Settling the second?

[BROKEDED]

I've given some thought about what we would do IF we could and IF it made sense to settle our second and (maybe) reaffirm our first AFTER discharge. But I noticed that our second, which is a HELoan, has been written off and sold.

Who would I deal with in trying to settle...the bank or the company that bought the debt? Who would be holding the deed of trust?

[daytona]

You would deal with the company who bought the debt...AFTER they can show you that they actually own it and have a right to collect on it. It's hard to say who actually owns the deed "officially". (not being an azz, its just that the banks, assignees, collectors, etc, etc, usually have no clue and this is a huge part of the "robo signer" scam in the news.) I don't see a reson to reaffirm the 1st after discharge, if you pay on time it's highly unlikely they would foreclose and you have no liability if things change for the worse.

[tcreegan]

Hi BROKEDED,

If the HELOC got sold b4 the BK it may be unsecured debt. Definitely something to check into, eliminates the need to settle, saves money....

Check w/ the state office where deeds/titles are recorded and see if there is a lien on the prop. for the 2nd.

(if there is, find out who holds the lien, that is who you settle with)

Who knows, you might just get lucky and the HELOC is discharged in the BK.....

....oh well, we can dream, right? Happy Thanksgiving!

Tom in Colo

[BROKEDED]

daytona - We haven't made a payment on 1st or 2nd in a year. Therefore we would only reaffirm if we knew that we had a sure fire deal with the 1st and then only after we had discharged or had a clear title from the 2nd. I know it's a long shot but I thought it was worth investigating. Thanks!

tcreegan - Tom, it's a Home Equity Loan instead of a Line of Credit. I don't know if that makes a difference in the ability to discharge. We have NOT filed CH7 BK yet so it was definitely sold before. The house is worth approximately $50k more than what we owe on the 1st according to recent Zillow and RealtyTrac estimates. Of course the bank would never get that at auction. Based on most of the sales in my neighborhood the 1st would break even and the 2nd would get nothing. That's kind of what has given me a little hope that this scenario would work out.

Any more insight would be appreciated.

[daytona]

Brokeded; Have you looked into a HAMP modification on the 1st? If you really want to keep the home this could help lower your payments and essentially put all of your lates on the back end of the loan allowing you to get caught up. Putting the lates back on the 1st accomplishes another thing as well...it eats away at any perceived equity the 2nd thinks they have. So if you have 15k in lates it would be added back onto your 1st mortgage balance and this is done automatically without the 2nd's consent. You could then try to settle the 2nd or modify it as well. I would try the Hamp mod before doing a BK because you would still have the option of not reaffirming the 1st even after the BK. However, (if the mod is successful) your payment should be lower and you would be "caught up". I'm afraid if you are 1yr+ late and file BK it's going to get the banks attention and they will likely foreclose...

[tcreegan]

Hi again BROKEDED, and happy turkey day!

Hope you are more successful than I was on the mod for the 1st....the only advice I have is to find someone in the lenders company who actually has the authority to make the modification terms. Get a method to contact them directly so you deal with the same person each time.

I was thinking the 2nd might have become unsecured b/c when you deal with debt buying/selling the saying 'there is no honor among thieves' often applies. There is a chance the original 2nd sold it off as an unsecured debt and didn't bother w/ the lien. Not to imply that all debt buying/selling is dubious, but we had a couple debts that were sold within a few days after we filed BK. The owner of the debt got notified of the BK, so they lumped it with a bunch of other debts and sold it. The buyer can't go through every acct at the time of sale (might be thousands of accts in the transaction) so they don't know they have been cheated until they go to collect on it.

Stranger things have happened....

Tom in Colo

[BROKEDED]

Well, I haven't really updated regularly about the mod process. I'll try to make this as detailed yet short as possible...We quit making payments a year ago and sought BK counsel. Two attorneys assured us that we qualified for CH7. At that point we decided to try to stay in the house as long as we could to 1. Save a little money for the attorney, the piggy bank, and for moving and any down payments on a rental and 2. Avoid spending money on rent. The 1st mortgage handled the foreclosure process pretty much by the book. At different times we were able to delay our foreclosure hearing and sale date by a combined 3 months. The second mortgage hasn't bothered us at all.

Before the first foreclosure hearing, we started a modification process to not only try to buy more time in the house BUT to give us time to see if any other opportunities arose during the process. However, we were not looking to save our home as a long term commitment. Knowing that we would ultimately file CH7 allowed us to take a less...panicked...approach to the mod process but as the time went on and on it really began to piss me off that the servicer AND Fannie Mae were basically dragging their feet. The final straw was after 3 months I found out that the office handling my paperwork had closed and my files were sitting in a box somewhere. I was basically told that my sale date couldn't be postponed unless they had my file in a negotiator's hand which was the 3rd time that story had changed and was told my only recourse was to start over. By the servicer's account starting over was a minimum of 2 months to get back to a negotiator. At that point we were 3 weeks away from our FC sale. At that point I was more determined than anything that I wasn't going to be lied to like that and be swept aside so I started burning the phone lines up. Every phone call I made was greeted with more lies.

At last, I filed a formal complaint with the Commissioner of Banks in my state and made an appointment to start the BK process. The same night after meeting with the attorney I made a call to the servicer where I was immediately put on hold for 15 minutes and then kicked back out to the main line. The next person I spoke to was more productive in 15 minutes than the dozens of others I had talked to over hours and hours on the phone. In basically one weeks time, we went from a brand new mod application, to being approved for a mod and our sale date postponed until.....

I'm currently awaiting paperwork to find out the details of the mod offer and terms of the sale postponement but was told that it was typically 60-90 days. We'll see. I am going to call tomorrow to see if I can find out more info ahead of time. We may file BK during the postponement, during the trial mod, or during the next FC process but I'm trying to gather as much info as I can in the interim to make the best decision for us.

daytona - The only reason we would consider reaffirming the 1st after BK would be to get them to go along versus selling the house themselves and keeping any profits. On second thought, I guess the 1st would still be liable to the second for anything over what's owed to the 1st, right? It's just that WE wouldn't be liable to either of them. I'll have to think about this some more.

tcreegan - I will definitely have to find out if the second has become unsecured and if not, if they have a lien on the property. Thanks for your suggestion there. A recent credit report showing the 2nd mortgage said that it was sold and written off. A financial services company recently sent me a letter saying that the account had been "forwarded' to them and tells me to mail my check or money order for the full amount of $1XX,XXX.xx .......... BWAAAHAHAHAHAhahaa...um yeah, I'll get right on that. I've got about 12 days to respond to them. I don't suppose they would tell me if the debt was secured or not, huh?

[tcreegan]

Hi BROKEDED,

....glad (sorry?) to see that I wasn't the only one treated like dirt/idiot/number on a loan mod....pat on the back for you going to the Bank Commissioner !!

Hope you are as stuffed as I am......T-Day definite success at our house!

Tom in Colo

[BROKEDED]

I'm sorry Tom. I keep meaning to say HAPPY THANKSGIVING!!! to you too. Glad to hear yours went well. I'm stuffed, very stuffed. I had to eat two plates just to try everything once. HA!

Btw, I had spoken with the young man that had been soo much help several times before he asked me if I had written the company a letter. It was obvious that he saw something on my account. I told him only the letter that I had emailed him with my package and he said no, besides that. It then clicked and I told him that I HAD filed a complaint with the Commissioner of Banks before I was able to talk to him. He said, "ahh, I see...that explains...". He didn't finish and I didn't ask.

I didn't say earlier but I figured that the Commissioner's office would respond about a month after the house was sold. But I was actually copied on a letter about one week later that was sent to someone at my servicer's bank headquarters (attorney maybe?) AND to the Office of the Comptroller of the Currency in the servicer's state.

I've wondered if I just lucked up getting the service rep when I did OR if my account had been coded in such a way to get the response I did and the rep looked into it a little more later on and questioned me about it. I do feel that THAT complaint played some part in at least how quickly my case was turned around. I only expected my file to be advanced to the negotiator stage to suspend the sale date and then expected it would sit there and wait a while which was fine by me. But it was assigned to a negotiator and a modification offer was created in about 3 days. I had been told several times before that it would take 60-90 days for that to happen.

Funny how things get done when they need to be. Shameful that this isn't the norm. The moment of truth will be when I see what they offer. -$1?

[BROKEDED]

Just wanted to update this thread that my sale date was in fact postponed. The sale was supposed to be today but I talked to the Substitute Trustee for the bank yesterday and they DID have their notice to postpone the sale.....wheeew! I haven't called the servicer since last week since I'm leary of doing anything that might speed up the mod process now. If I don't receive a phone call or mail by the end of the week I guess I'll call them for an update. Right now, the best thing is that we won't have to move or get ready to move during the holidays or shortly thereafter. That removes alot of stress.

One other thing is that I was originally under the impression that a negotiator had already reviewed our file and worked out a modification package. After speaking to a different rep during the holidays it seems that our application may have just met the requirements for further review.

[btbeme]

Living for free in your home for a year is a dream come true. Hope it happens to me. Discharged this morning; applied for a mod this afternoon (upside down by $175k on the first). Willing to move but hope they play ball. I also hope I fall through more than a few fingers on the way, as I would LOVE to bank the next year's worth of mortgage payments, regardless of the outcome. Add the arrears to the loan amount? No thanks - here's your house, along with a copy of my discharge papers. Buh-Bye.

Oh, and I can't wait to talk to the bank holding my HELOC. That is, IF I talk to them...no sense settling the 2nd if the 1st won't play ball.

[BROKEDED]

I'm guessing my second mortgage had already crunched the numbers and realized they probably wouldn't get anything. A recent foreclosure sale in my neighborhood netted 55% of the original purchase price from 2005. That's the worst I've seen yet. Most others were 62-85% of the orignal purchase price. I'm sure the banks look at certain accounts that have always been paid above and beyond and on time and then they suddenly stop with no warning and they can statistically figure out where that account is going.

As for slipping through fingers, we've been VERY fortunate so far in maximizing our timelines. Some of it has been by design and some by sheer dumb luck. I see it all as a blessing though. I try to regularly figure out possible worst case scenarios, for staying in the house, just so I'm not caught completely off guard and then dream about possible best case scenarios to keep myself motivated.