Got a call from Wells Loss Mit Dept (after 3 months behind)

[ultimate4799]

All,
Got a call from Wells Loss Mit today after 3 months behind on my mortgage. The guy seemed so nice and he told me I am being reconsidered for a loan mod. I told him that I got denied before since I got mortgage backed sec loan but he further said that in their system it is showing I'm now eligible for their new program pending for me to resend latest financials/ hardship letter/ etc.

Now, I know it make sense for me to walk away now(underwater by $200k) but I still feel like if they can help me lower down my mortgage to prevailing rent in my neighborhood, then I will move forward with loan mod with them. But I have the following questions in minds that I like to get consensus among all of you(specially to Prof Shays) before taking a move :

1.) If I send them my latest financials, what are the chances that they will track all my assets, bank accounts, etc and run after me thru collection agency later on if I decided not to take their offer?

2.) Also, if I resend again my financials, will this buy me more time for rent free living? Didn't see NOD yet up to this point.

3.) Any other things I'm not aware of as risk if I do provide them with my latest financials? I plan to file BK after I received NOS if loan mod is not favorable for me and I worry they can do something to prevent me from doing so later on based on info I provide.


I highly appreciate anyone's inputs.

[The Professor]

Rather than having to go through your previous posts, can you answer the following questions:

1. What state is the property located in?
2. For each loan, identify the lender, current balance, and whether the loan was created at the time of purchase and entire loan proceeds were used to pay for your residence.
3. What is your estimate of the home's current fair market value.
4. Have you occupied the home as your primary residence since purchase?

Daniel

[ultimate4799]

Hi Prof. Shays, Please see below answers. I appreciate the advise.

1. What state is the property located in? >>>CA
2. For each loan, identify the lender, current balance, and whether the loan was created at the time of purchase and entire loan proceeds were used to pay for your residence.
Wells Fargo - $640k
SLS -$120k
>>> Refinance per above. Original purchase price is $700k.
3. What is your estimate of the home's current fair market value. >>>Estimated value per zillow is $482k. Bigger and newer house on sale for $440k which is just few house away.
4. Have you occupied the home as your primary residence since purchase? >>>Yes, primar residence and still living in it since 2005.

[ultimate4799]

Hey Prof Shays, Any advise please?

[The Professor]

For some unexplained reason my earlier posting didn't hit the forum. My question was were both the Wells Fargo and SLS loans created as the result of refinances of each?

Daniel

[ultimate4799]

Yes they are refied loans. Before I have 100% financing(80/20) with Greenpoint and Countrywide.. It was refied 2007 and Wells/ SLS are the new lenders.

[The Professor]

You are in an extremely challenging position. Because of the refinances you have lost the non-recourse protection provided by California Code of Civil Procedure Section 580b. Given you plans to file bankruptcy you seem to recognize this. My sense is that I would not provide new financial information because of the potential downstream questions that may come up during your interrogation at the bankruptcy first meeting of creditors. Stale information is easier to explain away as opposed to recent financial statements signed under penalty of perjury.

A loan modification isn't going to chance the fact that your home is underwater by $200K. The approach you've decided to follow, that is getting the fresh start provided through a bankruptcy filing seems well reasoned. Money well spent is talking to a bankruptcy attorney early on in the game to provide the opportunity for asset placement would be a plan you need to consider.

Daniel

[ultimate4799]

Hi Prof. Shays, Thanks much for advise... This helps me make up my mind Now for BK part, few months back the attorney told me he can qualify me for chapter7... Now, just 2wks ago, I got 20% of the paycut reinstated back(from overall 25%)... My gut-feeling is chapter7 maybe in jeopardy and most prob only chptr13 will qualify me... From your experience and judgment, assuming chapter13, will this still help protect me from liabilities of my loans being recourse? Also, I'm assuming chapter13 will help me protect my assets like 401k, cars, etc but not sure if it will bail me out from $43k credit card bills.

Please help advise me on above on what you think is best for me given my situation... I'm still trying to contact the attorney I talked last Jan and seemed he is on vacation as of the moment...

I highly appreciate the help, Prof!

[The Professor]

I'm going to suggest that you talk to your lawyer on this one. Problem of course is that going the Chapter 13 route effectively means that you have to pay your creditors something through a payment plan. Me, I much favor the "flushing" experienced through a Chapter 7 that results in a true "fresh start." Damn those raises anyway......

Daniel

[ultimate4799]

Hi Prof Shays, yeah, the reinstatement of some of my paycut happened at wrong moment(although good since I got some more money)... I hope/wish for chptr7 but maybe chapter13 will be only hope...Assuming when I got hold of attorney he will tell me chpter13 only, do u think it makes more sense to try to settle for a loan mod(lower payments) on Wells(1st loan) only and move with chptr13/2nd lien stripping than walk away and end up paying some to creditors? Or you still feel walk away is the best solution with my case no matter which BK I can qualify... I thought like assuming I still ended walking out and give latest financials to 1st loan(Wells), they will forclose(non judicial) and ended up taking the house and all I need is to worry how to deal with my 2nd(SLS) eventually..Please let me know what you think...

[ultimate4799]

Hey Prof Shays, any advise please? I appreciate it..

[ultimate4799]

Hi Prof Shays, I call Wells Exec Res team today... I was surprised that he still insisted that my loan is mortgage backed securities type which makes me ineligible for the obama making home affordable plan...Besides, he told me I need to increase my income and do everything to have surplus on my expense(If I have money, I wouldn't request for loan mod, don't i?)... this is contradicting with their loss mitigation rep who called me last week.. Now, I have the impression they just wanted to get my latest financials for their records that they may use later against me.... Still didn't heard back from the attorney... I may need to call him or setup another appointment... will keep you guys updated but feel free to let me know if any suggestions you have with my case...

[kent302]

The way I understand it. If homeowner's mortgage/income ratio is too high, they figure he can't afford the house even if the loan was modified and it'd still likely to fall into foreclosure.

So to maximize rate of success, your ratios should stay within the range they want to see. There is a strategy, discuss this with a non-profit loan-mod counselor.

[ultimate4799]

thanks for tip, Kent... Since my house is over $200k underwater, I'm not really 100% sure I wanted loan mod... Its up for my lenders to help me... Otherwise, walking away is fine with me as well... I didn't feel like living in this place entire my life anyway... I will just focus on my son and have him go to a decent school rather than throw away much money for this underwater home...

[markmc2000]

the lenders now have an incenti, in my mind, to do mortage cramdowns. I would ask if you are so far underwater about a priciple adjustment. It works to the banks benefit because they get guaranteed money from uncle Sam if they rework mortage to 105% of value and within certain income guidelines. SO if the lender were to forclose, it would get less than doing a cramdown for you while getting uncle sam to guarantee a value higher than the current value of home while not selling at firesale forclosure price, holding costs, repairs, etc.... It may be worth a shot unless you have sensitive financial info that can be used against you later. The banks are so swamped with bad loans they would be better off taking the uncle Sam/taxpayer bailout gaurantee....

[ultimate4799]

Hi Mark, it kinda awaken me when you said "sensitive financial info" that maybe used against me later... Can you provide me examples of such sensitive financial info? This is one of things I worried about since not sure if their loan mod will work for me and I may end up walking out later anyway... I have 2 cars(1 worth $7k at most) and 1 is financed(owe around $22k) and 401k that can be considered assets and don't want to disclose as much assets to bank which they may try to run after later on to compensate deficiency if I decided to walk out... I appreciate your inputs...

[Enough Already]

Hi Mark,
You 401K should be safe. As I understand it they cannot come after any retirement savings. They'd be looking more of other real estate you might own, or cash in the bank, that sort of thing. They probably won't be interested in your financed car, but they may take note of your $7K car. You should consult with an attorney to be sure.

[susan spencer]

I've been following this thread as I have the same lender. I am curious about what program markmc2000 has referenced here in regards to lender willingness to do principal reductions. The 105% of income guideline does not sound like Affordable Home Program just released. I am curious what DTI guidelines are referred here. WF has done very few principal reductions. Cramdowns is referenced here possibly meaning principal reduction. There have been incentives given to this lender, bailout, etc that have not been used to help homeowners. What seems logical has not been the case. Perhaps something will change and I hope it does. It has not been the case that what appears in print is what is really being offered and available as a remedy unless only to a mere few.

[markmc2000]

Hi susan,

I haven't heard of any cramdowns happening, however the way the program is designed whether the lender realizes it yet or not, they have a financial incentive to reduce pricinple in certain situations. The home affodability plan will allow home owners to refi if the loan is no more than 105% of the home value. Then uncle Sam guarantees the new loan for the bank if the borrows income is within the proper affordability range as a percentage of the monthly payments. Since foreclosure is so expensive due to extra costs of attorney fees, cleanup, realtor fees, and declining values. It seems to me, that the lender would do everything to get the governement guarantees on new loans for 105% of value instead of trying to foreclose. I would take 105% of every dollar, guaranteed by Uncle Sam, over maybe 70% of every dollar that is not guaranteed.

So my point is that the lenders may not be doing cramdowns yet, for whatever reason but they certainly have the financial incentive. So it may just be a matter of time. I would guess now they are still struggeling with reality and moving slowly by just trying to change interest rates. However, they should certainly do cramdowns in my opinion. Probably just wishful thinking though. Sorry if I created any confusion.

[markmc2000]

hey ultimate, I think enough said it pretty well. Any information can be used to rework your loan, OR take you to court. So If you send them a sheet showing them you have alot of cash in a bank and have a pretty good income, it is likely that they will use that information against you to collect if they can't come to a reasonable workout. Doesnt' sound like you have much to go after, but they may fret if you pull down a big paycheck or have someting else to take. I'm just a speculator though and can't day from experience.

[ultimate4799]

Thanks for the tip, Mark... I think you are right, they don't have much things to run after me except the paid off car($7k at most) which I don't plan to disclose now.... I don't make much as well nowadays since I got around 25% paycut and not even enought to pay all bills/expenses. But nonetheless, having a CC debt of $45k makes my assets even worthless so seemed I have nothing to loose if I send them my financial info and try to see if they can work things out... Maybe it will buy me more time for rent free living since my credit will be a mess anyway...

[ultimate4799]

Originally Posted by Enough Already

Hi Mark,
You 401K should be safe. As I understand it they cannot come after any retirement savings. They'd be looking more of other real estate you might own, or cash in the bank, that sort of thing. They probably won't be interested in your financed car, but they may take note of your $7K car. You should consult with an attorney to be sure.

Thanks for info, EnoughAlready... I don't own any other real estate anymore since I short saled it last year to preserve my existing home... But due to economic recession and huge paycut, I'm having hard time paying my existing mortgages and related expenses.... Big factor is house underwater by at least $200k... Don't hv much $$ in banks as well... I may start taking $$ as well and save to start fresh later on since I need to live with $$ and no more loans and credits if banks decide to foreclose on me...

[markmc2000]

Ultimate. hang in there and be happy you have a job. Its rough out there. The only thing people really need is food, shelter, and good nights sleep. Everything else is just really about perception and enjoying the simple things. I have never enjoyed the simple life like now; just hiking outside and looking at the scenery. especially now it is spring. totally killer right now in santa rosa.

[ultimate4799]

Thanks, Mark.. I know I could count all of you guys here at loansafe.. this seemed to be kinda my refuge when everything seemed to be worst and I felt so stress.. But I agree on what you said about simple things needed in life and rest are just perception... live and enjoy your life to fullest and forget about burden being caused by this mess! spring break almost over, huh..