I recently settled a car accident claim for way less than I thought it would be, but I have a small amount of money coming. I can offer the bank approximately 28-29% of the principal balance on the home loan. The loan was included in bk7, so I know I can walk away, but my hope is that by settling with the bank, I could avoid the 3 year wait for a new loan, and we could just rehab our current house and stay here. It will likely need about $50,000 worth of repairs (could be more), so our thought is to settle with the bank, then turn around and apply for a loan to fix it.
So, I was just wondering if anyone has had any success in offering a settlement on a house in a foreclosure, and if so, how that would report. It's my understanding that we wouldn't have to count the loss as income due to the 2007 Mortgage Relief act.....so there's nothing to lose here - right?
Anyone have a template or suggestion on what to write in the letter - do I just send it to the loss mitigation department?
A settled for less transaction would be reported the same as a foreclosure from the standpoint of a 3 yr wait on a new Fannie mtg.
The only way to avoid this might be to actually purchase the paper (note and assignment of mtg or dot) from the lender, but this is a very technical event and maybe too vast to discuss in detail here. These transactions are also very rare, if dealing with a large lender.
Back to the offer of 28-29% of the loan bal: How does this reflect to and objective value if determine by a 3rd party? Sounds pretty low unless the mtg value was way too high or the mkt value has taken a serious hit. Another way to look at this is, if you owned the mtg, knowing what you know about the house and FMV of the local re mkt, would you accept 28% of the loan bal, or would you foreclose and sell to the highest offer following a sher sale? Which would net you more?