I have a first motgage with Wells Fargo for $97,000 and a HELOC with Fifth Third for $29. My property value on Zillow is $88,000. I filed chapter 7 that was discharged in March 2009 and never reaffirmed either mortgage.
I was thinking of stopping the payment of my HELOC and continue to pay my first mortgage in hopes they will settle. I reached out to them for settlement but it went unanswered. I know I can walk away from my property free and clear but I would like to stay in my home. I know there is always a risk of forclosure but what do you think the chances are that the HELOC would settle after several missed payments? I can’t imagine them paying off the first mortgage and paying for the forclosure costs to lose money but I may be wrong. Also…if they send it to collections and I settle, does the collection company remove the lien?
You may want to read Why It Makes Sense to Consider Debt Settlement for Second Mortgages and HELOCs for a broader description of the process.
The key to this process is to make sure the lender will put in writing they will clear the lien against the property if you settle. Bankruptcy eliminated your requirement to pay the mortgage or HELOC but did not extinguish the liens against the property. Unless you can get those cleared repaying or settling the old debts is a moot point.
But let’s say you do manage to get a HELPC settlement for $3,500. Just keep in mind that’s still going to leave you underwater on your first mortgage.
Before you give anyone, any money, you might want to negotiate with both lenders. It seems like the math doesn’t add up to settle the second alone if the first won’t budge.
More importantly, how much cash do you have on hand to settle the liens? If you need a coach to help you through this process you can look at getting help from Damon Day, Zipdebt, or Consumer Recovery Network.
Please post your responses and follow-up messages to me on this in the comments section below.