What to do regarding attempting to settle a defaulted second mortgage while trying to sell a house?
Question Details: Many years ago, my husband and I were able to qualify for a HARP loan restructure. We had an 80/20 split. We didn't know it at the time but only the 80% was restructured. Then, 2-3 years later, we started getting collection notices on the 20% loan. We have recently started trying to settle this debt as we are now in a place financially to do so. Is it possible to reach a settlement agreement of a specific dollar amount lower than the balance while simultaneously trying to sell the house? The last offer is more than what we have on hand but could easily be paid once we sell the house.
It is possible to settle for a lower amount (e.g. you'll pay them what you have in hand) and/or for later payment (e.g. after you sell). Someone to whom you owe money, including a lender on a second mortgage, as the power to resolve or settle the debt on any terms it agrees to. So you and the lender can settle this, but any settlement must be voluntary on their part: they do not need to settle, but rather must convince them to do so, such as by making an offer more attractive to them than what they could seek (including due to avoid legal costs to sue you) otherwise.