I am assisting with a settlement on a 2nd loan with PNC. This is not a short sale but the borrower has access to cash and can offer a settlement. The loan is currently being handled by the ‘debt management deportment’. They are willing to work with us for a settlement but right now they are strong arming us into paying 1 month payment (the loan is 5-6 months delinquent) so that the loan does not get ‘charged off’ at the end of this month- June. They are saying they need this payment so that the loan stays in their deportment so they can continue to review the settlement offer.

My question is- should I let the loan get charged off, will that help with the settlement?

Or should we cough up the 1 month payment to keep the loan from getting charged off. Where would I have more success with the settlement?   

 

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Steve

I had 2 transactions both where the 2nd loan was with Navy Federal Credit Union and they were both charged off--meaning they were with their collections department, when we started negotiations. One of them had PNC has the first and they were getting totally paid off. The 2nd had a balance of about $168K! We were able to give them about $40K from the proceeds and they asked us for a $4k Prom note which we agreed to but as it closer to closing we were able to give them about $5K more and they waived the Prom note. About $120K was written off. I have since spoken with that same gal on another transaction and she told me she was very happy with the payoff...it was good for her!

From my experience, it was quite easy to deal with the loan in charge off status. I think you may have more negotiating ability because if they don't get paid or won't take what you want to offer, then it goes to collections and they spin their wheels trying to come after you. Once it is in collections those people get paid a commission on what they can get out of your client so whoever you are assigned to in that dept. really wants to get the deal done. My client has had a lot of success waiting for his debt to go to collections and then playing hardball. He has wiped out tons of debt this way. He has had collectors call and ask for all kinds of money and when he says no, come after me, they hang up. They call back several times and ultimately he strkes a deal for far less than they originally asked for, because they just want to settle and get their percentage. Now the question is if it goes into collection, can they foreclose on the loan? I don't think so, but if it stays with the lien holder, PNC, are they then able to pull the trigger on a foreclosure? Maybe that is why they want you to keep it alive...I guess it depends upon the anti-deficiency statutes in your state. Again I can't speak for PNC but this has been my experience.

Elise
Elise,

Thank you for responding.

Was the 2nd loan you settled also with PNC?
I am trying to gather information on PNC's collections dept.
Once charged off do they typically out source to 3rd party collection agencies or do they keep it 'in house'?

With regards to your foreclosure question, I don't believe in my case PNC has much leverage to forec' since they are a secondary lien (the first lien is with a different lender) with little to no equity.

Steve
Steve

The 2nd loan was not with PNC, but Navy Federal. In my case I thought that a charge-off meant that it would be with a 3rd party collections but NFCU said their charge-off loan was with LRC...I found out later that LRC is just a dept. in another state (FLA) within NFCU. They had not sold it...it was still in house. Probably just in a service center that exclusively handles Charge-offs. Always a tough game to play but my client swears all day long that dealing with collections is far better than dealing with the banks/credit cards as the first line of defense.

Elise
I have been thinking of a reply... I am inclined to say let it get charged off but...do you need to give them an answer right away. I am working tomorrow and Sat. showing homes, but I can call my contact at LRC in Florida and ask her if it is better if it gets charged off. I do need to call her regarding one of my short sales that she is working on for me. You can reply to me privately and let me know what kind of loan it is and some details about the shortfall. Email: [email protected]

Elise
Tony...I don't know how long it was before it was charged off, but I imagine the loan was very delinquent. In fact there was a foreclosure date issued in both circumstances. In that case the 1st issued the NOD, the 2nd then charged it off to try to collect.

I think it went right to charge off to the LCR Dept. In fact when NFCU told me it was not with them anymore but transferred to LCR, they made it sound like that was going to be an issue...it was an OOHHH it went to Fla.

I got a settlement with the LCR dept. in days. Really. This last one was hours (since I had worked with this gal before) and the first one was maybe 2 weeks at most. They will work with you on the terms, closing date etc. They want their money but they don't want to make it impossible for your client to pay it.

Lien was released and I don't know about his credit report. He will be checking it out shortly and if anything interesting, I will let you know.

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