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Wells Fargo about to charge off HELOC. What do I do now?

Date: Mon, 04/05/2010 - 20:41

Submitted by dantheman
on Mon, 04/05/2010 - 20:41

Posts: 860 Credits: [Donate]

Total Replies: 29


Hi Everybody. As you may know, I have been very involved in this forum through the settlement of all of my credit cards at about $165,000 with an average settlement of 30%.

Now I have my last issue to deal with: my home. I had a purchase agreement on it in 2007 (that obviously did not close) for $600k. It is now worth about $250k (which is my first mortgage balance with WF). I also have a HELOC at $98k, also with WF.

So far, I have not been able to get WF (2nd) to agree to a short sale and the first (WF) has had me in a holding pattern for modification for 8 months, and it is STILL pending with pre-approval status granted.

My question for this highly-informed and intelligent forum is this: WF (2nd) is telling me they will charge off the second mortgage in the next 2 weeks. I have no idea if I should make a payment or let it charge off. I am in Missouri, which is a recourse State allowing for deficiency judgments. I do not want to keep the house, but I do not want the 2nd in collections without the house.


Hi Dan, you can see if they would agree to a settlement. If you allow them to charge off, the account will then be sold to a collection agency. The collection agency then can get a deficiency judgement against you, if they want.

I think they would agree to the idea of settlement when the home value is so low.


lrhall41

Submitted by SC on Mon, 04/05/2010 - 21:37

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Hi Dan, I think you should read that forum loansafe.com for details on this. Here is my opinion, not even worth .02.

The reason they are charging off your heloc is because you havent paid in 180 days and mark to market accounting rules require them to charge it off their books for reporting to wall street. But charging off your debt does not mean they will sell to an external CA. They may, but they may not. Since it is a big bank my guess is they will not. Wells partners with their own "in house" CA, I think it is premier financial services who will collect on the part of wells, you can read the debt collector forum on this site to see who wells uses. Fortunately, they do not use Dick O Niel which is the worst. The fact that it is charged off may actually make it easier for you to settle. IF you do a settlement, you will need to be sure that their paperwork says the debt is settled in full and that they will release the lien.

I wouldnt' be too concerned about this charge off, it is meaningless to you. But because you are recourse you will have to settle at some point. You should plan on at least 10% of the value of the heloc to settle they will not let you walk scot free.


lrhall41

Submitted by on Tue, 04/06/2010 - 12:11

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Now 8 months late and WF has NOT charged it off. They keep bouncing it between 150 and 120 days late on my cr. Does anyone have an opinion as to whether I should make a single payment to keep it from charging off? BTW, my first with WF is pending modification for the same 8 months and they show it 120 days late each month.


lrhall41

Submitted by dantheman on Sun, 04/18/2010 - 18:23

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My friend just went thru this with WF for both his first and second. They applied for modification on both loans and neither went thru over the course of 9 months.....they were just strung along the whole time. From the research that I have done, this is how Wells Fargo mortgage operates. He was lucky...he was right side up on his loans but from the reading I did, most people who a so upside down and charged off end up filing bankruptcy to avoid the defincency balance.


lrhall41

Submitted by SOAPLADY on Wed, 04/28/2010 - 11:41

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Quote:

Originally Posted by SOAPLADY
My friend just went thru this with WF for both his first and second. They applied for modification on both loans and neither went thru over the course of 9 months.....they were just strung along the whole time. From the research that I have done, this is how Wells Fargo mortgage operates. He was lucky...he was right side up on his loans but from the reading I did, most people who a so upside down and charged off end up filing bankruptcy to avoid the defincency balance.


Wow, you're really in trouble. Debt becomes you. Best of luck to all.


lrhall41

Submitted by on Wed, 04/28/2010 - 14:07

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Quote:

Originally Posted by Anonymous
Wow, you're really in trouble. Debt becomes you. Best of luck to all.


Right, we are in trouble because of Wall Street and the banks. They all came out on top, while the homes in my area lost 60% of their value. May they rot in hell.


lrhall41

Submitted by on Fri, 04/30/2010 - 14:35

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I guess my first question is - do you want to keep the house? If not, then I would simply just let the first go into foreclosure (which will take the HELOC with it) or do a Deed in Lieu of foreclosure with a provision that they can't come after you for the deficiency (which is normal in a deed in lieu).

I guess the biggest question on a settlement on a HELOC is if they will release the lien or if they will just take the settlement as payment in lieu of further payments and will just wait until the house is sold sometime in the future for the remainder.


lrhall41

Submitted by Debt Free to Be on Fri, 04/30/2010 - 20:39

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Quote:

Originally Posted by Debt Free to Be
I guess my first question is - do you want to keep the house? If not, then I would simply just let the first go into foreclosure (which will take the HELOC with it) or do a Deed in Lieu of foreclosure with a provision that they can't come after you for the deficiency (which is normal in a deed in lieu).

I guess the biggest question on a settlement on a HELOC is if they will release the lien or if they will just take the settlement as payment in lieu of further payments and will just wait until the house is sold sometime in the future for the remainder.


Well, they won't settle it and they won't take deed in lieu and they won't agree to a short sale. I paid both mortgages for five years hoping to sell it, as I watched the bottom fall out of the market. I'm now around $200k underwater which may account to why they are not foreclosing....they probably don't want it.


lrhall41

Submitted by dantheman on Mon, 05/10/2010 - 18:15

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No they probably don't want it back if you are that underwater. I 'm not surprised they won't do a deed in lieu. I haven't heard of anyone doing one in a long time except through a bankruptcy. Everything is short sale now.

Speaking of that, have you presented an offer from a buyer to the bank? the bank never agrees to a short sale until after we have submitted an offer along with the short sale package. What you need is a really good short sale negotiator. Find a real estate agent who has one in-house. I have one that is in house and that is all she does is negotiate with the banks. She has her own contacts at the banks and knows exactly what is and isn't acceptable to them BEFORE the package goes in. A professional negotiator will also get the job done sooner.


lrhall41

Submitted by Debt Free to Be on Mon, 05/10/2010 - 20:19

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Quote:

Originally Posted by Debt Free to Be
Wow! That is amazingly great! I hope that you can do it with payments. I guess the question is - will this allow you to stay in your home or are you still going to let it foreclose?


This would allow us to stay, dftb. Just when I was about to give up on doing so. My question out there is: has anybody received say 15% or 20% in settling a heloc recently?


lrhall41

Submitted by dantheman on Wed, 06/23/2010 - 18:55

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Quote:

Originally Posted by dantheman
This would allow us to stay, dftb. Just when I was about to give up on doing so. My question out there is: has anybody received say 15% or 20% in settling a heloc recently?


I think you've been posting in the Settlement of Mortgages thread, but I did settle my Wells HELOC for 17%. I think that was about a year ago or maybe 10 months ago.

I think it's really about a game of leverage, and who has it. If it's charged off already, it's in their benefit to collect something rather than nothing. Particularly if they have no recourse other than foreclosing the house (i.e. they can't sue you for a deficiency judgement).


lrhall41

Submitted by ball_mich on Thu, 06/24/2010 - 15:25

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Dantheman,
Did wells just send you the 30% offer unsolicited? or did you start negotiating with them already?

What I am getting at, is whether the 30% is the starting point of negotiations because they offered it to you, or have you already been working with them to get that amt. thx


lrhall41

Submitted by on Thu, 06/24/2010 - 19:12

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Hi Annoyed. It was Unsolicited. The first offer was 60% unsolicited just after chargeoff. Now at 60 days after they offered 30%. I called and discussed it and have faxed a settlement proposal that is somewhat lower over payments. It is being considered and I will let the board know. Good luck. dtm


lrhall41

Submitted by dantheman on Fri, 06/25/2010 - 09:23

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Quote:

Originally Posted by ball_mich
I think you've been posting in the Settlement of Mortgages thread, but I did settle my Wells HELOC for 17%. I think that was about a year ago or maybe 10 months ago.

I think it's really about a game of leverage, and who has it. If it's charged off already, it's in their benefit to collect something rather than nothing. Particularly if they have no recourse other than foreclosing the house (i.e. they can't sue you for a deficiency judgement).


And thank you for the kind words...but ball_mich has been my guide in the early goings. I was blown away with that settlement and now find that I may get close to that myself. This board is so helpful and let me just take a second to thank everybody who participates. This has been a rough go for me and the support of you guys has been amazing.


lrhall41

Submitted by dantheman on Fri, 06/25/2010 - 09:26

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Hi Everybody,
Just to let you know, I finalized my settlement with WF at 20% today, to be paid over the next year. They rejected my offer in the upper teens and it looked like it would go to an attorney, so I am glad to have it agreed. Thanks to everybody....mac, ballmich and all of you who assisted with advice and support. I made my final cc settlement payment this week and with this heloc, I am finished. Never again. Maybe won't live so large, but will sleep at night. dtm


lrhall41

Submitted by dantheman on Mon, 07/12/2010 - 13:13

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Quote:

Originally Posted by dantheman
Maybe won't live so large, but will sleep at night. dtm


Dude, always live large. Just not on borrowed money.

Congratulations. I'm trying to figure out this credit repair thing right now, having finalized all of my settlements recently. Join me over in that forum and share any experience you have if you go down that path too.


lrhall41

Submitted by ball_mich on Mon, 07/12/2010 - 13:19

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Quote:

Originally Posted by ball_mich
I think you've been posting in the Settlement of Mortgages thread, but I did settle my Wells HELOC for 17%. I think that was about a year ago or maybe 10 months ago.

I think it's really about a game of leverage, and who has it. If it's charged off already, it's in their benefit to collect something rather than nothing. Particularly if they have no recourse other than foreclosing the house (i.e. they can't sue you for a deficiency judgement).


Hi Ball Mich. Well, livin large is a matter of interpretation. Let's say instead that I will live large but shop more carefully!! (and pay cash!)

So WF settled for $20k in monthly payments over a year. They may have accepted around your 17% for cash, which I am running short of.

Mine IS full recourse...no question at all. I am in Missouri and even in foreclosure heloc debt simply becomes unsecured debt. Did they report yours as settled for less than owed or how?


lrhall41

Submitted by dantheman on Mon, 07/12/2010 - 15:34

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Yes, that is great. Mine was a cash lump sum, but that's what I wanted. At the time I still had delusions about trying to short sell the property and wanted the HELOC completely out of the way, so I paid them right away instead of in installments. Mine was recourse as well.

It says a little something different on all three credit reports, but in general it says that i was charged off and settled for less than the full amount. I wish I had negotiated this point harder, but at the time I just needed to get the settlement under my belt.


lrhall41

Submitted by ball_mich on Mon, 07/12/2010 - 15:40

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Quote:

Originally Posted by ball_mich
Yes, that is great. Mine was a cash lump sum, but that's what I wanted. At the time I still had delusions about trying to short sell the property and wanted the HELOC completely out of the way, so I paid them right away instead of in installments. Mine was recourse as well.

It says a little something different on all three credit reports, but in general it says that i was charged off and settled for less than the full amount. I wish I had negotiated this point harder, but at the time I just needed to get the settlement under my belt.


That's what I thought they would show. All of my cc's state that, as well. Did you receive 1099's from them (and your cc's for that matter)?

B/c of the huge hit my home took (and with it my equity) I was able to claim insolvency on all of the cc's. Then I settled the heloc and get the combination of the insolvency and mortgage forgiveness act. Now that they are settled, I have just become solvent again. Funny how that worked out.

I'll join you in the other forum. I am still finishing up with the hits from the settlements just showing up. I'm like 520 on this scale that starts at 500, so basically I am at the bottom. Probably couldn't get a title loan (lol). But I have erased over $250,000 in debt this year and only have a first mortgage and small biz credit line left in play. This may have taken me 15 years to pay otherwise. My monthly expenses used to be $9000 and now are $1500. Amazing.


lrhall41

Submitted by dantheman on Mon, 07/12/2010 - 15:54

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I received 1099's for the HELOC and all of my CC's. Unfortunately 2 of my settlement slid in 2010, as I was trying to get everything into 2009 for sake of tax purposes. But so far the tax consequence hasn't been too bad. I didn't qualify for insolvency but I think I had significant stock losses from my (now) miniscule stock portfolio which offset the gains.


lrhall41

Submitted by ball_mich on Mon, 07/12/2010 - 16:04

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I have $200k in old carryover losses from portfolio losses that were a little too risky. So you are saying that the income is treated as a gain and not ordinary income?? If so, I always have the carryover losses to fall back on, since I can only deduct $3k/yr from my income taxes.

I studied the insolvency thing carefully and with the order I settled these in, I saw to it that I was insolvent right up to the heloc. The bpo that wf just got shows I am no longer underwater on my first. So, if the mortgage forgiveness debt relief act was not in place, I would have an issue on the heloc settlement. I paid all my cc's in 2010 and am trying very hard to pay the heloc early so I can have it all wrapped up on my 2010 return. Acct says we should file seperate returns since the debt picture is all mine (remarried). Would like to get this sh*t done with and back to normal. Thanks for the info.


lrhall41

Submitted by dantheman on Mon, 07/12/2010 - 16:31

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Well, maybe I should be careful. I'm not an accountant and I don't do my own taxes. I had some losses from a lawsuit as well, so that that may have acocunted for some of it. I thought my stock portfolio losses also offset it, but maybe not. All the better if not, as they's still be available to me...


lrhall41

Submitted by ball_mich on Mon, 07/12/2010 - 16:42

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Currently settling a boa heloc with collections. Balance due is right at 97k and I have them at 9k seetlement, no deficiency. Ben a pain but I just keep saying no. They started out at 15K and I offered 2K. Think I can squeeze them for a bit more but don't want to push my luck.


lrhall41

Submitted by on Tue, 03/22/2011 - 09:31

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Hi Just received a settlement offer from Wellsfargo on Equity 30% but we do not have 30K.They said there are payment options. How did you get them down to 20%? We have a 1st 446K 2nd 100K. Home prices are selling $418K-$440K We live in CA Anybody file a 982 form and add the forgiven amount to your home basis? How does that work?

What should I say when we call. We can't afford the 30K? What are your payment options. I have already paid 30K in interest and now they want $30 K more so basically they are getting 60K out of $100K. It irks me we see it as we put 150 k down and we took out 100K our own money.

Please help on settlement ideas


lrhall41

Submitted by on Mon, 04/18/2011 - 23:51

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