Foreclosure in 85032>Question Details

Mary, Other/Just Looking in Jones, OK

Our Home is valued at $173,000 now (according to Zillow) and we have our 1st Mortg w/Wells Fargo for $74,000

Asked by Mary, Jones, OK Sun Sep 28, 2008

and a Home Equity Line (Home Assett Mgmt) w/Wells Fargo for $110,000. If we stop making our 1st mortgage and Equity pmts and go into Foreclosure, can Wells Fargo sue us?

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With the recent changes to underwriting guidelines, it is very unlikely that you will be able to walk away from your current home AND buy a new home. The underwriting guidelines for that purchase are going to prevent you from successfully getting a new loan. FHA, Fannie, and Freddie are all in alignment now that you need to have a very high Loan to Value on your current home, as well as the income to support both homes, before they would underwrite the new loan. These underwriting guidelines are designed specifically to prevent exactly what you state you want to do.

With regard to your second loan w/ Wells Fargo, a HELOC is a personal line of credit, very similar to a credit card. It is protected by the home, but also by your "good name", such that on the sale of the property it can be paid off by the home, but if there's not enough money there, the bank may want the balance from you.

I have been successful negotiating settlements with regard to HELOCs as part of a short sale process, but I certainly wouldn't be able to guarantee a settlement. Each bank and situation is certainly different.

FYI, a short sale will be just as bad for your credit in the near term as a foreclosure. For at least 2 years you will be completely unable to get a conventional loan. In a foreclosure, the rule is 5 years. So for the first 2 years, the situation is the same, it's just that a short sale can be forgiven sooner.
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1 vote Thank Flag Link Mon Sep 29, 2008
Hi Mary,

I don't think that Wells Fargo can sue you, but there are other issues we need to discuss.

I would suggest that you do not trust online home value estimates because they tend to be inaccurate the majority of the time. However, every now & then a blind squirrel does find a nut. So, there is a small chance that your home is actually valued at $174K, but to be certain, I would recommend that you speak to a REALTOR or two or three to get a very good analysis of the value of your home. If after this information you learn that you are in a negative equity situation, I would recommend that you contact your lender for assistance.

HomeSmart Real Estate
1 vote Thank Flag Link Sun Sep 28, 2008

Most probably the bank can not sue you on the first loan, since it is a regular mortgage. But the rules can change on your second, which is basically a HELOC (Home Equity Line of Credit). You might want to consult a Real Estate attorney for all the legal consequences, but I have known or several cases in Phoenix where the banks have gone after the borrower for the deficiency on HELOCs after they have foreclosed.

If you have a real hardship and can not continue making the payments your first step is to always contact the bank. The can help you with a loan modification or approve you for a short sale.

If you can not work out a deal with the bank, then plan to do a short-sale. Get in touch with a Real Estate agent and get a better estimate of value, the estimates on Zillow can sometimes be way off. If we trust the estimate on Zillow you seem to be under water only by about 6%. Based on those numbers you might very easily be approved for a short sale, or even better you property might really be worth more than that and you might be able to just do a regular sale and satifsy what is owed to the bank.

Remember that a foreclosure will destroy your credit and that will stay on your report for the next 7 years. A short sale will be a lot easier on your credit, but it will still be a considerable hit - if you can you should try to avoid them.

Good luck!
1 vote Thank Flag Link Sun Sep 28, 2008
Hi Mary,
Have you spoken with a Real Estate Agent yet about the value of your home? They will be able to give you a more accurate market value on your home. You should also call Wells Fargo at 800-678-7986 and ask about Loan Modification Programs - Adds any past-due interest and escrow amounts to the unpaid principal balance, which is then reamortized over a new term. Or you can check out this information for Alternative Repayment Options at You are welcome to call me if I can help. Take care and Good Luck.
1 vote Thank Flag Link Sun Sep 28, 2008
Hi Mary

I'm sorry to hear of your situation. Contact Wells Fargo and see what options they may be able to provide you. Wells Fargo may be able to modify the loan terms, rate etc to help you out.

As a Realtor another option that might arise would be to sell your home for what it's worth today and get Wells Fargo to accept less than what you owe. This is called a short sale and we are currently helping people like you with that option. A short sale is much better credit wise than foreclosure. A short sale would not cost you anything, we would work with the bank for you.

Please let us know if you have other questions.
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1 vote Thank Flag Link Sun Sep 28, 2008
They can't sue you but they can foreclose on your house and completely ruin your credit. If you haven't been in contact with Wells Fargo I would highly recommend that you get in touch with them and see if there is anything you can do to work out payments that would work for you. Don't go into foreclosure unless there is no other way for you. Banks do not want another house and will try to work with you on a payment plan.

If you have to go into foreclosure I suggest you find another place to live before the foreclosure hits your credit report. Any new landlord is going to run a credit check before they agree to let you move in. If the see a foreclosure you may have a tougher time finding a new place to live.

Hope this information is helpful.
1 vote Thank Flag Link Sun Sep 28, 2008
I forgot to mention that we live in Phoenix, Arizona. Thanks in advance for your help w/our question!
1 vote Thank Flag Link Sun Sep 28, 2008
I am a buyer seeking a good deal on a home to buy from seller in AZ. Can you give me info. on your home and pics, balance owing, pool??? Sq. footage, address, etc. I may be interested in it.

Is it an assumable loan and how much equity is in your home? What is your current rate and any other info. you can pass on. I am not a Realtor, just a buyer looking for the right deal and home.

Thank you.

0 votes Thank Flag Link Thu Apr 30, 2009
I would approach this problem more holistically.

Talk with a Realltor about your options:
Loan modification
Short Sale

Wish I could offer more from this end.

Good counsel is the key, and asap.
0 votes Thank Flag Link Sat Oct 4, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
Depends on the note you signed. If Wells Fargo didn't wait their right to go after a deficiency balance they can sue you for the remaining balance after foreclosure.
0 votes Thank Flag Link Sat Oct 4, 2008
Ever dawn on you to RENT?
0 votes Thank Flag Link Mon Sep 29, 2008
The reason is that I lost my job 3 months ago, so we've been having a hard time making ends meet on one income. We contacted our Mortg Company (Wells Fargo, Lienholders on our 1st and Equity) to let them know of our Hardship and to see if they would be able to work out any sort of a Temporary Loan Modification. Eventually they declined our request as they insisted on including my husbands unguaranteed Overtime Earnings in their number crunching process to determine if we qualified for Temporary Assistance. So in this case, our lender WILL NOT work with us, they only have their hand out to us. Now we're looking at reducing our total debt and know that we could buy a house in Maricopa, AZ (85239) for $85,000. So that's where we are, we've never skipped a payment on either of our mortgages, our Mortgage company will not work with us, and we're now considerring the process of getting a cheaper home and "walking away" from this home. It's certainly not an easy decision, though, it is a strong possibility..
0 votes Thank Flag Link Mon Sep 29, 2008
PAUL! I want to thank you for eloquently describing the "Zestimate." ROFL, yes indeed, sometimes a blind squirrel does find the nut.
0 votes Thank Flag Link Mon Sep 29, 2008
Why do you want to stop making payments? Where are you going to live? Good Luck
0 votes Thank Flag Link Mon Sep 29, 2008

Our recommendation is for you to direct your question to a qualified real estate attorney.

Good luck
0 votes Thank Flag Link Mon Sep 29, 2008
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