Trying to settle discharged 2nd mortgage (DCU)

[catleg]

Even if it's underwater they have no incentive to settle until a foreclosure is filed by the first. Unless you make a really wild offer.

[MrsDixon]

But the credit union already took a loss when it was discharged in BK.

They won't get anything if I let it go to foreclosure. Not a penny. I would think that they could run a value on the house and see that it's underwater and then make a decision based on that.

[jadams]

Your finances do have a bearing on it. They don't want to accept a settlement from someone with the resources to clear the lien in full when some future event happens that requires selling/refi/etc. Or accept 10% when you should be able to afford 20%. You will need to prove to their satisfaction that the settlement you have proposed is their best choice.

More likely than not the short sale packet is just the easiest way they have to get all the information they need for loss mitigation to evaluate and decide if and how much of a loss the bank is willing to take. Your houses value, your resources, etc.

It likely goes through a standardized review that results in an "acceptable loss" figure, and is then returned to one of the workers you've dealt with who then has the power to negotiate up to that figure. Whether they get there through short sale, lump settlement, payments, etc. Being determined at that stage.

[BCA2009]

I am trying to settle a discharged 2nd mortgage w/DCU. I am currently 120 days behind. It was discharged 20 months ago and the loan was not reaffirmed.

They want me to fill out paperwork for a short sale, which I refused to do. I am either going to settle with them or I'll let the first mortgage holder foreclose. DCU will get $0 since I am underwater on the 1st.

I emailed a hardship letter explaining what I want to do and then they responded that they wanted the short sale package filled out, bank statements, taxes, paycheck stubs, 401K info, etc.

I told them that my finances were irrelevant because my personal obligation was discharged 20 months ago. The loan specialist said that they will not even consider an offer until I fill out the paperwork and give them the requested information.

I don't know what to do next. I emailed the CEO & VP to ask for assistance but who knows if they'll respond.

Any thoughts?

From my research, (I'm in a similar situation) I think that is common for them to request that info. That "specialist" is just going down a checklist. She probably has no authority other than entering data into a system and reading what it spits out.

Alot of Banks have executive resolution departments that can cut thru most of that red tape and give you an answer. The hard part is getting in touch with that department/person.

You may also have to wait until they decide to foreclose, then negotiate with them. If you just called them up and started the process, you are not even on their radar screen. They may have no incentive to open your file and put any effort into your loan.

I would keep trying and try to get to a decision maker. But I would not send them any personal info. I can't see how it would benefit you at all, but it could give them information to try and hold out for a higher amount than they otherwise would take.

Good Luck and keep us updated. I am 4 months behind, but I am not going to contact them for at least three or four more months, maybe not at all until they contact me. I want to be in the best negotiating position I can be in, before I start talking to them.

[MrsDixon]

I am trying to settle a discharged 2nd mortgage w/DCU. I am currently 120 days behind. It was discharged 20 months ago and the loan was not reaffirmed.

They want me to fill out paperwork for a short sale, which I refused to do. I am either going to settle with them or I'll let the first mortgage holder foreclose. DCU will get $0 since I am underwater on the 1st.

I emailed a hardship letter explaining what I want to do and then they responded that they wanted the short sale package filled out, bank statements, taxes, paycheck stubs, 401K info, etc.

I told them that my finances were irrelevant because my personal obligation was discharged 20 months ago. The loan specialist said that they will not even consider an offer until I fill out the paperwork and give them the requested information.

I don't know what to do next. I emailed the CEO & VP to ask for assistance but who knows if they'll respond.

Any thoughts?