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LawTalk
LawTalk, Attorney
Category: Real Estate Law
Satisfied Customers: 35406
Experience:  I have 30 years legal experience. Additionally, in CA I held a Real Estate Broker's license.
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I live in California. My house was foreclosed on in 2011. I

Customer Question

I live in California. My house was foreclosed on in 2011. I kept paying on my HELOC that we used to put in a pool because I was trying to redo my first mortgage. It is still current because I thought it just became an unsecured personal line of credit. Can I negotiate with the HELOC lender (Chase) for a payoff pennies on the dollar. A friend did it for $3000.00 on a $50,000 loan.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  LawTalk replied 1 year ago.
Good morning,
I'm Doug, and I'm very sorry to hear of your situation. My goal is to provide you with excellent service today. In order to give you a clear and concise answer, I will need some additional information about the circumstances, please.
1. Has your house been foreclosed on yet?
2. Are you prepared to file bankruptcy?
3. Was the HELOC done as part of the purchase of your house or was it a loan taken out after you bought your home?
This seems like a very serious situation for you, and your questions and issues suggest that an in-depth conversation might better suit your needs. If you are interested, I can offer you a phone conference as opposed to continuing in this question and answer thread. I will make that offer to you after I get this posted to your question thread. All you need do is accept the offer if you would like me to call.
Doug
Doug
Customer: replied 1 year ago.
1 foreclosed on in 2011
2 do not want to fIle bk
3 loan Made after purchase of house
Expert:  LawTalk replied 1 year ago.
Thanks for the additional information.
Let me first say that while your friend may have done the deal they claim, it is a very rare deal and your financial facts are almost certainly much different from that of your friend at the time they made that insanely-great deal. I see something like that maybe once every 5 years.
While there is nothing preventing you from approaching the HELOC lender about a compromise settlement of the remainder of their claim, there is little reason that they would agree to do that either.
First you have been paying the debt all these years even after the foreclosure occurred, and because the loan was made after the original mortgage was taken, while they don’t have a secured interest in the property any longer, they have a viable claim against you personally for the debt.
If you were years behind in payment, or they believed that you would file bankruptcy leaving them with nothing, then they might accept pennies on the dollar. I would not expect them to take much less than a 20% cut on the remaining debt---and that would be based on you making payment in full on the 80% in a lump sum.
Most lenders will not agree to a decrease of any kind until you are 3 months or more in arrears on the debt, and so if you even want a chance at negotiating a deal, you will almost certainly have to cease payment altogether and make noises about filing bankruptcy to them---whether you intend to or not. I wish you success.
You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.
Please remember to rate my service to you so that I can be compensated for helping you.
I wish you and yours the best in 2015,
Doug