Originally posted by Zachary Dosch:
If there is a charge off at all for any one of the major banks, particulary at the one that you are trying to borrow from, you goose is cooked. Its the scarlet letter. The only way to mitigate would be to completely pay them back for what you cost them. You don't have to do that so almost nobody does that. Even if you charge off an auto loan, its almost impossible to overcome.
In my opinion, this type of situation is exactly why the term on a loan should never be longer than 5 years at which time the ability to qualify for the loan should be reevaluated. 30 year terms are insanity from a banks perspective.
My guess is to find a newer, smaller bank and develop a relationship with them.
Zach,
First thank you for your feedback, it is appreciated along with the other posters as well. I love the "sounding board" here at Bigger Pockets. Its just like sitting around a table at a restaurant or bar with some fellow investors and saying " hey guy/girl I was wondering what do you think about this Real Estate situation or deal" and getting different experiences and viewpoints is nice. Of course some information is good and some is bad, but thats life.
Now the 2 loans I sucured over the phone in early 2006 were for 2 pre construction properties in Charlotte, a SFR 4bed 2.5 bath 2 gar, for $170K - 20% cash down and that loan was with CHASE (which I have 4 MTA loans on other investment properties with them also that are current).
The 2nd Loan was with Bank Of America, on a Townhouse 3 bed 2.5 bath 1gar for $160K - cash 20% down, that I borrowe money on for almost a year to pay the $1,100 a month note on. I even re-fied the loan to drop the rate 1/2 percent when my credit score was over 800 to try to keep the property, but to no avail. The market in some parts of Charlotte has dropped so bad, its tough to sell at what you owe on something and rents have decreased.
In 2005 - 2006 Charlotte was a good solid hot investment area, but like a lot of hot area fell down far. ;-(
The Heloc was started with Wachovia in 2003 for $100K and has been maxed out and payed off at least 2 times since then. Wells Fargo took over a year or so ago and I have had perfect payment history with them, as well as everyone else for years.
When I was bleeding money like someone with a leg cut off at the hip, and had no options other than Foreclosure or as Chase and Bank of America suggested to "request a short sale", I went and had a meeting with the Bank Manager at my local Wells Fargo (yes with a coat and tie on) and explaned the situition in full and I ask him, "Will, this affect my Heloc with Wells Fargo? He said it would not effect it since I had been with the previous banks since 1989 with perfect payment history, and that these were other banks and I was doing all I could do to "cure" the situation.
My mistake was to belive a local Wells Fargo Bank Manger. If I would have know they would shut down a $100K line at 2.25% I may have borrowed the $75K left and invested it into something giving more return.
The bad thing is our home we live in would be on the line if we could not pay.
So right now we owe about $23K at 2.25% and the min payment is $50 a month. (which would take 200 years to pay off at that amount).
So I am going to vist some local creidt unions to see what they can offer me.
I really just wanted to keep the line open to have IF I get a huge tax bill because of capital gains generated from the $150K (or there about) loss to the banks. I am concered I may have to pay 15% cap gain on the $150K "IF the bank writes it off?"
So I would need about $22,500.00 to pay uncle sam I guess in April 2013?
Maybe?
I have just decided to put some money into a .01% savings acct each month and just pay a few hundred a month on the Helco as I was paying as much as $1K a month on it and eating cup of soup, but now I will have to be my own bank.
Lesson learned: CASH IS KING
Thank you all and Happy Investing.
