Second lien foreclosure or loan modification?

[Terence Wang]

I started the foreclosure since the borrower stopped payment for 3 months. About 3 weeks after I recorded notice of default, the borrower requested to remove NOD because he's doing refinance and new lender wouldn't lend for a house in foreclosure. I have no clue if this is true or not. So I said we can do a loan mod by adding all accrued interest to principal and a mod fee in order to remove NOD.

The house has plenty of equity so I'm not worried and I won't give any discount. If borrower's lying, I'll have to do foreclosure again in 3 months but I at least collect the loan mod fee. Does this sound like a good strategy? How much would you charge for loan mod?

[Mike Hartzog]

In a refinance scenario, you do not need a loan mod because you will get a full payoff as part of that process.  I would agree to put FCL on hold in exchange for the borrower resuming monthly payments while the refinance is pending.  If they can't or won't do that, chances are they are using the story as a delay tactic.