My clients have a second, originally with WaMu, but was then passed on to a recovery group. They will release the lien for $3K, but will not settle for less then 50% of what is owed. If my clients had 45K to give, they wouldn’t be in this position to begin with! At this point I have advised them that we/they will still have to settle this debt, but at least they are free of the house. We have approval from the first.
Any success negotiating a settlement with a recovery group prior to COE?
You can go back to the first and let them know what the second said. Not sure about a recovery group. But I did this with the short sale I’m working on now and we submitted a new HUD with the amount the second asked for and the first came back with an amount they were willing to give them. Now we’re closer to having all parties agree, but still not quite there. The first bank told me I had to negotiate with the second, they can’t do it, but they will review what they receive. I hope that helps…
When dealing with a recovery group or collection agency that is now handling the file we have seen cases where the agent went back to the lender that sent the file to the recovery group. Remember that the lenders are under pressure to approve more mods and short sales. The recovery/collection agencies want more business from these lenders. We have seen a call from the right person at the lending institution change the whole terms of the short sale approval. This may not work every time but it is worth a try.
My experience is that most recovery groups will settle for 10 to 15% of the loan balance. Remember even if the first takes the property to foreclosure the second is not wiped out, it is then just not secured by the property but the debt is still there. Do your best to work with first to get them to pay a little more and try to get a little from the seller or buyer. Good Luck!
Sherman Smith
www.shermansmith.com
sherman@shermansmith.com
Recovery groups are difficult to deal with. The amount the recovery company quoted you is probably not their bottom line. Go back to the first and ask if they are willing to pay more to the second. If they want the close the short sale, they will. A lot of people think that in California the second gets nothing if the property goes to foreclosure. That is not true. In California there are 2 types of foreclosure available to banks, judicial and non-judicial. The non-judicial route is preferred because it is cheaper. We are also a one action state, which means that lenders have to choose the foreclosure route they want to take. I am assuming that the first has started the trustee sale process and since they will be the one to foreclose, the second still has the option to pursue the debt because they have not taken their one action. That creates a problem for the first. The reality is that the second is in control and if the first wants the short sale to happen they will have to bring more to the table. It then becomes a numbers game for the first. Which will cause the least loss for them: giving more money to the second or foreclosing? Good luck to you and remember that “it’s not over till it’s over.” Keep fighting for your client.