HELP!!! with Wells Fargo Loan MOD!!!!

[flippinwacko]

Murrieta California - Riverside County
5/1ARM interest only 5.875%
Adjusts end of 2010
Loan Amt. $387,952
Have paid on it for 3 years interest only.
Owner occupied. - I do want to live in it. I like my home.
fico: 788

Way upside down.
value: $220,000 - on the liberal side
-based on what homes in foreclosure/short sale, basically are going for right down the street...Just alone on my street 8 -10 houses with signs up, Bank Owned.

2 Rentals - combined in the red.
Going through Divorce with Wife.
Paying Spousal Support for $1000.00 a month.
Lost her income and responsibility to pay.
Her name is still on the deed.

The only way I have been surviving is from overtime at work (which is going away along with the economy) and my parents lending me money every month.

I can't nor do I see a reason to make the payment anymore. I have contacted Wells Fargo several times prior trying to get them to refinance the loan even before the financial debacle! They say, "They can't help me."

My perspective...I can only see a modification happening if the principal was reduced.
Do I have a chance of that happening?

I am not late as of yet...But I have tapped everything out!
I wrote a hardship letter but have not sent it yet.
Reasons:
1.I believe I have to be late on payments to send it.
2.I am unsure if my hardship letter is good enough.
3.My fico score.
4.Needing the best approach, for fear of Rejection of request.

PLEASE, CAN ANYONE HELP?

Sincerely,

distraught at the refusal of beauracrats to release the $800 billion dollars to even be considered to bail out homeowners.

Why didn't the government try to avoid this entire mess by simply reducing rates across the board for homeowners and then guarunteeing the difference lost with the rate reduction. None of these loans would never have been charged off and the economy would still be at least sputtering along above water!

PLEASE HELP!

[Moe Bedard]

HI flippinwacko,


Welcome to the forum and thank you for joining...............

"My perspective...I can only see a modification happening if the principal was reduced"

this isn't happening as of yet........investors are not reducing principle.....whether they will in the future is anyones guess...............

Is there a Plan B?

If you want to keep the principle home and the rentals are in the red......is it possible to sell off the rentals? Are they also with Wells Fargo as a servicer too?

[flippinwacko]

Thanks ***....The other 2 properties have seconds...the first property is just down the street from this home...The second is about 30 miles away...

They are both way upside down at this point...but the loans are as follows.

30 year fixed 5.375
30 year fixed 4.375

In my humble opinion, it would be silly to sell those homes rather then walk away from the home that I am in with a loan that is purely interest only...


Do you see where I am coming from?
Plus the fact that Wells already conned me into this interest only loan...

What are your thoughts?

Anyone else have input?

[Moe Bedard]

I see..........

so are you questions then what could happen if you walk away?
Have you consulted with an attorney to go over that prospects?

[flippinwacko]

No I have not consulted an attorney...Yes, my questions pertain what will happen since I can no longer make the payments on the property? How long would it take Wells to kick me out? Would Wells try to negotiate something with me, since they will probably lose the same amount on selling it, vs. writing down some of the principal?

[flippinwacko]

Also, theoritically if I were to negotiate something with them, could I have them modify my credit history? Meaning could I require them to write a letter stating that all of the lates are wrong, therefore clean up my credit history?

[flippinwacko]

sorry about spelling...just trying to type too fast....

[flippinwacko]

Also, my ex wife or should I say future ex wife has her name still on the property...She is also on the loan...I'm pretty sure that once a judge sets forth a divorce decree Wells will take this into consideration as it pertains to her credit history, right? I can have her quit claim the property to me, but she will still be on the loan. I would think that Wells would have to abide by the divorce decree, therefore not affecting her credit, correct?

[The Professor]

Please provide background on the two rentals. For each property indicate:

1. Present fair market value.
2. Loans on the properties, including lenders and the amounts owed.
3. The state(s) where the properties are located.
4. Were either previously occupied as your personal residence? If so, were the loans created at the time of purchase?

Daniel

[flippinwacko]

California - San Diego County and Riverside County

property one -

fmv-250,000

85,000 first, 200,000 Home Equity second (at GREENSPANS request, "we all have equity, so use it!) - lender JPMorgan Chase

property two -

fmv- $220,000

250,000 first lender countrywide, 145,000 second lender citigroup.

fmv - comparable to current homes in foreclosure etc in same areas.

Property assessor just reassessed propertys in October for around $40,000 to $60,000 more then current fmv

yes, I occupied each property upon origination / purchase of the properties.

The first's on both were originated at the time I occupied.

The seconds were also originated at the time of occupying each home.

[flippinwacko]

property 1 - 1st 4.375 15 year fixed JPMorganChase...I have paid consistently on principal....probably 7 years left at this point. 2nd - Home Equity Loan JPMorganChase variable rate currently at 3.5% - probably could lock this.

property 2 - 1st 5.375 30 year fixed paid down almost 5 years. 2nd Fixed Home Equity 6.875 Citigroup.

[The Professor]

As to the first property you said, "85,000 first, 200,000 Home Equity second (at GREENSPANS request, "we all have equity, so use it!) - lender JPMorgan Chase"

What I need to know is if the dollars that were borrowed were used to purchase the properties. The above statement has me confused. I'm guessing that the second was created sometime later than the date you purchased the property. Am I correct.

The focus here is on CCP Section 580b which applies to "purchase money" loans.

As to the second property, the same question. Were both loans created at the time you purchased the property?

Daniel

[flippinwacko]

thanks Daniel for taking the time on this...

properties sorted by date of Acquisition:

property 1 - 1998 - purchased with own money
(1st @ 85K jpMorgan)
(2nd @ 200K jpMorgan - originally this loan was a 100K loan which I used 60K to purchase the second property. However, I repayed almost all of it by the time the house was built and ready to move into. approx. 20K I used from this second to combine with the other 40k I had saved as a down)

property 2 - 2004 - purchased with own 40K and rest from 2nd mortgage from property 1.
(1st @ $236,880.58 Countrywide)
(2nd @ $145,381.73 Citigroup - used $98,000.00 to buy 3rd property)

property 3 - 2005 - purchased with 98K from 2nd with citigroup against property 2
(1st @ $387952.31)
(no 2nd)

Please respond back as soon as you can...I do appreciate it....let me know if further information is needed....

[The Professor]

It doesn't help my analysis for you to give me what I'll characterize as Piggy-Backing information. What I need to know for each piece of property is whether the loans that are currently on a particular property created at the time you bought that property or later. My sole reason for needing that information is to determine whether they might be non-recourse debt under California Code of Civil Procedure Section 580b.

Let me give you an example of what I'm talking about. On property 1, it doesn't make sense at the time you bought it that the first would be substantially less than the second. So I'm guessing the second was created sometime after you bought it. Now there may have been a smaller second that you refinanced into this larger second and if that is the case tell me. Clear things up on the other two properties.

Again the only thing I want to know is if the loans that are liens on a particular home created at the time you purchased that specific home.

Daniel

[flippinwacko]

No- each of the seconds were originated after...I have not refinanced any of the seconds or the firsts...But, on property 1, the HELOC loan was originally $100,000, but then I increased it to $200,000....probably a new loan....


I understand where you are going...Perhaps, I do not quite understand what "Purchase Money" is?

If you can clarify that in lay terms, I might be able to respond in a complete intelligent mannger...

Sorry, Lots of research, but still cloudy on "Purchase Money".

[flippinwacko]

shay.....

no, the loans were originated against the properties after the purchase of "said" properties...But, why would they not be "purchase money", property?????

It seems to me that any property used initially should cascade to every property, thereafter? No?

[flippinwacko]

the 2nd's were not used to purchase the property that they were secured to...

it is incredibly hard to believe, ( to me ) that the loans taken against the two properties are not purchase money, especially since the first property was purchased with a 50K out of pocket down payment?

Tell me SHAY...I am free and clear....

If not, I am so upside down on all of these properties, what would any lender gain by nailing me to the fence?

[The Professor]

The cascading doesn't work under CCP Section 580b. It is limited in its application. It means that in order for non-recourse to apply, the secured loan in question must be created at the time of purchase of a particular piece of property and the proceeds of that loan must have been used to purchase that specific property.

As to Property 1, you are actually in good shape to avoid post-foreclosure liability since the holder of the second would undoubtedly resort to non-judicial foreclosure and once that is complete you would no longer be personally liable to them.

As to Property 2, you have a real problem. My sense is the second lender won't foreclose because there is no equity beyond the first. They will simply be wiped out by the foreclosure on the first, and then follow the actions of an unsecured creditor seeking to collect the amount of their loan from you personally.

As to your home, well it is simply underwater and the path its lender will take is to foreclose.

The bottom line risk to you is that you will lose all three properties and have a remaining personal debt of $145K to Citigroup.

You need to talk to a lawyer. Your situation, as I've outlined it, isn't good. Sorry for the bad news.

Daniel

[flippinwacko]

Shay, so even though I generated the second on property 2 to use to buy property 3....CCP section 580b does not apply to me for property 2's second?

What would be the chances that they would follow the actions to collect the unsecured debt?

Then I have no other alternative, but to file BK then, right? I understand that I do need to consult an attorney, but your input is very helpful....

[The Professor]

Shay's answers:

Shay, so even though I generated the second on property 2 to use to buy property 3....CCP section 580b does not apply to me for property 2's second?

Yep.

What would be the chances that they would follow the actions to collect the unsecured debt?

Depends on whether or not you have a pot to pee in after you lose the homes.....

Then I have no other alternative, but to file BK then, right?

See the answer to the question above.

Daniel

[The Professor]

Oh, meant to add the following to my last answer:

Freedoms just another word for nothin left to lose,
And nothin ain't worth nothin but its free... (Me and Bobby McGee by Kris Kristofferson)

Daniel