Any HELOC settlements possible?

[deepunderwater]

Hi all,

We have two mortgages for our primary residence in CA and are desperately trying to figure out what our best option is. The first is with Wells Fargo for $650,000. The second is a HELOC with Chase (interest only) for $186,000.
We paid Chase down to $130,000 over the last 4 years in an effort to "do the right thing." Well, now our house which we paid a total of $836,000 for, is worth around $650,000, give or take. Wells Fargo interest only loan starts to float April of 2010. We want to refinance the $650,000 for a conventional 30 yr. mortgage but of course no bank will agree to this since we are so much under water. They keep telling us we have to pay off Chase first. We don't have the money to pay off Chase and we don't want to spend the next 10 years trying to do so.
My question to the group is this: Has anyone successfully completed a settlement for a HELOC loan? What is the process your followed? Maybe we could pay them 10% or 20%? I think it is a non-recourse loan since we are in CA, the money was used at the time of the sale (purchase money loan) we have not refinanced it and it is for our primary residence. We are trying to come up with a plan to deal with Chase. Wondering if we need to default on our loan to get attention, threaten foreclosure? Ideally, they would just agree to work something out with us but I'm doubting they will agree to do that unless we start defaulting. Any information on this is valuable. Thank you!

[Evan Bedard]

Hi deepunderwater welcome and thank you for joining.

My question to the group is this: Has anyone successfully completed a settlement for a HELOC loan? What is the process your followed? Maybe we could pay them 10% or 20%? I think it is a non-recourse loan since we are in CA, the money was used at the time of the sale (purchase money loan) we have not refinanced it and it is for our primary residence. We are trying to come up with a plan to deal with Chase. Wondering if we need to default on our loan to get attention, threaten foreclosure? Ideally, they would just agree to work something out with us but I'm doubting they will agree to do that unless we start defaulting. Any information on this is valuable. Thank you!

Yes many lenders are willing to settle their second mortgages for about 5-20% of the remaining mortgage balance. I would suggest to first start out with an offer at about five percent and slowly work your way up. This is definetely possible..

[deepunderwater]

Thanks for the words of encouragement!
Do you know what branch of Chase we contact to talk about this? Do we need a lawyer to draft a letter? Do they typically consider doing this without a default? We'd like to save our credit as much as possible.