Modifying a HELOC?
Here is my question: Has anybody heard of a lender (HELOC) granting a principal reduction or modification without doing a short sale? I have a client who would like to stay in her home, and can handle the first mortgage, but not both. She is in default on the HELOC, but Harris Bank continues to accept partial payments from time to time, and has not yet filed a Notice of Trustee Sale.
She would like to exhaust ALL her options before deciding to do a short sale. She has been trying unsuccessfully for almost 2 years to get a loan mod with BofA. She has a first with BofA of about $245,000, and a HELOC with Harris Bank of about $180,000. Her home is worth in the range of $225,000.
She is about to contact Harris Bank to request a modification of the HELOC. (She had already spoken with an attorney who said he would charge $5,000 for the modification(s) negotiations, but that there were no guarantees. He told her he has been successful in renegotiating HELOCs which were not part of short sales.
She is a Realtor, and her income has gone down about 75% in the past 4 years.
Any input you have would be appreciated. Thanks in advance.
Replies to This Discussion
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Permalink Reply by Enrique Vasquez-Plaza on
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HElocs and most loans are modifiable. I had a client that got a 1% with a BofA heloc. But the problem is the first. She most liekly not get anywhere with BofA, since they are a complete total mess. I have closed no less than 70 or 80 mods with Bofa in the last 6 years, and each year they become worst than the year before. A good strategy would be to work with BofA along with NACA (starting on naca.com) and following the process, that is the only reliable and real way (in my experience) to get it done, and get bank of america to give you status and actually work. And its free!
REgarding the second, -as long as you have complete financials and have experience documenting a case for mod- everything is possible (unless investor is not willing to modify at all... which is very rare... to find) I have also had principal reductions on 2nd liens (not on first ones, with few rare out of the ordinary exemptions...)
Usually for 1st, we structure required payment at 31%, so for second, I would go up to 36-37% (that is the guideline) but, let me make you a very simple and "you should not rely on" example: If I have a client with a 120K second, with a payment of 700 a month, I would structure the request for a payment of 300 a month or even 280, that way you are pushing the lender to do principal reduction. they are not obligated to do so, but a loan amount of 120K at 2% for 40 years, will give you a payment of 360, so to reach the 280 goal, they must forbear some principal, or they may say just no.
If they deny, you can apply again and again... which is not my favorite route, but... Sometime we must understand the math, so we can guide sellers better, so they know in reality in what mess they got themselves into,,,
Good luck!
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Harry, I agree to all you have said 500% percent. But what do you do when all this people just want to keep keep keep keep keep keep., and are blindfolded by that... It is hard my friend, but yes, you are right. Its like my 1.1M borrower who wants to fight until the last day to get her payment at 3500K which is mathematically impossible... But they want to keep fighting... WELL, again, there is a point in this game, when there is no more fighting... You must stop and short sale.
But for the figthers Harry, there is a 40 year mod... at 2% with no principal reduction (they will actually add the delinquency...) that is why I said on another post, that I am waiting for defaults again in 2014,2015,2016 and therefore... All this mods are fixed for 5 years, then they go up 1% each year thereafter...
Sometimes you have to be on the side of the "ones that make smart long term decisions" and those who really have difficult situations and are so overwhelmed, that are blinded just by that... It is sad, and I have let some tears go by that, there are really very sad cases... But, one way or the other,we must move forward...
There is the human side (usually on the side of the poor) and the other one, usually on the other side... Take care Harry///
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Permalink Reply by Jackie W. McDermott on
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I want to thank Harry and Enrique for your comments. This has actually, been very helpful. I appreciate it. I'm going to cross my fingers for her.
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