Need advice on settling my 2nd with WF

selfemplyd

LoanSafe Member
Mar 11, 2014
3
0
1
Hi – I have been reading this forum for the past few months and hoping I can get some advice.

I am currently in the process of settling my 2[SUP]nd[/SUP] with WF.

Located, North Miami Beach, FL
Took out 80/20 loan in 2007 for purchase of townhome for 333K.
Self-employed and single mother. Take care of elderly mom who also lives with me.

1st with WF – 249,750 (30 year term @ 7 %)
2[SUP]nd[/SUP] (HELOC) – 83,250 (interest only @ 5%)
(16,500 of this money was mine which I deposited into the HELOC account & borrowed from over the past 4 years).

In 2010, due to severe reduction of income, I was able to get a loan modification on my 1[SUP]s [/SUP].

So, at present, my payments are:
1st with WF – 256,036 (40 year term @ 5.25 %) - 1,642.00
2[SUP]nd[/SUP] (HELOC) – 83,250 (interest only @ 5%) – 352.00
HOA fees: 600.00

In Oct 2012, I applied for a loan modification of my HELOC and was denied due to: “Your current monthly housing expenses exceed 45% of your gross monthly income.†My home preservation specialist sent me papaerwork listing the various options. I really want to keep my home (5 year old son just started Kindergarten and the public school we are zoned for is excellent!) and so the only solution would be settlement.

I have been unable to make my HELOC payments since Dec 2013 (now 3 months late) and I faxed an offer of 3% (based on small retirement fund) which was denied. WF has refused to give me a verbal or paper counter-offer and has asked me to ask around to family and friends to see if I can borrow more monies and then call them with a higher offer.

I have had to dip into my 401K over the years (to pay for medical/car/house emergencies) and am afraid to dip into my “emergency fund†anymore. I’ve always been a stickler with my bills (when I worked in NYC with a higher income) and have never been so finacially strapped as I am now. My credit score has dropped from 715 to 643 in just 3 months and my CC debt is growing rapidly.

Current value (per zillow): 359K
(Per WF underwriting during HELOC modification) : 300K
Owe: 339K

Last townhome sold for: $355,000 (renovated) in Oct 2013 and 5/2013 - $305,000 (not renovated). My townhome is not renovated.

Can anyone offer any advice as to my next step? I have not heard from WF since about 2 weeks ago, nor have I tried to call them. Would my property be considered “underwater� Can WF proceed with foreclosure?

Thanks in advance!
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
84
48
SF Bay Area CA
selfempyd

Welcome to the LS community.

Based on your numbers, your WF 2nd is underwater. I do however recommend you get a current valuation via a CMA from a RE agent who farms your neigborhood.

Once you receive that, you'll know better where you stand.

Based on that CMA, if your 2nd is in fact underwater, WF won't FC. I recommend you seek to eventually settle by following the guide at post #1 of the following thread. Your patience is required as this will likely be a long process.

http://www.loansafe.org/forum/debt-settlement/37996-strategy-settling-your-2nd-94.html
 

Evan Bedard

Call 1-800-779-4547
Loan Safe Mortgage
Aug 26, 2007
18,837
48
48
San Diego, California
www.LoanSafe.org
Tom has excellent advice, in no state will a junior lien holder foreclose if you're currently underwater. However, keep in mind that FL is one of very few states where a secured junior lien holder can sue the borrower in lieu of foreclosing..
 

selfemplyd

LoanSafe Member
Mar 11, 2014
3
0
1
Tom has excellent advice, in no state will a junior lien holder foreclose if you're currently underwater. However, keep in mind that FL is one of very few states where a secured junior lien holder can sue the borrower in lieu of foreclosing..
Hello Evan,
Thank you for the advice in 2014. I have an update on my situation and another question regarding refinancing.

I was released from my lien (on my 2nd) in 6/2014 and I have a notarized release of lien letter from Wells Fargo. I am no longer self-employed, but have been working full-time since 3/2017. How soon after a release of lien can I do a (cash-out) refinance? I spoke with a lender last year, and he told me it was a treated like a foreclosure and that I have to wait 6 years from the release of lien date. Is this correct?