Posted by JT-IN on June 21, 2007 at 07:53:07:
“maintain as much status que as possible”… aka Let’s hope that this situation goes away…
Bottom line is that this person is in way over her head and financial capability. The circumstances are quite unfortunate, but the realities are what they are. The Banker / Advisor may not be providing constructive advice here… I would simply ask him what his recommended course of action would be…? It is easy to say, “no, don’t do this or that…” But having a cogent and meaningful answer and approach is often times much more difficult.
There is really not enough details offered in your post to give any substantive direction on what should or shouldn’t happen here… It greatly depends if she is currently behind on pymts, which it sounds like she may not be, but that it is inevitable. With that said, I wouldn’t be offering anything to a 2nd mtg until you hear back from the 1st. If the 1st is current it is unlikely that they are going to play “charitable contributor here”, just because this gal has a bad situation. The business reality is that the family should have planned for this event and not been so fool-hardy with finances prior to this catastrophic event. Sorry.
What must also be known is what amount is the 1st mtg and what amount is the 2nd…? Sure, the 2nd will gladly settle for 70% on an over-leveraged property. In reality what should happen is the 1st is paid in full and the 2nd takes the big hit… certainly most 1st mtgs would see it that way, and I would too if I was holding the 1st. So your suggestion to the 2nd that they take 70% may well end up working against a reasonable settlement here… since they have that planted in their minds now.
So provide more details of FACTS, balances, current or late… etc. The fact that the family would like to stay in the house is irrelevant, the bottom line is they can’t afford to stay. You seem to be doing more social work here than investor fact finding. Separate your emotions from this deal… and try to look at it as if YOU were owed the money on the 1st… what would you do here…? (think like a big company now).
Better luck to all involved here, but luck may not be enough…