HELOC Won't Budge

[IOUSEATTLEWA]

Hi.

Short story, I stopped making payments on my first in May and put the house on the market while still paying my HELOC. Moved out of the house into a rental in August (moved cities for a job). Finally got an offer that will only cover 87% of the first. My R.E. has been negotiating back and forth with the 1st and 2nd. The HELOC (U.S. Bank) has come back and said 'NO Dice!'. They want it all and will block the sale.

The HELOC wants a VERBAL ok to this term and will THEN put it in writing. My R.E. agent says (based on the dozens of these that she is doing) go ahead and verbally agree and then don't sign anything in order to negotiate (get my attorney in on this or?). No inital offering of 10% or ??? as otherwise discussed in this Forum.

Due to other business debt and the such, I could just declare BK and tell them nevermind, you both can keep the house. My guess is that when I stop paying the HELOC (like October 1st) they'll come after me (phone calls, judgement, attempt for garnishment) and buy's me some time.

I was told months ago that my $100K + in debt (not including the house and HELOC) was too recent (last summer to keep my business afloat) and my creditors might fight me. Additionally, my employer indicates that they can and may impose discipenary actions against me for multiple and excessive garnishments as consistent with the CCPA (Consumer Credit Protection Act).

So, my question is, if I say no deal, go away, will they simply walk away from this? Will the 1st lien holder allow them or try to work something out before the buyer disappears? When the HELOC comes after me, how long before a judgement and wage garnishment notification gets to my employer? My attorney thinks I could file by first quarter of next year.

Thanks.

[123ABC]

U.S. Bank is really hard to deal with. I have been dealing with them on my mortgage and its nothing but trouble. My guess is they will go pretty quickly for the judgement and lien on the house. If you stall that as long as possible by waiting till the last day to answer the summons, filing an appeal and then waiting till the last day again you can stall it about 3-4 months. They wont be able to start that procedure till you are 90 days behind so thats another 3 months. If once you get 90 days behind you make a payment you can stall them another month or so... once they get the judgement and the lien it will take them 28 days to file for a bank attachment... then you have 10 days to respond and appeal. you can stall them another month or so... so all together before they will get a bank attachment or garnishment you can strectch it out about 6-9 months depending... you must be on top of everything though and make sure you dont miss a deadline or its done. and at some point, when you get the notice of garnishment or attachment you need to be ready to file quickly. good luck.

[StartingOver08]

What is the value of your home? How much is the first and how much is the HELOC?

Normally the second is SOL in a short sale. It is common for the second to get $3k to $5k or some very small percentage of the loan. It is true, that all the parties (first, second, mortgage insurance etc) have to agree to the same terms for the short sale to take place. It is common for one of the parties to demand something unreasonable - usually it is the mortgage insurance company (even if you do not have MI, the originating lender probably has lender paid MI on the loan). The last time I saw a 2nd take a hard stance like this was Wells Fargo when the seller/borrower defaulted within one year of purchasing the property. Turns out the Wells Fargo loan officer faked the borrowers income and documents to originate the loan!

The reason they do this is to make sure the property is foreclosed upon so they can collect on the mortgage insurance payout. The mortgage insurance will not pay the lender in the case of a short sale. If you have done all that you can, then when you file BK you should not feel one moments worth of regret. IMO.

[IOUSEATTLEWA]

Thanks for the quick replys....

I originally purchased the home in 2006 for $450,000 and put $90k down. When the economy began to tank, I took a $60k HELOC (last summer) to keep my business afloat. The offer on the home was for $305k. US Bank wants all $50k back. No if and's or buts. Based on other feedback I'm being told to say no and see what thhey come back at. I'm not sure I have much to lose either way with some upside on the return harball tactic.

Thanks!

[StartingOver08]

Make sure you make at least 12 payments from the time the loan was originated on your second so they can not claim fraud.