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Settlement of 2nd Mortgage with Wells Fargo

Discussion in 'Debt Settlement' started by kjq10a, Nov 19, 2010.

  1. kjq10a

    kjq10a LoanSafe Member

    I am at the +/- 160 past due point on my HELOC with Wells Fargo. My only viable option is to settle the debt using proceeds from an early 401k distribution. They say they need to deny a loan mod before they can accept a settlement offer. They are requesting documentation of my financial situation in order to apply for the mod of the HELOC.

    Does anyone have any experience with this? At this stage of the game, should I submit the paperwork and get the mod denied and then make settlement offer to Wells? Or....should I wait 2 more weeks for the charge off to occur and deal with the 3rd party collection agency?
  2. DBarr13447

    DBarr13447 LoanSafe Member

    Are you underwater on your home? Are you seeking a loan mod on your 1st? I would NEVER touch my 401(k) to settle!!!

    Can you provide more details??
  3. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    Yes can you please provide more info about your situation?

    FYI you do NOT need to be denied a loan mod to be considered eligible for a settlement..
  4. TomEason

    TomEason LoanSafe Guide Staff Member

    I agree with DBarr in that you should not access 401-k funds. I assume you're OK on your 1st? Your strategy might depend on the owner of your 1st and loan's status. In my experience, it never hurts to wait. In fact, it often strengthens your negotiating position. I wouldn't send WF any financial info.
  5. dantheman

    dantheman LoanSafe Member

    I settled my HELOC with wf for 20% on $100k out of retirement funds. When people say you should not use that money, they must be ready to deal with a lawsuit, judgment and collection of same. I say, if you can erase a $100,000 mortgage for $20,000 it is a great deal--retirement funds or otherwise. After all, that is effectively a 400% return, right?
  6. TomEason

    TomEason LoanSafe Guide Staff Member

    I think it all depends on the borrower's situation. If a borrower has no assets that can be seized or attached by a money judgment, then why settle? Of course, keep in mind that 401-k and other retirement and pension funds, are exempt from attachment by federal law.
  7. cahomeowner

    cahomeowner LoanSafe Member

    How far behind were you on your loan? What were the original loan amounts on the 1st and 2nd and current market value? How was this reported on your credit report?
  8. dantheman

    dantheman LoanSafe Member

    I was just over 6 months late and wf had charged off. They are reporting it on cr as charged off. $300k first and $100k second.
  9. daneam

    daneam Senior Member

    But was your 2nd outside the value of the house?
  10. dantheman

    dantheman LoanSafe Member

    Yes, it was mostly or totally underwater depending what bpo is used.
  11. daneam

    daneam Senior Member

    were you dealing with WF or you dealt with a collection agency since it was charged off already?
  12. cahomeowner

    cahomeowner LoanSafe Member

    do you have a better chance of settling for less with a collection agency after chargeoff versus the bank directly?
  13. dantheman

    dantheman LoanSafe Member

    To the 2 preceeding posts: Yes, it was charged off. But with WF it stays in house following charge off. So I was dealing with the post charge off department of wf and that is who I settled with.
  14. Us_vs_them

    Us_vs_them LoanSafe Member

    I recently settled with WF for 20% of Second Mortgage. My case was actually a balloon payment that was due. I started to negotiate a mod with them Sept 1 - 60 days before it was due as they said that was earliest they could do. They told me the same that I must be denied for mod b4 they will negotiate a settlement. I sent them info and was actually accepted for mod. However the mod financially did not make sense. It was 50% higher payment then previous and it was @ 7.5% for 10 yrs. My home is 50% underwater, I owe 450 on the first and 100 on the 2nd.. So I actually declined the mod, and then started the settlement process. Which they kept questioning me on why I would do that if I wanted to stay in the home. WF did their BPO and came back at $400k, so there was no way they were getting anything on a foreclosure. They first denied my settlement offer at 15% and actually told me they would rather see me short sell and them get nothing than allow me to stay and settle. That really angered me but at the end of the conversation I offered 20% and told em final offer and i would actually need to borrow the remaining to get that. They told me they need to talk to "Sr. mgt" and would get back to ke in a month or so. A week later they called again asking more questions about my intentions and what I was planning on doing with the house. I was clear that I would either short sell or wait out a foreclosure, thus ensuring they get nothing as the value is about 10-20% below the first, which I am current on. So they said they would get back to me in a couple more weeks. Again a week later a different guy calls and asked a bunch of questions, tried to get me to offer more, was very aggressive and almost angry.. I matched his demeanor and was insist end that I did not care anymore.. Take the offer or get nothing. He gave me the same response as before.. Couple weeks "Sr. mgt" etc.. Then an hr later the person I had been dealing with gave me a call and said my offer was approved! After reading this forum I see I may have been able to settle for less but the deal works for me and even though I will still be underwater on my first in the long run I think it was worth it. So hang in there stick to what makes financial sense to you and they should come to there senses. This was a 5 mos ordeal for me.
  15. TomEason

    TomEason LoanSafe Guide Staff Member

    Thanks for this valuable post of your personal saga with WF! Congratulations, and good job.
  16. cahomeowner

    cahomeowner LoanSafe Member

    so you were able to settle your 2nd which is excellent. now if you can just get your 1st modded
  17. TerrinPhx

    TerrinPhx LoanSafe Member

    I have to agree with dantheman....I used $8k in 401 funds to settle my $50k Heloc and it was a huge relief not to have to worry about any further legal action plus I settled for 16% of the balance. Maybe it makes more sense for those who plan on keeping their home. I had my 1st mtg modified and eliminated negative equity by settling. The return that I achieved on my 401 funds was much greater than any return I would obtain in interest on that $8k investment.
  18. bt1974

    bt1974 LoanSafe Member

    Whew... Just what I need to hear right now. We gave up hope on a realistic mod on our 2nd but have kept our 1st current. We bought in 2007 for 575K 80/20 loan (both by chase in so cal). We stopped paying our 2nd 8 months ago because we just couldn't keep up.

    We received an unsolicited settlement offer from Chase today for 19% of our balance (21K of 114K) payable within 30 days. Our home is worth about $390K, our 1st is 455K, our 2nd 114K... we intend to stay here until our kids are grown (at least another 15 years) and CAN afford our 1st mortg.

    Our initial reaction was relief, even knowing that we'll have to pull the money out of our Roth IRAs and traditional IRAs (so there will be penalties) BUT we'd love to have that peace of mind knowing we avoided BK & our 2nd will be a nightmarish memory. Then I started reading posts that recommend you do not accept the first offer, that you negotiate, and that you should not use your retirement money to settle & it just sent me into confusion and doubt. It really helps to know that you (dantheman) seem to have no regrets having done what we intend to do. Thanks for the reassurance.

    Now we'll sleep on it & consult with out tax man this week before we make any final decisions. From what I've been reading, 19% as an initial settlement offer seems to be a great deal. Maybe we don't want to push our luck by trying to negotiate.
  19. TomEason

    TomEason LoanSafe Guide Staff Member

    I recommend you consult some other threads and posts on this topic prior to your anticipated action. You can go here to read my strategy guidelines on settling your 2nd. http://www.loansafe.org/forum/debt-settlement/37996-strategy-settling-your-2nd.html
  20. LoanSafeSubscriber

    LoanSafeSubscriber LoanSafe Member

    Getting close to time that I have to resolve 2nd Mortgage Balloon payment

    This thread is of significant interest to me. In Mar of 2007 I purchased a home with an 80/20 type mortgage (actual was either 75/25 or 79/21) where the 2nd mortgage is a 5 year ballon mortgage. The intent was to sell a home my fiance (now wife) had at that point and use the proceeds (she had lots of equity in the home) to pay down the ballon. We all know what happened in the market next. We never sold that house and in fact it is now renting...hoping for the market to at least improve a reasonable amount.

    ...Fast forward almost 4 1/2 years. I now need to start preparing how to resolve that impending balloon payment...which I absolutely cannot pay. I've never been late or missed or mortgage payment on either 1st or 2nd mortgage. The whole issue is the balloon payment coming up in Feb/March 2012. The lender is WF who purchase the loan immediately after I first bought the house. They have been the lender since and the payments have been set up almost since day 1 to be automatically taken out of my WF checking.
    From reading these other posts it looks like this is not going to be that easy. My definition of easy would be to refinance the 2nd loan at a lower rate for longer term OR bundle them into one loan at a lower (although I'd probably have to take on a PMI)...it would probably still be lower than my current monthly total payment. The loans at this point are approx 370 on the first and 129 on the 2nd.
    I have not talked to WF yet but is it really the case that they won't don ANYTHING until we get inside of 60 days? Are they that difficult if I'm willing to continue making payment but just need the 2nd loan to either be reset or converted into some sort fo 15-20 year 2nd mortgage??
    Your responses are GREATLY appreciated.

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