Lumpsum payment

[mhertz]

I have heard that if someone is in financial difficulties but has a way of coming up with a lump sum payment, (a wealthy relative), that banks would be willing to take between 10 to 30 cents on the dollar to payout outstanding loans.
I've heard this in regard to home equity lines.

I currently have a $200,000 home equity line and would like to explore this possibility. Does anyone have any information about this.

Steven

[LHarveyMadman]

Are you in a hardship situation? Is your home worth $200,000 less than your combined loan balances?

[mhertz]

Yes I am in a hardship situation.

I have a 300,000 mortgage and 190,000 equity line.

My home is probably worth 550,000 to 650,000 .

[LHarveyMadman]

Unfortunately, I don't think you're going to get your second lienholder to agree to settle your HELOC for pennies on the dollar. Your home value exceeds your combined debt. If you are unable to pay the HELOC, the second lienholder can foreclose on you and get back every dollar that you owe. The first lienholder wouldn't prevent the foreclosure, either, because they'll get paid, too. There is no incentive for the second lienholder to offer what you hope to receive.

You haven't mentioned what your current loan terms are, but with that amount of equity, you should be looking into refinancing your loans. You easily meet the FHA requirements for refinancing. If you think your home can appraise for at least $612,500, then conventional refinancing is available to you as well, since this would put your loan-to-value ratio at 80%. You have lots of options available to you to help pull out of this hole. You're lucky in this regard - most people on these boards are way underwater and have very limited options.

Good luck.