Wells Fargo - Has anyone heard of this

[Brazzy]

When a negotiator makes a decision they have to back their decision up with supporting documentation. They need to show all available alternatives and justify why the decision they made was the right one. Typically around 3 months past due they will start the analysis. If you negotiate with them after that they wont ask for an appraisal to be done because they can use the one that was just done. Regardless of the value of the house they probably will and should be tough on this one. With you being current on the first their lien is in no danger. They know you want to stay in your house and will continue to pay on the first. In their eyes unless you make them a juicy offer they have no reason to settle now when they can just wait for a more favorable situation.

[2manybills]

The information I received from the loss mitigation department is that they want to either settlement or do a loan mod.

We'll see where it goes from here. All the folks on these boards that have settled with WF, give me hope.

[shark66]

If your house is underwater on first, stick with your original offer and let them sweat it...that's what I would do.

Personally, I would've missed a few more payments just to see how they would've reacted, but the ball is somewhat in their court now...

Finally, as for "mini appraisal" I would be telling them "no way no how" but it's obviously your call. I've never heard of mortgage company asking to actually set foot in the house to appraise...and in my book, by letting them in, you'd be assuming a weaker position for any further negotiations...

My $0.02 only...

Good luck.

[Brazzy]

The catch to that is they are not sweating it at all. They already know that this is going to be a total loss and this is already fitted into the 2010 budget. They gain nothing by taking a low ball offer. Its worth a try since some creditors SOP never accounted for today's financial climate. However Do not expect them to accept this offer, and they shouldnt. Their best option would be to charge it off, sit on the lien and wait. Crazier things have happened though. Some creditor's negotiators lack common sense.

[shark66]

Brazzy wrote:

Their best option would be to charge it off, sit on the lien and wait.


Wait for what? The housing market to come back where it was when the loan was taken out?

[Brazzy]

In all honesty... Yes. When they charge it off it will still accrue interest and in the event this home owner decides to sell or refi this will be there for all of eternity. The funny thing is that even at that point if the house is upside down and you try a short sale they have a ton of leverage because if they say no the entire deal will fall through. They can retain this thing forever if they want to, and why wouldnt they? Its already been reported as a loss on the books. Meanwhile the home owner will continue to make payments on the first and bring down the principal. So the balance on the first is going down, ideally the housing market starts to pick up again (it wont be this way forever) and they find themselves in a VERY nice situation.

One quick thing about the housing market. I have a theory and its because of all these seconds that are being declined for foreclosure and being charged off. The creditor can come back and exercise their lien at any time. If the housing market were to rebound I really feel that a few creditors would revisit these charged off seconds and look to move on them. In turn this would adversely affect the housing market and set it back quite a bit. I'm very interested to see how that situation plays out.

[shark66]

That's under the very liberal assumption that the housing market will bounce back anytime soon, or that the OP will get to the point of paying off the principal....

The way I see it, the market will stay low for the most of the next decade at the very best of circumstances.

I can't speak about WF since I don't know anyone who has dealt with them personally, but have seen instances of seconds being settled for anywhere between 8-12% in a similar set of circumstances.

With all of that said, what you're saying makes a ton of sense under one additional condition: that the bank (WF in this case) doesn't have zillions in shadow inventory (which they most likely do, and then some) of the housing nature and wants to add to it instead of walking away with (highly subdued amount of) cash...

My $0.02 only...

[Brazzy]

Thats the thing is that this wont be inventory to the bank. The other situations you have seen are probably more along the lines of when their lien is in trouble. Understand that if the first forecloses they get nothing. In that scenario its better to take what you can get and walk away. However the lien is not in trouble. Come on now we're talking about the big bad WF... You think they're gonna make life that easy? I would actually lose respect for them if they did. That means the next time I'm dealing with them I would hammer the hell out of them.

[shark66]

This is what OP has stated in a different thread:

I have not reaffirmed my mortgages, but I continue to pay on my first and work on settling my second, which is underwater.

That was my starting point. In my book, the second lien is in trouble. That's why I have initially advised that letting them (WF) sweat is the way to go IMHO.

[Brazzy]

He's paying on the first and intends to keep the house. Not seeing where the second is in any danger.

[shark66]

My point is that OP could've easily stopped paying the second (which is underwater) and waited for six months before making an offer....which would be 5% if it were me...

They (WF) won't foreclose since they've got nothing to gain.

OP may not be going anywhere, but neither is the housing market...

[Brazzy]

I understand your point. However there is no urgency or leverage here to force WF's hand. Your thinking short term in terms of the housing market. Once an account is charged off, over time its not going to get "more" charged off. Its going to stay as is. They have all the time in the world. They should use that fact as leverage. Basically stating that if you dont want to pay it thats fine but eventually something will have to be done to satisfy it. Even if its your grand kids that have to do it. If you make that offer to me it will be shot down i a heart beat. Personally that offer would have to be mighty juicy to get me to bite. 5% wouldnt even make it to my desk. The creditor would normally ask for 70%.

[jmanford]

Its already been reported as a loss on the books.

And you know this how? I'm just curious as to where your getting your inside information?

[Brazzy]

We are talking about a charge off. When an equity analysis is completed and the value of the home does not justify foreclosure it will be charged off per OCC guidelines. Basically speaking the loan be written off as a bad debt. This type of thing has been forecasted and budgeted for. The negotiator will look to recoup funds prior to charge off to reduce the net charge off. However, they have a trump card in the form of a lien. Much like in a game of high low jack they are gonna hold that trump card until there is an opportune time to use it. $15k is a drop in the bucke... no a drop in the ocean to WF especially since they will be eating a large charge off regardless. Mind as well play hard ball and get as much as possible.

No insider info needed on this one. Its pretty much financial common sense.

[loser104]

But, if I were the WF negotiator, especially in a true hardship case, I may get NOTHING from the homeowner if he/she files chapter 7!

Now if there is no hardship, then yes, maybe the WF guy rejects the settlement offer, and just sits on the lien forever and eventually it does pay off for them...........