What is recourse, if any, against lender trying to extort more money for their lien after it has been discharged through Bankruptcy?
We have a HAFA and the 2nd is getting $8500, however they argue that is not enough because of the amount of their loss. But it has been BK'ed and discharged. We just need a release!
I understand the negotiator game, but they have held us up requiring 2 extensions from the senior lien, with no end in sight.
Is is possible the BK trustee could help?
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Nope, you're probably stuck. Some BK's strip the liens from the property, apparently, this one did not. They aren't going to do a release because you've lost that leverage with the BK - it would be a release to $0. If this is someone who bought the debt at 10%, they often can be bulldogs who are told that they make more by getting the occasional one to pay and lose everything on all the others than to accept what is given. This is generally not true, but they are managed that way.
Since you've done a couple of extensions, I'm guessing that you did push this hard with them and they aren't folding. The only other thing I can think of is too lengthy and may not apply - go the QWR route (where they don't have to respond for 60 days). You might find that they have securitized the loan and have no right to collect anything or violated significant laws.
You might try complaining to the CFPB, FTC or whoever oversees this company. You might try the big guns of a state senator?
I have not done any of these on a 2nd - consider it blue-sky thoughts?
Is the second with the lender or with a collection agency? The collection agencies are vultures. If it hasn't been long since the loan was transferred to the CA, you MIGHT be able to get the original lien holder to pull it back. Otherwise the lien is valid and they will likely not budge. Another option is the contact the State AG's office.
I recently encountered the same situation. Even though the borrower was personally released of the obligation via the BK, the lien against the property survives the BK. So the lien holder still has the right to pursue their interest in the property. You will need to somehow reach a settlement with the 2nd. I don't believe handling of the lien is within the Trustee's jurisdiction. When I recently faced the same problem, we were forced to negotiate an acceptable settlement with the 2nd. If it's a major lender you will have a better chance of succeeding. Good Luck.
When a person borrows money in a mortgage arrangement, there are TWO parts to the legal agreement.
Harry, it is not a given that the 2nd is still on the property. You really need to find out. Sometimes they are "crammed down" and other times, the 2nd does a release, I assume to write it off, which they cannot do while it is still on the property and it seems very unlikely that they will get anything in a foreclosure. I've dealt with it both ways. It is just something you have to find out to know for sure.
Thank you to all of you for your wisdom and advice here. Though I have been doing this for years, sometimes we forget whom we are dealing with... This is a small lender 2nd lien. They are going to be difficult, I am now prepared for that. I will need to re-set the expectations of my clients with regards to 2nd lien settlement, and most importantly, I will not take any of this personally or get emotionally wrapped up in it. That is the hardest part of this whole business, isn't it!!!
"I will not take any of this personally or get emotionally wrapped up in it". Boy, do I agree with this statement, Richard. I think that is the hardest skill in the business and it is critical for success ...and sanity. I make a daily affirmation similar to this.
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