Thank you ball_mich
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[COLOR=black]I have been reading your posts and am very impressed in the way you handled your situation with WF. I am a resident of CA and have a home that would appraise for $425,000 at most. I owe on my first with Citi $408,000 after they modified my loan. I have a HELOC with WF for about $97,000 and they are trying to do a modification for me. I have initially given them my documents like paychecks, tax returns, they even asked me how much I have in my 401K and I just said $20,000 but did not give them any documents of my 401K. They did reject my modification package at first saying that my income was too low and now they are saying that their bank has signed up for the government plan and most probably they can modify my loan. They put me on a low monthly plan and got authorization for paying them for the next three months from my checking account. [/COLOR]
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[COLOR=black]I simply did not know that it would be possible for me to settle with them. But I am thinking even if they foreclose my house they have to pay the first loan to Citi first and then they get any leftover money. [/COLOR]
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[COLOR=black]Now I am trying to settle with them. My situation is different than yours because they already have my financial documents, which is not showing much money. [/COLOR]
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[COLOR=black]So I am thinking to contact the settlement department before they send me offer for the modification and also call the person who is working on my modification and say that it is not possible for me to pay these monthly payments (which is the truth).[/COLOR]
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[COLOR=black]What do you think is the best way to deal with them? Do you think I would have any luck with them? [/COLOR]
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[COLOR=black]I can pay an attorney to do this for me but I kind of don't trust the attorneys. At the same time they do all the talking with the bank and know what to say. Obviously, I have done everything that I should not have done like giving them my information. Look forward to hearing from you.[/COLOR]
Rose - I've already responded via private message, but was going
Rose - I've already responded via private message, but was going to try to repost that here for everyone's benefit. Unfortunately, I can't figure out how to find what I wrote to you... So will re-write a little bit of what I wrote.
Settlement is primarily an issue of leverage. Whether or not your 2nd mortgage is underwater or not is only a portion of the equation. Just as important is whether or not you are protected by your state's anti-deficiency laws. Some mortgages are recourse loans, meaning you are personally liable for the debt, just like a credit card. Other mortgages are non-recourse, meaning they cannot sue you for a deficiency judgement, only foreclose on their collateral (i.e. your house).
In California (the only state I know about specifically) the anti-deficiency laws are generally covered by California Code of Civil Procedure ("CCP") 580 (a) through (d). There is also the "One Action Rule", although I cannot remember the CCP number but it's in the code as well. Make sure you read the link below to further understand these. Generally speaking, if your loan was purchase money, meaning the loan proceeds were used to pay the seller when you purchased, the loan is then non-recourse. If you refinanced, the loan is no longer purchase money and likely recourse. If you took out the loan after purchase, like a HELOC to pay for repairs, that is not purchase money, likely a recourse loan. However, some HELOC's were used in a purchase money role to fund the purchase proceeds, like in an 80/20 dual loan situation... So some HELOC's could be purchase money.
http://www.leginfo.ca.gov/.html/ccp_table_of_contents.html
Anyway, the best situation for you to have maximum leverage is for the 1st mortgage to be at or greater than the FMV of your home, AND to have a non-recourse loan. That way the 2nd can't sue you for a deficiency judgement and wouldn't likely foreclose because they'd get nothing from the sale. When I settled, my loan was recourse, so I didn't have maximum leverage. So it can be done but I found it difficult, for sure.
Settlement was not easy and it's not for everyone. And you do run the risk that the lender acts irrationally and decides to foreclose your home despite the fact that it's not in their best interests to do so.
As far as sharing your personal financial information. I don't think that's necessary a bad thing, if you don't think it will hurt your chances at a settlement. My situation was very complicated and I had no confidence that they'd be able to accurately read my financial information and come to the right conclusion, so I didn't give them the opportunity to do so.
Hopefully that was helpful.
