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Settlement

Short Sale? Can we Settle instead of payment plan?

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Question:  We are in the process of doing a short sale to sell our condo in Illinois. We have a mortgage and a line of credit through Wells Fargo. The mortgage is approved for short sale, asking us to bring $20k to closing. The line of credit is almost approved but they are saying that we will have to settle that loan AFTER we close by setting up a payment plan. We cannot afford to pay on this line of credit and we are now considering foreclosure. If we foreclose, can the bank come after our assets? Can the bank come after us for the line of credit? We are moving out of state. Will we have to go to court? Will foreclosure permanently be on our record, or just for 7 years? Will we be able to get loans in the future? Thank you for your help!

Answer:

These are great questions. You have about 3 or 4 questions here so I will try to answer them accordingly. First, the bank can’t come after your assets directly but they “could” file a judgment against you where you will have to pay them the amount that was deficient. The line of credit is what gets most people into trouble. They are the ones who take the biggest losses. So they are the ones that usually come after you. You can actually settle the 2nd mortgage completely for approx. 10% to 15% of the original note if you know what you are doing. That way there is no repayment plan. It’s basically wiped out for good. See most banks are worried that you will file bankruptcy, so they are willing to work with you if you provide them a quick settlement upfront. Third, you shouldn’t have to go to court, unless you decide to fight the judgment if it even goes that far. Fourth, foreclosure will be on your record for about 7 years. Bankruptcy is about 7-10 years. A short sale is about 2-3. A settlement has NO effect on your credit because it was paid off in full. No matter which route you choose, you will eventually be able to get loans again. It’s just a matter of time.

Can I Short Sale My HELOC?

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Question:  I may need to short sale my home in Washington DC. My second is a line of credit of $80K. Is it possible that that lender approve a short sale, or will they automatically not, just because it is a line of credit and not a regular mortgage loan?

 

Answer:  

Yes, you can “work out” something with your lender. A short sale is usually done when you have a buyer come in and offer the bank less than what that home is worth and then you have to move out. If you want to sell the home, than that would be an option. However, a better alternative might be to Settle Your 2nd Mortgage. This is where you would negotiate a full payoff or settlement of your 2nd mortgage. It’s a lot different from a short sale because you get to stay in your home and it doesn’t affect your credit like a short sale would. Hope this helps.

Counter offer to HELOC settlement

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Question:  Hi, many of these subjects are interesting but my questions and situation is a bit different.
After going through a long process with my 1st mortgage, finally a loan modification with a 3 month trial is being worked on. Still owe about 145,000 on 1st mortgage. House value is now around 50,000. Took a HELOC of 30,000 of which I still owe 24,000. After unemployed and some rough times, just getting back on my feet. Heloc lender wants a lump sum at this point of 19,500. If I can’t come up with it then a down of $4,500 and a monthly of $200. If I could I would but can’t. I counter offer $50-$75 month. My weekly budget has no rooms for extras. I have not heard on my counter offer. Can you explain what will happen if they don’t accept to me, my house which I am trying to keep and working with my 1st lender. Thank you for any help or suggestions you can provide. will look out for a response.

Can I Settle my Equity Line of Credit with the Bank?

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Question:  I own a property outright which has no mortgage. There is an equity line of credit which has come due, which I can not afford to pay in total. I consistently made payments on the equity line until November of 2011. The bank asked me to offer them a settlement which I have done and suggested that I not make anymore payments on the equity line. This has been dragging on for months. The bank asked me to let them appraise the property and then they would decide on the settlement. Is this normal procedure? Can you shed any light?

Can 2nd mortgage foreclose on me?

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Question:  I have a 1st and 2nd mortgage with one bank in Florida. Then another bank came and offered to pay my 2nd mortgage with that bank. My heloc was not closed with the first bank and i had an emergency got some money out of it. My 5 yr term with the 2nd bank expired. They have been calling me and offering 8% interest rate on my heloc. I have been negotiating for a lower interest. they wont approved. Bank is threatening to foreclose my property. Can they do it? Property value is way too low..there is no equity on the house in this current market. Please advise. Can the 2nd bank foreclose my property?

Answer:   Absolutely, the 2nd mortgage can foreclose on your property. When you signed on the dotted lines for the HELOC, you gave them the right to force the sale of the property, which was collateral for the loan, in the event you did not keep up your end of the deal. Unfortunately, banks don’t like to negotiate with homeowners very much. They have this assumption that homeowners have no clue what they are doing. So they don’t give you very good deals that seem very reasonable based on current market conditions. Yet when a 3rd party (attorney or real estate investor) negotiates with them, the bank will usually lose more money because the offer is even lower then what the homeowner proposed. Bottom line, banks flat out don’t make sense.

So you best bet is to have someone else, like an attorney, negotiate the terms with them and try to get them to reason with you. Unfortunately, they cost money, but they should be able to help.

Another option is to have someone settle that 2nd mortgage and wipe it out completely…

Let the bank know you are interested in settling, tell them your home is upside down by $50,000 or whatever the amount is, there is a first mortgage in front of them and they will end up paying more than what the property is worth. Let them know your attorney has advised you to file bankruptcy but you don’t want to go that route. (This will just by you some time, they will eventually foreclose.) Then you or preferable someone else, needs to go settle that note for pennies and that way you don’t lose your home.

We settle 2nd mortgages and have been very successful in doing so for homeowners with large 2nds. The great part is that it doesn’t cost you anything upfront.

Good luck, hope everything works out for you.