Need Foreclosure Help

Off Topic
21

[quote]dollarbill44 wrote:
trailrash wrote:
stumpy wrote:

While an interest only loan won’t make his loan balance go up, what a lot of people are finding out is that the value of the home at the time they wrote their mortgage is no longer the value of the property.

DB[/quote]

I see what you are saying. But this is unlikely given this is maybe a 210k home but possible. I personally have not seen that amount of depreciation except in areas that were very inflated in the last few years. While the market is depreciating the amount of depreciation you are speaking of isnt that widespread. But I see your point.

Going back to what I said there could be a number reasons as to why he cant get what is owed. For all we know he could have done a cash out refi and had an inflated appraisal. And yes, inflated by 40k could be something that got by lenders a few years ago and shame on them for allowing it.

For instance I looked at a loan the other day where there were comps surrounding the subject but all comps on the appraisal were out of the neighborhood. Why? because is where they found the value at and some stupid bank signed off on value.

That customer will be screwed in 2 years when his ARM is up and he needs to get out of it. I told the broker not to close the loan but he is doing it anyways. He will surely have one pissed off cutomer in 2 years.

One thing that most banks are doing which they should have been doing years ago was qualifying the borrower on what the rate will be on the first adjustment. If they don’t ratio then no loan.

22

[quote]jm85 wrote:
You want foreclosure to be the last option, your credit will be jacked for most of your life.
[/quote]

Most of your life? It is 7 - 10 years. After that it comes off his credit score. It isn’t the end of the world. The last option he wants to have isn’t foreclosure either. It is bankruptcy.

Foreclosure would suck, but it isn’t the end of the world either. Many people recover from both, and go on to live successful lives.

23

Wow! Thanks for the help, guys!!

Well, that number I just threw out there. After rechecking things, I owe $212k. We maxed out our equity a couple months ago because we thought things would work and things would be different.

Our appraiser was honest and didn’t inflate the price, even though I wanted it. After looking back, its a good thing he didn’t. LOL! I know its bad to do that finally and in the legal part of it all.

With the market how it is now, I’m guessing we could get rid of it for maybe $185k. This is just a guess. Maybe we could sell it for $195k+. Our house is a lot nicer than the ones we looked at in the same price range 8 months ago.

We have a 30 year fixed for both loans. One is 80% of the value and one is a line of credit.

24

[quote]trailrash wrote:
dollarbill44 wrote:
trailrash wrote:
stumpy wrote:

While an interest only loan won’t make his loan balance go up, what a lot of people are finding out is that the value of the home at the time they wrote their mortgage is no longer the value of the property.

DB

I see what you are saying. But this is unlikely given this is maybe a 210k home but possible. I personally have not seen that amount of depreciation except in areas that were very inflated in the last few years. While the market is depreciating the amount of depreciation you are speaking of isnt that widespread. But I see your point.

Going back to what I said there could be a number reasons as to why he cant get what is owed. For all we know he could have done a cash out refi and had an inflated appraisal. And yes, inflated by 40k could be something that got by lenders a few years ago and shame on them for allowing it.

For instance I looked at a loan the other day where there were comps surrounding the subject but all comps on the appraisal were out of the neighborhood. Why? because is where they found the value at and some stupid bank signed off on value.

That customer will be screwed in 2 years when his ARM is up and he needs to get out of it. I told the broker not to close the loan but he is doing it anyways. He will surely have one pissed off cutomer in 2 years.

One thing that most banks are doing which they should have been doing years ago was qualifying the borrower on what the rate will be on the first adjustment. If they don’t ratio then no loan.

[/quote]

Good points. This thread should be read by everyone so that they get an idea of the many ways they can get burned. People wrongly assume that if they can get financing that they can afford it.

While my example is over the top for most markets, people are seeing these types of deflations where home prices are higher. For instance, I just checked a listing for a nearby home that sold for $1.1 million just 18 months ago listed now at $980k. Oops. There are also instances where the property tax has gone up precipitously recently that drives prices down, like where my parents have a vacation home. Their annual property tax bill doubled (and I’m talking about 5 figure tax bills to begin with) in one year’s time, so a lot of people are selling, which is driving down the real estate values. Some houses have decreased by as much as $400k.

DB

25

[quote]dollarbill44 wrote:
trailrash wrote:
dollarbill44 wrote:

Good points. This thread should be read by everyone so that they get an idea of the many ways they can get burned. People wrongly assume that if they can get financing that they can afford it.

DB[/quote]

You are 100% correct on this. Perfect example is what we call a Wage Earner stated or W2 stated loan. Shame on the broker, Real estate agent and the lender for allowing many of these loans to close. Perfect example and nothing against a waiter or waitress but they should not be buying a 200k home just because they got approved for it. many times the Mtg Broker will put the customer on a W2 stated loan because they have the credit scores to qualify but not the income.

The customer thinks it is all okay because the lender approved them right… wrong. Many of these people get into the home and then realise they can’t make the payment. Shame on the Mtg broker/banker for putting them into too much of a home, shame on the real estate agent for allowing this and shame on the Lender for closing this.

Thank God my company has always turned those deals down if the income was unreasonable for the job position. Keep in mind there are times the borrower makes side money that can’t be proven and they can afford the home but in many cases thats not the way it is.

I had a broker call me today asking me if his borrower would qualify for a W2 stated product and I said to him “why are you going stated?” and he said Quote “well her debt ratio is too high”… I told him to repeat to me what he just said and think about what he just said.

26

OP, here’s the real deal. Read the following with the caveat that things may be different where you are. I practice in GA.

Now, bankers are bankers because they want money. They do not want your house. When bank auditers come in they don’t want to see a lot of real estate on the books. That means the bank is making bad loans. Hence, the bank will do everything that is reasonable to help you. I would think you would get a minimum of 60 days before the bank began foreclosure proceedings, likely more.

Also, your house won’t sell for 150K at auction. The bank’s opening bid will be for the loan amount. Furthermore, none of the banks I represent would go after a deficiency judgment in the event the bank sells the house for less that what you owe. If you can’t pay your note, what are they going to get out of you?

Bottom line, talk to your banker. He’ll help. I guarantee he does not want to foreclose.

27

Here is a great article I read on the subject today, maybe you can mine a nugget of help from it?

28

[quote]snewland22 wrote:
Furthermore, none of the banks I represent would go after a deficiency judgment in the event the bank sells the house for less that what you owe. If you can’t pay your note, what are they going to get out of you?

[/quote]

In the past that is the case and maybe it still is for the banks you work for but not all banks look past this so much anymore. I have personally seen this on a number of credit reports in the last 6 months. For instance I saw a rather large bank holding a 60k judgement against a borrower and guess who is paying them back on a payment plan.

29

Thanks, once again, for all the advice guys!! :slight_smile:

[quote]snewland22 wrote:
Furthermore, none of the banks I represent would go after a deficiency judgment in the event the bank sells the house for less that what you owe. If you can’t pay your note, what are they going to get out of you?

Bottom line, talk to your banker. He’ll help. I guarantee he does not want to foreclose. [/quote]

I don’t understand why banks wouldn’t go after someone? Say if someone owed $200k on the house and the bank sold it for $180k. Why wouldn’t they want that $20k??

30

I have worked in this field for too many years.

Is your girlfriend on the deed?
Seperate question, is she on the mortgage?

Also the attny atop page two gave you some simple & good info.

philipj

31

[quote]HouseOfAtlas wrote:
Thanks, once again, for all the advice guys!! :slight_smile:

snewland22 wrote:
Furthermore, none of the banks I represent would go after a deficiency judgment in the event the bank sells the house for less that what you owe. If you can’t pay your note, what are they going to get out of you?

Bottom line, talk to your banker. He’ll help. I guarantee he does not want to foreclose.

I don’t understand why banks wouldn’t go after someone? Say if someone owed $200k on the house and the bank sold it for $180k. Why wouldn’t they want that $20k??

[/quote]

The banks are willing to accept less for the payoff for a few reasons. It is costly for them to go through the legal procedure of a foreclosure, if the house goes up for sale at an auction, it will generally sell for much less than what is owed on it anyways and the bank will have already had to pay for the legal process and also, the banks are not in the business of buying and selling houses.

They are in the business of loaning money to make money. If they don’t have enough money in their reserves then they can’t loan it out to make more money. Hope it makes sense.

In the case of a short sale, you say that you have 80% of the value held by your first mortgage and 20% held by a second? As a general rule of thumb, most private investors will buy at around 70% FMV (Fair Market Value). If your house goes to foreclosure, the second mortgage will be wiped out and they will get nothing unless the auction bid is in excess of the first mortgage bid amount…not likely.

An experienced investor will work this deal and be able to short the second for almost nothing and probably be able to get the first down enough to where they can make everyone happy.

You may want to talk to a lawyer about the tax ramifications though. While I’ve never personally seen a bank go after anyone for the deficiency judgement, as I understand it the bank is required to report that amount to the IRS as income but sometimes will not.

Don’t be afraid to talk to investors as I assure you they are not all scam artists and they will not make you do anything that you are not willing to do. Remember, it makes sense for all parties… you get out of your upside down mortgage situation and they get a house at 70% value to sell for retail prices.

There are a few bad ones out there so I encourage you to talk to a lawyer and have him look over anything that you sign.

Good luck
Tim

32

[quote]HouseOfAtlas wrote:
It seems like I am heading towards foreclosure of my house. I haven’t missed a payment or anything, but I can see it coming soon. My work has cut hours a lot and the gf and I are almost ready to split, so it looks like it is my only option. Even if I got a second job that paid extremely well (highly unlikely) it still won’t happen. Also, I’m not a big spender, so tips on “cutting back on spending” won’t help LOL!

My question is, what exactly happens? I know that I have a certain amount of months to get out of the house, but how much does the credit score go down? I know I can’t buy a house for years and that is perfectly fine by me. I realize what is important in my life and I can live life just renting.

Also, if I wanted to go to school in the future, would I be able to get student loans? Or does it all depend on what state I’m living in when it comes to foreclosure laws.

Lastly, when/if my house forecloses and since I owe $210k on it, it’ll probably only sell for $160k at the auction, will I have to repay the $50k??

Any legal help or anyone that has been in this situation that wants to chime in, I’d greatly appreciate it.[/quote]

What state are you in? Different states have different laws as far as a foreclosure timeline is concerned. In New York you can get away with almost 2 years of not paying. In a state like Texas you got 3 weeks… yep 3 weeks!

I would avoid foreclosure at all costs if possible. It is worse than a bankruptcy on your credit report. It can stay on for over 10 years.

As far as getting student loans I can’t answer.

Do you have a recent appraisal? Do you have the house contrated with a real estate agent? What is your house worth and how much do you owe? Are you upside down?

If you owed $50 grand after the sale the mortgage company could attach a lein on you that makes you responsible for the difference.

I’m not an attorney but I do know some things about how foreclosures work.

Answer the questions I’ve asked you and we can take it from there.

33

[quote]stumpy wrote:
Sorry to hear that dude. I’m assuming since you owe 60k more than your place is worth that you have eithier a negative amoratization loan or an interest only. Now I’m sure I don’t need to tell you why they suck. A couple of suggestions for you. Find a private investor willing to buy your place and rent it back to you. This allows you to save your credit and not have to deal with moving and the the neighbors gossiping. Another thing you can do is improve your house so it is worth more, finish the basement, remodel the kitchen, bath, or bedrooms, or do some landscaping work.

Another option is to hire a realtor and have him do what is called a short sale. Basicly the realtor goes to the bank and trys to negotiate for the bank to buy your house back for less than what you owe. Trying to convince the bank they can eithier have it for said lower price in order to avoid all the expenses they will incur going through the forclosure procces. This will also keep your credit intact.

If all else fails and forclosure is inevitable. It generally takes 6-8 months (at least in this state) before the sherrif comes and kicks you out. In this case your credit is going to be fucked anyways, so don’t pay at all. Live rent free for that time and save your money so you have a nice chunk to get back on your feet again.

good luck[/quote]

The problem here is that a lot of realators don’t even know what a short sale is. The few that do don’t know how to go through the process efficiently.

34

[quote]robo1 wrote:
This isn’t legal advice, but don’t allow the house to go to foreclosure. You’re better off selling the house for a loss and then working out a deal with a bank to refinance the remaining $50k.

keep in mind that the $160K market value will likely be less at a bank auction, which means the bank has a vested interest in seeing you sell the property at market value. obviously that still leaves you with long term debt but at least it will be a more manageable payment than what you have now and it will preserve your credit rating.

HUD has a program where they help people through this process. You’re second option is to work out an arrangement where you transfer deed to the bank, essentially allowing the bank to claim the property without an actual foreclosure process, sort of like ``foreclosure-lite’'.

Keep in mind that a formal foreclosure implies that the homeowner failed in their obligations and the bank had no other recourse, it reflects horribly on your credit rating and brands you as a deadbeat in the eyes of creditors. Arranging a transfer of deed in advance won’t be weighed as heavily on your credit rating.

also avoid these ``counseling’’ programs and quickie purchase services, almost all of them are scams. Go through HUD they have a pretty widespread program in place to help people through this. Keep in mind that despite what many people think, banks hate to foreclose, so think hard about your options.

Your third option is to claim bankruptcy, which as scary as that sounds might do more to protect you than a straight foreclosure. You would probably still lose the house but believe it or not a bankruptcy can have less of a long-term effect on your credit report than a foreclosure. this isn’t legal advice, just my 2 cents.[/quote]

“Forclosure-lite” as you are referring to is callled “deed in lieu of foreclosre”. It is just as bad as a foreclosure. The bank likes to do this cause it saves them money!!!

35

[quote]timmyboy5410 wrote:
HouseOfAtlas wrote:
Thanks, once again, for all the advice guys!! :slight_smile:

snewland22 wrote:
Furthermore, none of the banks I represent would go after a deficiency judgment in the event the bank sells the house for less that what you owe. If you can’t pay your note, what are they going to get out of you?

Bottom line, talk to your banker. He’ll help. I guarantee he does not want to foreclose.

I don’t understand why banks wouldn’t go after someone? Say if someone owed $200k on the house and the bank sold it for $180k. Why wouldn’t they want that $20k??

The banks are willing to accept less for the payoff for a few reasons. It is costly for them to go through the legal procedure of a foreclosure, if the house goes up for sale at an auction, it will generally sell for much less than what is owed on it anyways and the bank will have already had to pay for the legal process and also, the banks are not in the business of buying and selling houses.

They are in the business of loaning money to make money. If they don’t have enough money in their reserves then they can’t loan it out to make more money. Hope it makes sense.

In the case of a short sale, you say that you have 80% of the value held by your first mortgage and 20% held by a second? As a general rule of thumb, most private investors will buy at around 70% FMV (Fair Market Value). If your house goes to foreclosure, the second mortgage will be wiped out and they will get nothing unless the auction bid is in excess of the first mortgage bid amount…not likely.

An experienced investor will work this deal and be able to short the second for almost nothing and probably be able to get the first down enough to where they can make everyone happy.

You may want to talk to a lawyer about the tax ramifications though. While I’ve never personally seen a bank go after anyone for the deficiency judgement, as I understand it the bank is required to report that amount to the IRS as income but sometimes will not.

Don’t be afraid to talk to investors as I assure you they are not all scam artists and they will not make you do anything that you are not willing to do. Remember, it makes sense for all parties… you get out of your upside down mortgage situation and they get a house at 70% value to sell for retail prices.

There are a few bad ones out there so I encourage you to talk to a lawyer and have him look over anything that you sign.

Good luck
Tim[/quote]

good sane advice

36

First off, thanks again guys for all the sound advice. You guys don’t know how much all of you have helped me :slight_smile:

My girlfriend is on the title, but all the mortgage “payment slips” have just my name on it. When we had to sign papers when we closed, she had to initial a lot of them, but there were a few that she didn’t have to sign and I signed everything.

My house was appraised two months ago at $212k and we maxed our our equity at that time. There wasn’t much, but we just wanted to pay off some bills and were hoping for a high appraisal to get more money to do stuff for the house, etc., but like I said, its good that my appraiser was honest so I might have a fighting chance of selling it now. LOL!

I just started working with a realtor and I will mention what I want and what I need. If they can’t help me, I’m sure I can find someone else. I’ll get straight to the point :slight_smile:

Thanks, once again, for everything guys (and ladies).

37

[quote]HouseOfAtlas wrote:

My house was appraised two months ago at $212k and we maxed our our equity at that time. There wasn’t much, but we just wanted to pay off some bills and were hoping for a high appraisal to get more money to do stuff for the house, etc., but like I said, its good that my appraiser was honest so I might have a fighting chance of selling it now. LOL!
[/quote]

Refinancing/etc. can be good, or it can be a way for lenders to siphon off equity from your home via fees/charges/etc.

Check out http://www.wellsfargoproblems.org/index.php?id=1441

It lists various practices one institution has been accused of doing that are not in the best interests of the customers (to put it mildly).

38

[quote]HouseOfAtlas wrote:
First off, thanks again guys for all the sound advice. You guys don’t know how much all of you have helped me :slight_smile:

My girlfriend is on the title, but all the mortgage “payment slips” have just my name on it. When we had to sign papers when we closed, she had to initial a lot of them, but there were a few that she didn’t have to sign and I signed everything.

My house was appraised two months ago at $212k and we maxed our our equity at that time. There wasn’t much, but we just wanted to pay off some bills and were hoping for a high appraisal to get more money to do stuff for the house, etc., but like I said, its good that my appraiser was honest so I might have a fighting chance of selling it now. LOL!

I just started working with a realtor and I will mention what I want and what I need. If they can’t help me, I’m sure I can find someone else. I’ll get straight to the point :slight_smile:

Thanks, once again, for everything guys (and ladies). [/quote]

If your house was appraised at 212k and you maxed that out, you are upside down! Even if you sold it for that amount what do you think the realtor is going to do? They certainly won’t sell it for free. Plus you must consider how slow the market is going now. I don’t want to be the bearer of bad news but just think you should look at this honestly.

Do you have a second mortgage? If so, this could be discounted, not by you but an experienced investor or possibly a realtor.

Keep us posted on what is going on. By the way, what state do you live in?

39

Get a room mate, or two.

Suck it up, make it work and fix the situation.

Adversity comes and goes in life. Don’t lay down and die.

Survive. Pure and simple

Three years from now you will probably have an entirely different outlook.