I bought the house with Chase Home Finance and Citimortgage. The first mortgage is 312K and the 2nd mortgage is 80K. I stopped paying the 2nd mortgage a long time ago in hopes to concentrate on modifying the first with Chase Home Finance. I am still pursueing modification with Chase.
I received a Notice of Case Management Conference for this debt. Also, received a Plantiff's set of Interrogatories and first set of requests for admissions.
I dont want to file Chapter 13. What is a realistic settlement for this worthless 80k debt on my house? My house is only worth 295k per Zillow.com.
Real Estate Attorney
It all depends on Citi, as they don't consider the $80k they lent you to be worthless. Some 2nds are taking as little as 2% while others are demanding payment in full! The fact that they are suing you means they believe they'll actually get something out of you. BK would prevent that.
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Tom Gimer, Esq. -- licensed in DC and MD -- 202.556.4LAW (4529)
You don't want to file Chapter 13? Then why do you think you can stop paying your second mortgage? What's your legal and factual basis for paying less than what you agreed to pay? And why should the bank accept anything less than a judgment against you for the full amount?
Based on the facts you present, the second mortgage can be stripped off in a chapter 13. Do you want to avoid chapter 13 because you have too many assets? That's reason enough for the lender to get a judgment against you and levy your assets. Do you want to avoid chapter 13 because you're afraid of what it will do to your credit rating? If you're already being sued because you have not been paying your second mortgage, then your credit rating has already suffered.
Bottom line: if you don't want to file chapter 13, I can think of no reason why they would want to settle with you. Speak to an attorney about your chapter 13 options before ruling out whether it is a good option for you.
By the way, on those requests for admissions: if you don't get a response in within 30 days, the facts will be deemed admitted. Be sure you read up on the rules of civil procedure so you don't get stung by failing to respond.
McLeod Law Offices, PC
1 lawyer agrees
Real Estate Attorney
I happen to know that Bill McLeod is a fine lawyer, and I generally agree with him - Chapter 13 seems to make sense here. However, I would like to caveat what he has said with the following: there are state law defenses that you may be able to bring, depending upon the circumstances of the mortgage (an attorney should be able to work out whether this applies to you).
You might also consider the so called 2MP program, which allows the modification of second mortgage loans following a HAMP modification. Employing a litigator to forestall the proceedings brought by the Second mortgagee might be worthwhile, particularly if you can enjoin the debt pending determination as to modification of the First mortgage.
Finally, I note that according, at least, to the Guidelines, a bankruptcy will not necessarily effect your ability to modify under HAMP. Though: of course - consult with a lawyer before reliance on any of this advice.
Bottom line: it's time to get an attorney.