Remod and 2nd mortgage

[Miknan]

Filed ch7 which included my house. I just had my 341 and still waiting to find out what happens. I intend to try and save my house after discharge without reaffirming. I figure I'm about $15k upside down on my first to WF and owe $24k on a HELOC to Fifth Third Bank. I want to settle for pennies on the dollar with 5/3rd and remodify with WF. Is this possible? Who do I contact first? WF or 5/3rd? Both have to happen for this to work. Any advice would be greatly appreciated. How much should I offer to pay on the $24k to settle? Thanks.

[Miknan]

Nobody has any advice on this?

[justbroke]

What's the value of your home? If it's worth less than $150K, then I wouldn't do any of what you want to do. My "recommendation" limit for keeping an underwater home is 10% of value. What you would do, if after you throroughly run the numbers, is discharge the debt. Then keep payments current on the first. File for a modification at the same time you offer 5/3 Bank 5% for the 2nd. They may come back with 15-20% to buy it out. Then offer then 6-10% and that should be your final offer.

Where is this money coming from?

[Miknan]

Thanks for the info. I think my house is worth about $180k and I owe $195k. Just can't afford the payment the way it is and now I'm three months behind. I plan on taking a loan from my 403k. I know everyone says it's a bad idea but I don't care. It's worth it to me to keep living here and have my kids go to the same school. It's not like I'm talking all the much money if I can get away with paying the second off 10% of the $24k I owe. If I could refinance the $195k at a low interest rate I'd be ok.

[justbroke]

In your particular case, I could concur with looking into this strategy. It will be contingent, however, on settling with the 2nd lender. As I wrote in my initial post, I like to see no more than 10% negative equity in the property. Since your value is $180K and you owe $195K, that is certainly within the 10% or $18K difference! It's the second that makes it not worth it. Should you settle for $2K or so, then that's $195K + $2K = $197K. That's just under 10% negative equity.

I would just make sure to run all the numbers and make sure you get a really good deal with the second lender. I don't know when you'll be able to refinance. I'm hoping that you can actually afford the first mortgage as it is. I also hope that it's not an option ARM or other adjustable rate mortgage.

[Miknan]

I really can't afford my 1st mortgage as it is now. I originally bought it for $219k at fixed rate of 5.3%. I'd like to refinance the $195k into another 30 year mortgage and hopefully get it at a low interest for a few years. I sure hope the banks work with me.

[newbie2]

I really can't afford my 1st mortgage as it is now. I originally bought it for $219k at fixed rate of 5.3%. I'd like to refinance the $195k into another 30 year mortgage and hopefully get it at a low interest for a few years. I sure hope the banks work with me.

Keep in mind that if you refinance you could be signing documents that reaffirms that mortgage / note and you're stuck with it. Since you are underwater on both loans it would probably be the wisest financial move to walk away from your house. Don't reaffirm and certainly don't sign anything that could cause a reaffirmation.

[justbroke]

Great point! Yes, refinancing is a new debt and a new obligation.

[considering7]

Miknan,
Did you have any success with your negotiations with Fifth Third Bank? Please share your experiences with us or come back in a few months and let us know what happened.

I am considering contacting Fifth Third to settle a debt that survive just like you and I'm curious how easy they were to work with on the settlement and whether they settled for a small percentage or not.

[Miknan]

Haven't tried yet. I'm going to wait for didpscharge, about 3 more weeks and try then. I'm not very optimistic at all. The stress of where we are going to live is starting to take a great toll. But I'll let you know what happens. Please do the same.