Need help with BofA 1st & HELOC

[msemr]

I have 1st mortgage and HELOC Nevada loans with Bank of America. I'm severely underwater with the HELOC and BA has no plans that will help me. The approximate value of house is the balance of the 1st (150k Conventional 30yr 5.375%) and the HELOC is on top of that by 50k (variable currently @ 4%). I looked at HAMP but don't qualify if I can't factor other debts into the overall picture. I would love some advice on how to proceed from here with BofA to either reduce the HELOC balance and/or get a decent (not 12%) fixed rate.

Thanks

[Evan Bedard]

Welcome and thanks for joining the community.

Well if your 1st mortgage payment is already at or below 31% of your gross monthly income you will not qualify for HAMP, but that does not mean you will not be eligible for a traditional in-house modification. Regular in-house modifications do not require that your payment is above 31% of your gross income.

As far as your second goes many servicers only offer temporary 1-3 year modifications for these loans. However, some people have achieved a permanent modification on a 2nd at a low rate.. People who are severely underwater can choose another route such as settling the second mortgage for a percentage of the balance. But for this you will have to be in default on the loan and/or charged off.. Here are some great threads with tons of information about settling 2nds..

Strategy for Settling Your 2nd

Success Stories in Settling 2nds

[msemr]

Welcome and thanks for joining the community.

Well if your 1st mortgage payment is already at or below 31% of your gross monthly income you will not qualify for HAMP, but that does not mean you will not be eligible for a traditional in-house modification. Regular in-house modifications do not require that your payment is above 31% of your gross income.

As far as your second goes many servicers only offer temporary 1-3 year modifications for these loans. However, some people have achieved a permanent modification on a 2nd at a low rate.. People who are severely underwater can choose another route such as settling the second mortgage for a percentage of the balance. But for this you will have to be in default on the loan and/or charged off.. Here are some great threads with tons of information about settling 2nds..

Strategy for Settling Your 2nd

Success Stories in Settling 2nds

Thanks for the info and I had already checked them out. I'll pursue the in-house modification after I understand what's involved and what the catches are in a potential deal. If i choose to attempt to settle the 2nd I'm concerned that as BofA also holds the 1st so that might/would increase the potential of a foreclosure. Never missed a payment and that holds no water with BofA in regards to giving me a decent interest rate on a fixed conversion for my HELOC.

I checked on the National Mortgage Settlement that was just released in January but the settlement supposedly does not include me as my "investor" (Fannie Mae) precludes my participation. Just can't win sometimes...

[Evan Bedard]

Thanks for the info and I had already checked them out. I'll pursue the in-house modification after I understand what's involved and what the catches are in a potential deal. If i choose to attempt to settle the 2nd I'm concerned that as BofA also holds the 1st so that might/would increase the potential of a foreclosure. Never missed a payment and that holds no water with BofA in regards to giving me a decent interest rate on a fixed conversion for my HELOC.

I checked on the National Mortgage Settlement that was just released in January but the settlement supposedly does not include me as my "investor" (Fannie Mae) precludes my participation. Just can't win sometimes...

That is true, unfortunately neither Fannie Mar or Freddie Mac are participating in the mortgage settlement. This is quite ridiculous as they own about 60% or so of all residential mortgages..

[beechamp]

Im very confused on what I should do with my HELOC with BofA. Ive read several posts and there seems to be two ideas.

1. Dont pay your HELOC, just leave it. Hopefully, eventually, we will get an offer to settle.

2. Donta pay the first AND dont pay the HELOC. That way before house goes to Foreclosure you may get an offer to settle, or the second may be forgiven.

Any help on this would be appreciated. At this point, I dont think we care if we stay in our home or Foreclose on our home, we just need to do something smart as we are underwater and NOT making our money work for us. We have been in our home for 7 years and now have credit card debt of 20K as well. We have foreclosures all over our street so our property value is down as well. Any ideas ???? Thank you.

[Evan Bedard]

Im very confused on what I should do with my HELOC with BofA. Ive read several posts and there seems to be two ideas.

1. Dont pay your HELOC, just leave it. Hopefully, eventually, we will get an offer to settle.

2. Donta pay the first AND dont pay the HELOC. That way before house goes to Foreclosure you may get an offer to settle, or the second may be forgiven.

Any help on this would be appreciated. At this point, I dont think we care if we stay in our home or Foreclose on our home, we just need to do something smart as we are underwater and NOT making our money work for us. We have been in our home for 7 years and now have credit card debt of 20K as well. We have foreclosures all over our street so our property value is down as well. Any ideas ???? Thank you.

Hello beechamp,

If you are going to walk away from your property, settling the second mortgage is probably not going to benefit your situation.. What state are you located in and how far are you behind on payments?

[beechamp]

Hello beechamp,

If you are going to walk away from your property, settling the second mortgage is probably not going to benefit your situation.. What state are you located in and how far are you behind on payments?

We live in Oregon and are not behind in payments, but we are using our credit cards so that we can stay afloat and becoming further and further in debt. Im not sure if we stop paying on the HELOC if they would settle with us (if we stayed current on the first mortgage). We just dont know what to do!

[Pennybond]

Hello beechamp I am in Oregon too. I have gotten a HAMP mod on my first in 2010 (with Chase) and I had been getting affordable temporary mods on my second with HFC until recently. They have changed their modification guidelines and now want to double the modified payment which equates to and interest rate of 13.44 percent. My second is underwater as the homes' value is equal to first mortgage balance. HFC would not budge eventhough their loan in underwater. The temp. mods I have been recieving have been right around 5.25 percent and the payment was half the original contract payment. First, I cannot afford the increased payments second it is illogical that they would think I would make payment where they are getting such a high spread, their borrowing costs are so low these days. So, I have stopped paying on the second (2 months now) and I am current on the first. I am banking the second payments that I would have made in hopes of having a settlement fund in 5-7 months. I was offering to keep paying if they were going to be realistic given the level of interest rates today. Are you underwater on the second? If so you may want to consider the same strategy I and others here are employing. Living off cards will eventually end with a heavy burden to you.

[Evan Bedard]

We live in Oregon and are not behind in payments, but we are using our credit cards so that we can stay afloat and becoming further and further in debt. Im not sure if we stop paying on the HELOC if they would settle with us (if we stayed current on the first mortgage). We just dont know what to do!

Pennybond has good advice about the settlement. If your 2nd mortgage is underwater they are in no position to pursue foreclosure on your property and you may eventually be able to settle the account for about 5-20 percent of the loan balance..