Wells Fargo HELOC Settlement Post Chapter 7

[centless]

After receiving so much helpful information from contributors to the BK Forums I wanted to share our recent experiences hoping they might help anyone in a similar position.

I am married, living in Northern California. My wife and I filled Chapter 7 in August 2011 and received a Final Decree that same month. We used an attorney and the whole process went smoothly because of advance preparation using information posted in these forums. We did not reaffirm our mortgage (B of A), HELOC (Wells Fargo), auto lease (Honda Fit), or auto loan (smart fortwo). However we continued to make payments post BK on everything but the HELOC. The smart car is paid off and the Honda lease will be complete in 7 months. No payments have been made to Wells Fargo for the HELOC since September 2011.

In September 2012 I decided to make an offer of settlement on our $40,000 Wells Fargo HELOC with the aid of some good information offered in the BK Forums. Hoping my experience might help others, I have listed the process below.

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September 10, 2012
called 800-241-0039
entered account number + last 4 snn
human answered, confirmed this was the correct department for post-bankruptcy settlement
re-confirmed account number, home/mailing address, employer, and current phone numbers
was told to fax settlement offer to 866-306-8279
once received the offer will be forwarded to an officer for review and I will be contacted

September 19, 2012
Faxed settlement letter offering 8% ($3,200) of outstanding balance on HELOC post BK

October 8, 2012
Received a call from A.K. at Wells Fargo
He asked to confirm my information
He requested I fax to 866-834-7648, a hardship letter and something showing funds were available to pay the proposed settlement offer

October 11, 2012
Faxed requested hardship letter and savings account summary to 866-834-7648

October 15, 2012
Received a call from K.G., the negotiator assigned to our case. She requested I return her call (8am to 5pm CDT) She needs one more piece of documentation.

October 16, 2012
Called K.G. who had two questions. What did we intended to do about the first mortgage, and were payments current on the first mortgage with Bank of America. I told her we would try and stay in the home and continue making payments, and that we were current on the first mortgage. She said she would forward the information to her superior and we should be contacted in 3-4 days.

October 26, 2012
Received a call from Wells Fargo saying they accepted the offer and would send a formal document with payment instructions to our home address.

October 30, 2012
Received documents and request for payment via bank transfer, which I did the following day.

December 27, 2012
Received 2nd mortgage lien release along with Property Reconveyance document from the County.
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The whole process was straight-forward and Wells Fargo was professional. I hope this information helps other who find themselves in the same position.

Also note that soon after the lien was released my credit score took a drastic drop. My average credit score had been rising since the BK, from 627 in 11/2011 to 674 in 10/2012, when it dropped to 647 in 11/2012. However it recovered in 1/2013 and is now at 702.

[LadyInTheRed]

Congratulations and thank you for sharing your experience.

[alo]

Thanks for sharing. I have a very small HELOC with Wells (less than $4K ...our first is almost $300K) but was wondering what happens to it if we file Ch 7 and stay in our home (we also would not reaffirm anything). How did you come up with 8%?

[centless]

alo - We stayed in our home, still there. We never stopped paying the first mortgage, but stopped paying the second HELOC after filing chapter 7. Both loans were dismissed in chapter 7, but the liens survive. I had read that Wells Fargo wouldn't consider a settlement offer as serious unless it was 10%, but read about someone having a 5% offer accepted. So I tested the waters at 8% and there was no counter offer from Wells, they accepted and released the lien after receiving payment.

As you can read from countless posts on this forum, the whole process is confusing, nerve-racking, even scary. But with the right information you can navigate the system and come out in good shape for moving forward.

[bktek]

I filed BK in 2009. I have a HELOC with Wells Fargo that will mature in July 2014. Is there any chance that WF would consider a settlement if they hold the only lien on the property? Since I filed, I've continued to pay the monthly interest on the loan in order to stay in the house. I'd like to settle if possible.

[LadyInTheRed]

I filed BK in 2009. I have a HELOC with Wells Fargo that will mature in July 2014. Is there any chance that WF would consider a settlement if they hold the only lien on the property? Since I filed, I've continued to pay the monthly interest on the loan in order to stay in the house. I'd like to settle if possible.

You are unlikely to get the same kind of settlement as somebody with a completely unsecured second, if you can get any at all. You would have to make an offer that will convince them that they are better off taking it than foreclosing. You also may have to stop making payments to get them to consider a settlement. Have you tried a modification?

What's the balance of the loan and the value of the house?

[bktek]

You are unlikely to get the same kind of settlement as somebody with a completely unsecured second, if you can get any at all. You would have to make an offer that will convince them that they are better off taking it than foreclosing. You also may have to stop making payments to get them to consider a settlement. Have you tried a modification?

What's the balance of the loan and the value of the house?

The balance is 50,000 and the value of the property is approximately the same. I didn't reaffirm the home, of course, so I can walk away if need be. A modification would be like a new loan for which I'd be financially responsible, right?

I doubt they could get anywhere near 50K for the property at auction, but who knows.

[LadyInTheRed]

The balance is 50,000 and the value of the property is approximately the same. I didn't reaffirm the home, of course, so I can walk away if need be. A modification would be like a new loan for which I'd be financially responsible, right?

No, a modification is not a new loan. It is a modification of the existing loan and does not change the fact that the loan is discharged. As long as you do not refinance, you will still be able to walk away.

[tongle]

Hello All

Here is my situation, I have read everything in this forum, but did not find anything similar, but followed "centless"' post and made an offer to Wells Fargo for a second mortgage settlement, did not get the same result.
Background, Filed Chapter 7 May 2011 on a more than 51 % non-consumer debt, took 5 months to fight with the UST and 3 341 meetings and finally got a discharge in Nov 2011 because I proved to the UST that 90% of my debt were non-consumer debt. I did not reconfirm the first or the second mortgage in the Chapter 7 filing.
The First Mortgage with Sun Trust (BOA is the investor) approved the trial loan mod (no terms stated in the letter), I am on the second month of the loan mod. The second is with Wells Fargo Bank, owed $132K plus they and another $20K in back payment. Faxed all the paperwork required for pre-foreclosure Sale on May 15 and offered $13K to settle in full. On May 30, received a letter from Wells fargo, the letter stated that "The Investor on this Loan does not entertain the Short Pay Option". I am waiting for another 2 months to see terms of the First Mortgage in term of interest rate and back payments added to the principle amount to see if it is worth it to stay and pay or just to short sale again. Have not made any payment to the mortgage holders since the filing date(except for the trial payment to the 1st), tried to short sale on 3 different occasions but the buyers back out all 3 times (15 months total in timeframe). Just wonder what Wells Fargo going to do, they already charged off the loan and not actively persuing the foreclosure because the value of the house barely covered the first mortgage. Is Wells Fargo waiting for me to sell in the future and wanted to be paid in full? Any input is greatly appreciated.