Wells Fargo Home Equity Demanding 10%
Just to give a little back story, this is a property with two loans. The first loan is US Bank for $900,000 and the second is a Wells Fargo Home Equity for $200,000.
US Bank has approved the first with $5000 for the second. Now the second is refusing approval without receiving 10% of what is owed. They need $19,000, so we need to come up with $14,000.
The seller is unwilling to pay anything to the banks. At this point they say that it can go into foreclosure for all they care. They are leaving the US and have said ‘let them try to find me.’
At this point I am not sure what to do. I have worked on this short sale for months, dealing with a seller who has been less than honest. I do not want to cut this as a loss, there has just been so much work done to have it fall apart at the end.
Has anyone worked with Wells Fargo to get past the 10% rule of the second?
Replies to This Discussion
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Permalink Reply by Todd J Sullivan J.D. on
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Very hard to get over the 10% on a Wells Fargo 2nd. Even as an Attorney Negotiated Short Sale operation - it's tough. What we have been successful with when we have "exhausted" clients is that we provide this scenario to such a client; "The lender in second position will proceed with litigation against you and will most likely receive a judgment for the full amount plus interest, plus fees, etc. We recomend that you sign a soft note for the outstanding balance (hopefully, that can or is being negotiated) of $14,000. Payment of the $14,000 is much less than a judgment for $200,000 plus. If you default on the payment of $14,000, a judgment to that effect is much more manageable than the $200,000 plus judgment." It works well. HOWEVER, make certain that the language of the note contains no "claw back" clauses that will reassert the original deficiency amount if the note is not paid. Plus, MAKE CERTAIN that whatever advice you are providing, you have your clients sign a statement that you are NOT providing any advice outside of your normal Realtor advice and have them sign it plus you highly recomend that they speak to an attorney. Cover yourself. These types of lawsuits are going to make a lot a Attorneys happy in the next 6 plus years (your EO insurance will not cover this type of litigation and they will join your Broker under Agency Law in the lawsuit). Good Luck! tjs
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Permalink Reply by Mike Horton on
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Todd, excellent comment. I have had this situation several times. The emotional level of the seller seemed to dictate if they would accept a very logical argument or not. One other thing that might be used is if the seller has some sort of government security rating they should check to see if there would be an impact to it for a foreclosure. This may impact their decision.
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Permalink Reply by Damon Gettier on
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I am in the same boat with Wells. Different figures but they want 10% and there is no more money to give. I think that for now on I will have to suggest to those with a Wells second that they foreclose.
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Permalink Reply by Kevin - Greenville, SC on
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Wells Fargo (Freddie Mac) first being paid in full.
Wells Fargo Home Equity getting a 35% recovery (borrower deceased, no estate assets) and still asking the Realtor to reduce commission to 2% each side.....for now...
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Update - Was approved and closed at 6%.
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