. I will try to update any progress that has been made here. But as of now , we are current on both. My New Years res. will be to hopefully settle my second by the end of the year....or the end of the next and so on and so forth.

I want to thank everyone in these forums for the wealth of information that can be found here. No matter what my outcome will be, I will either post in the success section , or in the walk section, or foreclosure..

Since I will stop paying on the 2nd in January of 2014 , I might not post on here in awhile....unless I start getting twitchy and need talked off the ledge.

My one worry is about the no contact because of the chp 7 discharge, because they will not be able to contact me...or that might be a blessing.
 
  • Like
Reactions: jay and Pensivity

Redlight

LoanSafe Member
Jun 4, 2011
15
1
0
Hipster, you may need to contact your lender and notify them that they are allowed to contact you only for settlement purpopses. Otherwise, you are correct.
 
  • Like
Reactions: jay

hipster

LoanSafe Member
Dec 4, 2013
34
6
8
I figured that I would wait a few months before I send that letter to the 2nd. Maybe 6 months. Since I am current on both , they would have no incentive to settle, I am assuming of course.
 

hipster

LoanSafe Member
Dec 4, 2013
34
6
8
I am wondering how long I should wait before I contact my second mortgage holder about making contact on settling since I have had my cht 7 discharged?
 
  • Like
Reactions: jay

hipster

LoanSafe Member
Dec 4, 2013
34
6
8
Ok, thank you Mr Eason. Even though this will be the first month that I have decided to stop paying the 2nd and starting the strategy? Thanks again.
 

hipster

LoanSafe Member
Dec 4, 2013
34
6
8
What should my letter to the lender look like? I have been thinking about this for a bit. What information should my letter contain? Thank you
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
Hello Hipster,

This letter doesn't need to be complicated, keep it short, sweet and straight to the point. Here's a simple example others here have used:

To whom it may concern:

My loan #XXXXXXXX with Popular Community Bank was included in Chapter 7 Bankruptcy. I am authorizing you to contact me via email or mail to negotiate a settlement.

Address

Sincerely,

Your Name
Date
 
  • Like
Reactions: Survivor_IN