Settlement of 2nd Mortgage...Who Has Been There?

[RedLight]

We filed Chapter 7 and was discharged 12/2008. Additionally, we did not reaffirm our mortgages 80/20. Our home is underwater and comps in the area put it at $98,000. We owe $108K on the first mortgage and $27K on the second. We stopped paying the 2nd mortgage as of 06/2011 so we are just at the 90 days late.

So, two days ago I typed up and mailed out a settlement offer at 5% to see what they would say to try to open up the communication lines. Well, they probably received their letter today, and I also got a letter from them, funny timing. The letter says on the cover sheet:

"under the terms of your secured mortgage, we are required to provide the enclosed notification. Therefore, we disclaim and assume no liability under the conditions and terms of 11USC 524 concerning the discharge of your debt."

The letter that follows is a standard letter saying that I need to bring the mortgage current or it may be handed over to an attorney and you will be liable for fees and such...blah blah blah.

So, my question to those of you who may have gone through this, should I wait for a letter response from the letter I sent to them or should I make contact over the phone and attempt to settle? I know it is better to handle things via mail so I have a paper trail, just wanted to hear people's thoughts.

[jmanford]

I had same sit and owed 60k on my 2nd. They wanted at least 35k to release their lein. They wouldn't budge. They are insured for the loan anyway. Both our loans were discharged so we just walked away. We didn't want the house cause it was too upside down

[laurannm]

I am pretty sure that since your loan IIB and not reaffirmed, you won't be liable for attorney fees. Given that you are upside down on the first mortgage let alone the 2nd, I am willing to bet this is nothing more than a scare tactic and they won't be foreclosing anytime soon

[RedLight]

Yes, I have checked my credit reports and it shows as IIB so I am not worried about any sort of fees and so forth. The mortgage is held by PNC and I have heard they are horrible to work with. I would be willing to settle for 20-25% just to get rid of that portion, it seems like they would realize I am under water as it is and make a deal. Only time will tell, I will keep this updated.

[RedLight]

So I sent a secure message with my settlement offer to their website just to test the waters and this is the response I got back:

"Thank you for your inquiry. When you are discharged chapter 7, and you do not reaffirm the mortgage debt, it is correct that you are not financially obligated to make payments. If you default on payments normal collection and foreclosure proceedings still continue on your loan. We do not offer any options to accept less than the full payoff on your mortgage, a settlement is not an option.

If you would like to keep the property, and you reaffirm the debt on your loan, we do have hardship assistance options available. Hardship options are based on your financial qualifications and the investor guidelines on your loan. If you have further questions about your loan please call 800-523-8654. We appreciate your business."

It really is like they don't care that they will get nothing instead of a decent settlement. I will have to give them a call later and actually try to get a hold of someone who knows something. And do they REALLY think I would be so dumb as to reaffirm? WOW!

[jmanford]

No way! Mine was with PNC as well! They wouldn't budge for me. My balance was actually 50k I think and they wanted 35K. I offered them as much as 15k. I doubt they will budge at all. They shot down 3 short sale offers we had on our property. They are complete jerks!

[jmanford]

They got nothing because our house got sold at auction. Here is the kicker though, they are insured for your equity line. They will get most of their money. Whatever they are asking you to pay is what they want and nothing less. They won't budge. That's exactly the way they treated me.

[RedLight]

So I pulled our appraisal for 2011 and the value dropped $35,000 from 2010 and even then the appraised value is over what it is really worth. The house appraised for $110,000 which is only $2,000 above what is owed on the 1st mortgage and I am thinking about trying to get someone on the phone at PNC to let them see it may be in their best interest to work out a deal with me. We currently have tenants in the house and we are renting another house but do not wish to do this forever. So, if by next summer nothing happens, we will be looking for a land contract, onwer's financing, or another option to get the home and simply walk away. It would be heartbreaking to do that since we put so much time and money into that house that is worth a fraction of what we paid. But, this is a financial decision, not an emotional one.

[laurannm]

In response to Janford's comments above....Not to hijack the thread, but is this really true? Are lenders insured on HELOCs and 2nd mortgages? This is the first I have heard of this. If it were true then wouldn't be see a much higher rate of foreclosure's on 2nd mortgages then what we are seeing? Seems like more and more people are having success settling

[RedLight]

***Update***

I just received a phone call from 1-800-367-9305. I didn't answer it as I never receive 1-800 calls. I looked up the number online and it was PNC Bank's Loss Mitigation department. I just got the voice mail and it was a guy asking me to return the call. I am wondering if they are responding to my settlement offer and if I should return their call or just let them sit on it a while.

[Ann]

Redlight,

You know I definitely want to hear what (if you do decide to return the call) they have to say. Keep us informed! Thanks!

[RedLight]

Interesting...looks like PNC pulled a credit report for myself and my wife. Guess they want to see what the financial situation is. If I contact them, I guess I don't have to send my financials since they took it upon themselves to do that.

[2manybills]

We were discharged in December of 2009. We quit paying on our HELOC to Wells in early 2010. I then waited for 2 months and sent a letter to try to settle. They declined wanting more like 20 cents on the dollar. We owe $338 on our first mortgage and $200K on our second. Our house is valued at about $420. Wells declined that verbally, but never sent a letter. So we kept not paying for another year and I sent in another hardship letter to Wells offering $15K. A Loss Mitigation rep called me back within a month and said that he thought they could get it done for $20K, which we agreed to pay. That was in June, 2011. They sent a letter confirming immediately and I paid them by the middle of August, 2011. The first week of September, 2011, I received a letter confirming receipt of the $20K and that it was in full settlement of our account, and just yesterday, I received a Full Reconveyance of the Deed of Trust. I guess it just depends on the bank and who you talk to.

[marchelala]

Yep aggree - settle 100K with Wells for 6%

[jmanford]

you guys with Wells are lucky. Because PNC won't settle. Maybe that's because the Bank is actually owned by India.