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  1. #1
    Join Date
    Sep 2008
    Posts
    3

    Default How to Go About Offering a Settlement on Second Mortgage

    My question involves a foreclosure in the State of: Ohio

    Hello...I have posted before, but circumstances have changed as well as my questions.

    Here is the situation (hopefully not life story )

    We owe close to $400,000 on our home between a first and second mortgage. Our situation is somewhat unique in that we owe MORE on the second than the first. We lost our business this year (we owned a mortgage company - how ironic ) We have paid down our first by about $60,000 additional principle in the last 4-5 years. We took out a second for use of home remodeling, but instead, used the money to chase the chances of keeping our company open. Bad move...but that's in hindsight.

    The first has started the foreclosure process. Our attorney has anwered, and stated that we wish to keep the home. In our county, it seems as though foreclosures are expedited and the normal time from the first foreclosure letter to sherrif's auction is about 6-7 months. We owed $197,000 on our first, now owe about $220K due to penalties. We are filling bk (chapter 7) because the unsecured debt we took out to establish our company was taken out in my husband and I's personal name, not business. We never transferred those accounts to the company. We are doing a business/consumer bk. We have not filed yet, due to that we really want to find a way to keep our home, and need to work with the banks. I guess if you file during this process, it does not go to loss mitigation, it goes to another department and loss mit cannot work on your loan for you as it is not in their department.

    Our home is way over valued in this market. The houses in our neighborhood are selling from $299K - to $315K, after sitting on the market for 18+ months. There are so many houses for sale right now, and noone is getting anywhere. I don't see the second coming after us, as they would want the first to pay expenses, right?

    My questions and intentions are as follows:

    1. The first mortgage is the one filing foreclosure, although we can make this mortgage payment. We have not due to the fact that for a workout plan with Countrywide, they have stated we needed to be 90 days past due. Strange how they cannot help BEFORE this process starts. At 91 days, they filed foreclosure papers on us. Is it possible to get them to go back to the orginal amount owed at $197K before the penalties, if we are able to pay all the back payments?

    2. How is this going to work with the second? Is it possible to offer the second around $50K to get them to settle on the account? I have a family member that would be willing to give me this money. I understand that they can come after you for the difference, but wont that go into chapter 7 bk? Then we could afford our home.

    3. Our bk attorney is too expensive to hire for this, although is advising us on our best possible solutions. He thinks all of this is reasonable. Who do we hire to do this for us? We need to get started now...but don't know how to do this. Is there a program out there to help us with this, or do we need a specialized attorney? We don't trust anyone out there, as we are getting "scam" letters daily.

    Any information will be extremely helpful!!! I, like you, I am sure, have lost countless nights of sleep due to this. I have 3 children who love their school, friends, and neighborhood, and cannot even begin to imagine what they will go through. Please help...and God bless everyone going through this and more in this country.

  2. #2
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: How to Go About Offering a Settlement on Second Mortgage

    If you want to try to negotiate with your lenders, pick up the phone and start negotiating. Nobody here can tell you what they will or will not do. Your end goal, though, seems to be to get both lenders to walk away while leaving you with significant equity in your home. I don't expect that to happen.

    I think you should be talking to your bankruptcy lawyer about Chapter 13, and stripping or cramming down the second mortgage.

  3. #3
    Join Date
    Sep 2008
    Posts
    3

    Default Re: How to Go About Offering a Settlement on Second Mortgage

    Thanks Mr. Knowitall...

    We cannot file a Chap 13. We do not even qualify because of the amount of debt. If we did, we would spend the rest of our life paying on a company that no longer exists. Ch 7 is our only option. We are holding off on filing due to working the house situation out.

    We do not want to walk away from the first. We just want them to go back 6months ago to our amount of $197K and pay them the back payments. In our county, the sherriff sale bidding amount is 2/3 of the appraisal. The auditor has our house listed for $315K. We owe close to $400K. That would put the starting bid at $211K. From what I understand, the first will only bid what they are owed. So, right now, $220K (because of penalties). In our situation, will the second bid? Do they want to own the home? They probably won't file foreclosure because they want the first to pay (C-wide). I am sure they could sell our house for $300K. So I am guessing that the second will bid? I don't know... This is why I wanted to offer them something so they will for sure get $. If we offer them $50K, then that would be better than the cost of owning the home, paying realtor, etc. If am just looking for thoughts, not really answers. I am working with C-wide, but their payment plan sucks. I won't even know for 4 wks if we qualify for the Homesaver Program. It really doesn't help at all! Short term, but not long term. We were thinking of having a family member bid on home so we could still live here and pay him, but not sure what makes sense for the second - and what they would do.

    I have been talking with the first, but not the second. My attorney is working on drawing a proposal for the second and why they should take the $50K and settle. Just need any thoughts. I know no one knows what the lenders will ultimately do, but if any has been in this situation, I would like some guidance.

    We really want to keep our home for the kids. We just really cannot afford to pay more than $250K right now. I know our situation will change...it's just going to take a little time and I would hate to foreclose.

    Thanks!

  4. #4

    Default Re: How to Go About Offering a Settlement on Second Mortgage

    Im not sure where u from. But im from Rancho Cucamonga 91737
    I recently just got a job and i work in a law office that also do Bk.
    I have a client who had 3 houses and dont care about losing the others except for the other one.
    he is also going to file chapter 7.
    Ur lender is not gonna let u get away with all those debts. and keep one house.
    But U cud exempt 1 house. and negotiate for the other house. or the creditor will force u to get the equity of the house and pay atleast something for the other somehow. ur situation is not that bad compare to this guy who owes 2 million dollars. i wish u live right here. So u can stop by in our office. Well I will tell the lawyer about this and ask her to see what it is need to be done.

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