Question: I have a primary mortgage with a balance of $249,000 and a HELOC with a balance of $46,000. My home is only worth approximately $275,000. Proceeds from the sale of my home will satisfy the primary mortgage and only about $20,000 of the HELOC. My question is does the HELOC loan need to be paid in full at closing? Will it impact my ability to close? Can I put the $20K toward the balance of the HELOC and agree to keep paying this loan? I do not want to short sale or foreclose, but I can no longer afford to stay in my home. Thank you.
Answer: – I hear this all the time and I do have a solution. You like a lot of other homeowners are finding that their home is upside down or underwater and when that happens, there are not a lot of alternatives if you can’t pay your mortgage anymore. Loan modifications are a joke, short sale hurts your credit, foreclosure is just not a good option at all, you can’t sell your home unless you come out of pocket, which is what you are considering, however I may have a better solution.
We may be able to settle your note so you won’t have to come to closing with $20k. What this means it that we will negotiate with your bank to accept less than what is owed. Very similar to a short sale except, it doesn’t affect your credit at all, it wipes out your 2nd completely, you can stay in your home if you want, in your case you would be able to sell your home and not have to come to closing with $20k. It’s also very fast… it usually takes us 2 to 3 months to settle a note.
If you’ve ever had your loan transferred and serviced by another bank, that’s exactly what we are doing. But in the process, we are paying off the note instead for a fraction of the balance. We’ve been doing this since 2008 and have settled millions in distressed real estate. Now there is a catch…
We can only settle 2nd mortgages. It doesn’t work with 1st mortgages. Our model only works with those who have 2nd mortgages, which you have. There is also one bank that we can’t settle 2nd mortgages with. Learn more about Settling Your Note and how we do it.
This is a good option for someone with a 2nd mortgage. You answered this person’s question very well… but I wonder what happens if he fails to convince his bank? Is there some kind of pressure he can put on them?
Although this strategy can be done by the homeowner, it’s much more effective having someone else do it. Even if it was a friend or relative. We are about 80% successful in settling these notes for homeowners so the odds are in the homeowners favor of getting it settled. It all comes down to the relationships you have with the banks and how well you negotiate with them. In terms of pressure, yes, there is lots of pressure you can put on them. Things like home is upside down, change in income, economy, any kind of hardship, etc. time value of money is huge to these banks. Money now is worth more to them then in 30 years.