Another question that needs an answer please

[Ann]

All,

I cannot seem to find the answer to this question so if anyone knows the answer please reply. After being discharged from a chapter 7 will a second mortgage company continue to add interest and late fees from a non reaffirmed mortgage (that has not been paid for the last 2 years) ? I'm just thinking of what I would actually offer to settle on if the bank were to ever accept to settle. Would it be based on the amount owed at discharge or 2 years of late fees and interest on top of what was last owed? Very much interested. Thanks for replying!

[justbroke]

Your non-reaffirmed, discharged mortgage balance will continue to increase and will consist of the principal, late fees, interest, attorney fees, broker opinion fees, and even attorney fees. Given that, the second lienholder may be interested in settling for as little as 5-10% just to get it off their books.

Of course, this all depends on just who the lienholder is and the value of your property.

I have no personal experience in this so I can't tell you whether offering 5-10% of the balance that was discharged or the current accumulated balance. There are several forum members who have done this and hopefully they pop in soon.

(I would think that since the 2nd hasn't moved to do anything at this point, they may be more amenable to a settlement. However, make sure that you are not "overpaying" and make sure you are not still underwater by more than 10% with the first. Otherwise, I don't personally suggest paying off the 2nd unless there are some real good financial reasons.)

[btbeme]

I am assuming two things - that your first and second are with different banks; and that you want to stay in the house.

If you don't pay on the second, it will continue to grow as noted above. If you try to settle, the bank will try to stiff-arm you into paying as much as possible. But if you are well underwater, you can hold out for a small buyout. 10% of the balance due seems to be the lowest I have seen (maybe a very few exceptions) but 20-30% seems do-able.

What the second would get if you were foreclosed is about $3000. They know that. They will want more than that, but if you work them hard and do not pay in the meantime, you increase your chances of getting an agreeable settlement. Be sure to have an atty look at the settlement agreement first.

[Pandora]

Ann,

As I've mentioned to you in past postings - PNC plays hardball and they dont care how long they sit on a property or lien - trying to settle with them is next to impossible; complete waste of time IMO.

if you didnt reaffirm and discharged both mortgages - why not just walk away and move to where you want to, as previously posted? walking away is the simple answer vs. trying to fight with PNC - they want the house that badly...let them have it; they havent been too worried over the past 2 years about you not paying, so that should be a red flag for you that they aren't concerned about it.

[Ann]

Thank you for answering my question. Yes, Pandora I remember your advice some time back. I have heard (and very confused) on the whole waiting period before we can buy another house. Please do not tell me to go rent for a while. I can assure you that renting is more expensive than buying. I know it sounds crazy but true. Pandora, is your experience with PNC Mortgage or PNC Bank? I have been reading that PNC Mortgage and PNC Bank (although the very same bank) operate very differently from one another. At this point the balance owed on my first mortgage and what I could presumably sell for leaves some money but certainly not what I still owe on my second and especially with all the late fees and interest.

[Pandora]

PNC Mortgage is who I've had to deal with (and still do...) - and yes, they are a PITA.

I understand you not wanting to rent, but...the alternative is to continue to play the game with PNC. they will keep holding on until they have enough push to foreclose. I dont know what you owe to the 2nd, however just be aware that if you plan to continue the fight with them, you need to know when they will call your cards, so to speak. It's all in what you want to put in effort wise not to mention stress / headache wise. :/

I understand what you want to do, but in all honesty, even if you sell your house for what the 1st is owed, or even a bit over, you still wont get any money from the sale unless you clear both mortgages in full. It really doesnt matter any way because PNC cant come after you for any deficiency - you didnt reaffirm.

You need to decide when to cut your losses to a point where it will profit you - or give it to PNC. I know you want to try to purchase another house but from a BK standpoint, its going to be quite a while before you can do so (i.e., get a loan), unless you have the $$ to pay in cash. Remember, if you walk away, it does not mean the deed / title is out of your name and you cant force the lender to push it any faster.

Just something to think about....

[newphoenix]

... But if you are well underwater, you can hold out for a small buyout. 10% of the balance due seems to be the lowest I have seen (maybe a very few exceptions) but 20-30% seems do-able.

What the second would get if you were foreclosed is about $3000. They know that. They will want more than that, but if you work them hard and do not pay in the meantime, you increase your chances of getting an agreeable settlement. Be sure to have an atty look at the settlement agreement first.

We settled for 5% (owed $100,000 paid 5,0000 to settle). We did not reaffirm either the first or second mortgage. The second mortgage was completely underwater. It sounds like you may have a difficult time with the lender you're dealing with but I would try. The worst thing they can say is no.