Loan Modification Forum - LoanSafe.org - View Single Post - Strange situation -- success with caveat -- HELP needed!

orcina_orca · 07-03-2009, 11:09 PM

Here’s my brief saga of gloom:
Home in AZ, bought 05/2006 for $380000
Loan w/ Wells Fargo for $340000 Interest only at 7.25% 2/1 arm, mthly pmt $2200. Adjusted to 8% interest only in 05/2008, w/ monthly pmt at approx $2550
Lost job, medical expenses, and various other financial difficulties. Stopped paying Dec 2008, set for foreclosure sale end of June 2009. As of 03/2009, Zillow showed home price to be $260000. Simultaneously contacted NACA/WF Executive team 2 weeks before sale date. NACA proposed mthly pmt of $1350 to WF. Sale date postponed by 60 days. WF called me 06/23 to make an offer for PI/TI combined pmt of $1880/mth, at 3.25% fixed interest for life of loan. They added foreclosure fee and late payments on to $340000, making total owed to $365000.
I rejected the offer right away, asking for a reduction to at least in the $1400 range. A week later WF called back to tell me that the house was now appraised by them at $230000. WF and the private investor of my loan are willing to “set aside” the difference of the amount owed and the current valuation (approx $110000). They are offering me approx $1450/mth at 4.0% interest (PI/TI) for the life of the loan. But, they say that the $110000 difference is due if I sell the house, refinance at any point, or in 30 years when the house is paid off. When I asked if the $110000 will be a non-recourse loan they say that it is too new for them to even know about it at this point. Although they say that if I sell the house I’ll likely be able to do so at the prevailing market price, which is now $230K and still falling fast. Apparently, I’ll know at an appropriate time if and when a situation arises for me to sell the house or refinance how to pay back the rest of the $110K.
Now my question is, has anyone heard of the term "set aside amount" (which WF insists is a new term that they've just started using recently)? Can I sell the house, say, tomorrow at the current market price and not be held responsible for that $110K difference? I know AZ is a non-recourse state, but does this also apply to this difference, or can WF or the investor sue me for this money? I’m thinking this is a good opportunity for me, but since I do not have any intention of staying for 30 years I’ll likely sell this sometime in the next 5-7 years. What happens then?
I haven’t responded yet to their second offer so need some help ASAP. I am supposed to call WF to give a final answer after their office reopens next week. Any advice would be greatly appreciated!

07-03-2009, 11:09 PM	#1 (permalink)
orcina_orca Member Join Date: Dec 2008 Posts: 20 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Strange situation -- success with caveat -- HELP needed! Here’s my brief saga of gloom: Home in AZ, bought 05/2006 for $380000 Loan w/ Wells Fargo for $340000 Interest only at 7.25% 2/1 arm, mthly pmt $2200. Adjusted to 8% interest only in 05/2008, w/ monthly pmt at approx $2550 Lost job, medical expenses, and various other financial difficulties. Stopped paying Dec 2008, set for foreclosure sale end of June 2009. As of 03/2009, Zillow showed home price to be $260000. Simultaneously contacted NACA/WF Executive team 2 weeks before sale date. NACA proposed mthly pmt of $1350 to WF. Sale date postponed by 60 days. WF called me 06/23 to make an offer for PI/TI combined pmt of $1880/mth, at 3.25% fixed interest for life of loan. They added foreclosure fee and late payments on to $340000, making total owed to $365000. I rejected the offer right away, asking for a reduction to at least in the $1400 range. A week later WF called back to tell me that the house was now appraised by them at $230000. WF and the private investor of my loan are willing to “set aside” the difference of the amount owed and the current valuation (approx $110000). They are offering me approx $1450/mth at 4.0% interest (PI/TI) for the life of the loan. But, they say that the $110000 difference is due if I sell the house, refinance at any point, or in 30 years when the house is paid off. When I asked if the $110000 will be a non-recourse loan they say that it is too new for them to even know about it at this point. Although they say that if I sell the house I’ll likely be able to do so at the prevailing market price, which is now $230K and still falling fast. Apparently, I’ll know at an appropriate time if and when a situation arises for me to sell the house or refinance how to pay back the rest of the $110K. Now my question is, has anyone heard of the term "set aside amount" (which WF insists is a new term that they've just started using recently)? Can I sell the house, say, tomorrow at the current market price and not be held responsible for that $110K difference? I know AZ is a non-recourse state, but does this also apply to this difference, or can WF or the investor sue me for this money? I’m thinking this is a good opportunity for me, but since I do not have any intention of staying for 30 years I’ll likely sell this sometime in the next 5-7 years. What happens then? I haven’t responded yet to their second offer so need some help ASAP. I am supposed to call WF to give a final answer after their office reopens next week. Any advice would be greatly appreciated!