Trying to Settle 2nd with SLS

Rillion

LoanSafe Member
Mar 21, 2012
72
7
8
History:

Purchased in 2007 for $485,000 in California using a $388,000 First and a $72,750 HELOC with 5% down. HELOC was completely maxed out as part of the purchase. Both loans were through American Home Mortgage (AHM). Before AHM collapased in 2007 the 1st was sold to some investment pool and servicing was sold to Wells Fargo. The HELOC ended up with Bear Stearns (as EMC), which then became part of Chase I believe when Bear went under. The 1st is I/O for 10 years and it was fixed for the first 5. It just reset and the new interest rate is 3.375%. The house is worth about $370,000 to $390,000. Meaning it is pretty much worth the value of the 1st only.

When I first bought the place I immediately started paying down the HELOC and actually paid it down by $10,000 before EMC froze the line. Once the line was frozen I stopped paying it down. For some reason unknown to me, they unfroze the line in early 2009. I immediately withdrew the $10,000. A month later they froze the line again.

Last year the HELOC was sold again and SLS became the new servicer. It is listed as being owned by a small bank in Georgia. In January I received a letter from SLS indicating that the owner of the HELOC was not renewing the draw period (it apparently expired after five years and there was an option for the owner to extend it for another five years). With the draw period not being renewed that meant that I would have to start paying back principal on the HELOC. I initially wrote them back and requested that they reconsider their decision and extend the draw period for another five years so that I could continue making the interest only payment. They declined.

Then having not yet found this site and its great tips on how to settle on a 2nd, I submitted a request through SLS's website to settle on the HELOC for $10,000. They eventually called me back and did a phone interview where I gave them some ballpark estimates on my income/expenses (a mistake I realize now). They mailed me out some paperwork requesting more financial details as part of a "loan modification" package. I did not send it back. In late February a fee of $115 appeared on my statement and when I called to ask what it was for was told that it was for a broker's opinion on price on my place and that they had sent someone out to drive by and take pictures of the property and get an opinion on value. I let them know that since I had not requested they do that this that I was not going to pay for it and would not be paying them that fee. The women on the phone said that there wasn't anything she could do about it.

Last week they called again and asked if I wanted a loan modification. I said I was willing to settle on the note. She said okay she would send me a letter requesting the information they needed in order to consider that. On Monday I received their "request for a short sale" package. I'm not sending it back.

Yesterday was the due date for the first principal & interest payment (plus their $115 fee). For the first time in five years I have not made my HELOC payment before the due date. Having now read through the strategies and advice here I am going to follow them in the hopes of getting this HELOC settled.

Financially I could have afforded the P+I payments on the HELOC (total payments on 1st, property taxes, HELOC, and HOA would only total 29% of gross income before accounting for any tax savins) but my concern with paying principal on the HELOC is that if interest rates start rising before 2017 there is the possiblity that my payments could skyrocket and become unaffordable in the future. So I'm not 100% certain that I'm not going to default on the 1st in five years but I don't want to modify it now since its at 3.3375% interest only. If that happens I'll be kicking myself for having thrown away money now by paying down the HELOC.
 

ramsey

LoanSafe Member
Mar 14, 2011
70
0
6
We have a second with SLS which we are currently not paying and hoping for a settlement as well. Our home is in Michigan and valued at approx $140,000 ( what the realtor wanted us to list it at for a short sale.) We currently owe $78,900 on 1st and are current. The second is $141,000 which we have not been able to pay since February 2011. We did try the short sale route for 6 months with not one bit on the house. Have decided to try and settle with the them if at all possible. Over the course of the last year we have received a couple of loan modifcation packages by Fed-Ex and have not excepted either. They offered a slight balance reduction and lowered the interest to 4 precent for the life of the loan. They have also called maybe 10 times on the phone (we have never answered ) and left messages maybe 1/2 of those calls. It was always the same person and the same message. Almost sounded like a recording as the wording was exact or close to it each time. On the second mod offer we sent back a counter and never heard one thing from them. That was almost 6 months ago. We just sent a second offer to them a few days back and have yet to hear a thing. I plan to never talk to them on the phone or send any financials. Please keep us up to date how your battle with them goes and I will do the same if you would like.
 

Rillion

LoanSafe Member
Mar 21, 2012
72
7
8
Yeah, it is a recorded message they leave when they call. Back when I was trying to get them to extend the draw period I called them back as indicated in the message and it is their main customer service number where some random rep answers and has no idea what the original call was about and has to review the entire account file. Total waste of time. After that happened twice I stopped bothering calling them back.

One sort of funny thing to show how clueless/automated their system is, they have sent me three letters so far this year letting me know they were freezing the line of credit and that I would not be able to draw from it even though its been frozen since 2009.
 

Rillion

LoanSafe Member
Mar 21, 2012
72
7
8
Well one month down in the strategy. First "missed" payment was due 3/20. SLS continues to call once a day M-F at fairly random times. They still make the call using their main 800# and I decline the call sending it right to VM. It is always the same pre-recorded message saying to call them back that day to the main 800#. I have been good and not called them back.
 

Pennybond

LoanSafe Member
Nov 23, 2009
128
0
16
Keep the faith. I am at payment number 2 missed as of yesterday with HFC. Underwater second af $39,500. I had been paying at a modified rate of 5.25% since 2008 which I could afford. Reapplied to extend the modification in Feb and they came back with an offer to double the payment with a rate of 13.44%, they said their guidelines had changed. I told them my finances had not changed and could not afford to have my payment double. (My original rate was 15.42%.) Anyway, decided not to accept as they were making plenty of income and cash flow at the 5.25% on an asset that has no collateral value. I will be banking the payments I would have made and hopefully at charge off I will have a little $'s to use as a settlement fund. Keep us updated.
 

Rillion

LoanSafe Member
Mar 21, 2012
72
7
8
Keep the faith. I am at payment number 2 missed as of yesterday with HFC. Underwater second af $39,500. I had been paying at a modified rate of 5.25% since 2008 which I could afford. Reapplied to extend the modification in Feb and they came back with an offer to double the payment with a rate of 13.44%, they said their guidelines had changed. I told them my finances had not changed and could not afford to have my payment double. (My original rate was 15.42%.) Anyway, decided not to accept as they were making plenty of income and cash flow at the 5.25% on an asset that has no collateral value. I will be banking the payments I would have made and hopefully at charge off I will have a little $'s to use as a settlement fund. Keep us updated.
Good plan! We have up'd our savings as well. As for an update, we received a letter on Saturday from SLS letting us know that they have been unable to reach me and that it is really important I call their main 800 number. Since it isn't an offer to settle, its getting ignored.
 

Pennybond

LoanSafe Member
Nov 23, 2009
128
0
16
Just banked my second missed payment today. Good plan to ignore that letter. I have not recieved any letters yet however I got an email on Friday that said "We have inportant information about your account, please call....." Ignored!
 

ramsey

LoanSafe Member
Mar 14, 2011
70
0
6
WOW...they are calling you more often then they have ever called us. I think the last time they called was in mid February. We have received one regular statement in the mail. Oh we also received a letter stating that our interest only period is up and our payment now will be principle and interest with an increase of over $300 in a payment we have not made now in over 15 months. What part of "we can not afford the payment" do they not understand?
 

Rillion

LoanSafe Member
Mar 21, 2012
72
7
8
Yeah, I've taken to referring to them as "my stalker", so when my phone is ringing I'll look and see their number on the caller id and say "Oh my stalker is calling." I didn't have a message from them on Monday so I thought perhaps they might be changing their pattern now that they sent the letter but I now suspect it was just a glitch with their automated dialer because they've called and let messages every day since.
 

Rillion

LoanSafe Member
Mar 21, 2012
72
7
8
Well they certainly ramped up the "stalker" factor. Not bad since I'm still less then 60 days late on the first missed payment. On Friday I got a letter in the mail with the usual implied threats of accelerating the loan and initiating foreclosure. Letter again asked me to call the regular 800 number. Then yesterday (Monday) they had someone come by the condo to drop off an envelope. Inside was a little note printed out in all caps. So I know it must have been really important.

MY NAME
AT THE REQUEST OF SPECIALIZED LOAN SERVICING, AN INDEPENDENT FIELD INSPECTOR CALLED ON YOU TODAY. PLEASE CONTACT SPECIALIZED LOAN SERVICING AT 1-800-306-6082. THANK YOU

If it were not for this website and Tom's detailed strategy to reinforce me, I'd probably breakdown and call them at this point but with all the support and information here, I'm going to continue to ignore them until I get some indication that they want to settle rather then just have me call the main number so they can try to get me to make a payment.
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
84
48
SF Bay Area CA
Hi Rillion

Thanks for your post.

I applaud your having stopped paying SLS, and your intent to follow the Strategy. You'll find it both easier and more satisfying.

Not communicating with SLS, and being very patient (being patient is easy because you need do nothing, LOL) are both important to your eventual success.

Good settling!
 
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Preparingfordefault

LoanSafe Member
Apr 17, 2011
293
7
18
Tom,

How long do you suggest to wait before attempting to settle the 100 percent underwater second? I'm at 10 months of no payments, they call maybe once every other week or so, I have not spoken with them at all ... they leave a live message, not automated. I am in a recourse state. My goal will be 5% or less to close that chapter.
 

Rillion

LoanSafe Member
Mar 21, 2012
72
7
8
SLS continues to make me laugh at their ineptitude. On Tuesday I received three pieces of mail from them, all the exact same letter with the only difference being they were dated on 5/23, 5/24, and 5/25. The letters suggested that if I didn't do something about the loan soon they would possibly start the foreclosure process and that I should send them my financial information by filling out an attached form so that they could help me.
 

ramsey

LoanSafe Member
Mar 14, 2011
70
0
6
We still have not heard anything from SLS since February. Home values here seemed to have dropped some more so we will never live to see our investment back from the purchase of this home. It is nice not hearing anything from them and having to deal with them but in a way I wish they would just get with the program of sending us a do-able settlement so we can get on with our life!
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
84
48
SF Bay Area CA
We still have not heard anything from SLS since February. Home values here seemed to have dropped some more so we will never live to see our investment back from the purchase of this home. It is nice not hearing anything from them and having to deal with them but in a way I wish they would just get with the program of sending us a do-able settlement so we can get on with our life!
ramsey

Thanks for your post.

I'm a bit confused. Why would you need your 2nd lender to ever settle? Do you have someplace you need to go?
 

Rillion

LoanSafe Member
Mar 21, 2012
72
7
8
We still have not heard anything from SLS since February. Home values here seemed to have dropped some more so we will never live to see our investment back from the purchase of this home. It is nice not hearing anything from them and having to deal with them but in a way I wish they would just get with the program of sending us a do-able settlement so we can get on with our life!
They still continue to call me 1-2x a day. Although the last two messages they have left have been from actual people and not the same pre-recorded call us back message. Although the individuals (different ones each time) just give me the main CS 800#.
 

ramsey

LoanSafe Member
Mar 14, 2011
70
0
6
ramsey

Thanks for your post.

I'm a bit confused. Why would you need your 2nd lender to ever settle? Do you have someplace you need to go?
TomEason,

We are not planning on living here for the reat of our life. And just yesterday my husband was just told his position at work is not secure. We might need to sell the house and if the second would settle then there might be a better chance we can get out of it.
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
84
48
SF Bay Area CA
TomEason,

We are not planning on living here for the reat of our life. And just yesterday my husband was just told his position at work is not secure. We might need to sell the house and if the second would settle then there might be a better chance we can get out of it.
Hi ramsey

Thanks for that info.

After reviewing your numbers, that could make sense. But, as you know, obtaining the most favorable settlement is a relatively long process. Hence, I recommend you exercise patience and follow the strategy guide. By so doing, you'll be able to maximize your sale proceeds.