Buy and Bail in California

driftwood

LoanSafe Member
Sep 17, 2012
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So I learned today when I picked up my mail that the loan for my new home was transferred to a company called Colonial. The address for payments is in Forth Worth Texas. Never heard of these guys, I found their website but doesn't tell me much about the company. Anyone know anything about them?
 

RexMorgan

LoanSafe Member
Jan 25, 2013
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Thanks for keeping us updated driftwood. We're a week into escrow on our 'buy' place.

I think you we're planning on renting out your 'bail' place. How's that going? We've been showing ours to prospective renters this week.

Btw, I've never heard if that servicer before.

Rex
 

driftwood

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Sep 17, 2012
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Rex I think the later start is probably going to benefit you! Interest rates/fees are looking a lot better this past week or so... lock while the going is good. I waited a bit too long thinking they might get better unfortunately. You know the saying about trying to catch a falling knife? :)

We haven't started showing our current house, its a mess as we are preparing to move. We had a friend who was interested so we have talked to them but I think they have decided not to rent the place. I plan to start showing it around the beginning of May since it likely wouldn't be ready for move in until June 1. Will probably list it towards the end of this month. Strangely enough I was concerned about getting it rented as soon as we move out but several friends know people looking for a larger place so we have had several "referral" inquiries.

I cant make up my mind if I want to do a lease or month to month. I have other rental properties and they all started with a one year lease initially, but after reading some advice from Tom here on these forums I am strongly considering just going month to month.

Are you getting a lot of interest in your place?
 

RexMorgan

LoanSafe Member
Jan 25, 2013
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Rex I think the later start is probably going to benefit you! Interest rates/fees are looking a lot better this past week or so... lock while the going is good. I waited a bit too long thinking they might get better unfortunately. You know the saying about trying to catch a falling knife? :)

We haven't started showing our current house, its a mess as we are preparing to move. We had a friend who was interested so we have talked to them but I think they have decided not to rent the place. I plan to start showing it around the beginning of May since it likely wouldn't be ready for move in until June 1. Will probably list it towards the end of this month. Strangely enough I was concerned about getting it rented as soon as we move out but several friends know people looking for a larger place so we have had several "referral" inquiries.

I cant make up my mind if I want to do a lease or month to month. I have other rental properties and they all started with a one year lease initially, but after reading some advice from Tom here on these forums I am strongly considering just going month to month.

Are you getting a lot of interest in your place?
Yeah I think we're going to be lucky with the rates. It'll make up a little for the market in our area going up in the last several months.

We've showed our place to some friends and friendly referrals and I'm surprised at the interest. We're offering a pretty good price & saying upkeep is on the renter, but now I'm thinking we lowballed it a little too much. That's fine, we're not looking to make a killing.

What's the advantage of month to month for the owner? We know we'll have it for at least a year.

Rex
 

TomEason

LoanSafe Guide
Jun 18, 2009
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SF Bay Area CA
RexMorgan

Yeah I think we're going to be lucky with the rates. It'll make up a little for the market in our area going up in the last several months. We've showed our place to some friends and friendly referrals and I'm surprised at the interest. We're offering a pretty good price & saying upkeep is on the renter, but now I'm thinking we lowballed it a little too much. That's fine, we're not looking to make a killing. What's the advantage of month to month for the owner? We know we'll have it for at least a year. Rex
Thanks for your post. To prevent asking an under-market rent, I always conduct a rental market survey for comparable rentals in a similar neighborhood. I use Craigslist for that; I also list Craigslist to list the rental. Occasionally I've rolled out a rental at an under market rent. When I quickly receive a large number of inquiries, I know the price is too low. I would then pull the listing off the market, conduct another rent survey, then roll it out again. If the property is desirable and well located, a month-to-month is better for the landlord. In my pro-tenant state savvy landlords often use month-to-month agreements, as leases provide the landlord absolutely no benefit.
 

driftwood

LoanSafe Member
Sep 17, 2012
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So only a couple days late but I am honestly astonished at how quiet it has been. I was expecting and had prepared myself to be bombarded by Green Tree Servicing on the 2ND. Prior to stopping payment, in month's past I would get a call usually on day 8 or 9 of the grace period inquiring about my payment. This month the first call/message didn't occur until the 16th. I got a second one yesterday, very polite I might add.

I would love to credit this to my forward thinking of setting up a Google voice number and disconnecting my former home number well in advance of stopping payment, but not so sure. I wonder if the rather tame response from Green Tree has anything to do with the recent class action lawsuit filed against them. Apparently it was filled just this month on April 3 in Mass Federal Court. I actually wonder if its legit, it seems so, but I cannot find any other information about the lawsuit except on the lawyer's own website.
 

driftwood

LoanSafe Member
Sep 17, 2012
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I guess I spoke too soon! Haha! GT has stepped up efforts, they called my in-laws cell phones, my cell and even now have my work number. I have no idea how they found my in-laws and their cell phone no less that intrigues me to be honest. Unfortunately the call to my office I picked up before I checked the incoming number so I did speak to their representative and they were hostile right off the bat. I wound up just ending the call abruptly and realized I probably will need to send a C&D letter which I did early this past week.

On another front we have already started moving into the new place but the heavy part is in a couple of weeks when the movers show up. My neighbors now know we are leaving the neighborhood and they were disappointed. I do have good neighbors here.

We have also started publicizing the home for rent and several people have come through... a couple of applications are in as well. That has been an interesting process and its only the beginning... but that is a much longer post for another day. Need to enjoy a beer right now.
 

driftwood

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Sep 17, 2012
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Been a long busy month, due to moving! We are in our new house for almost 2 weeks now and its been great paying a significantly reduced mortgage for a nicer home. Of course there is so many projects that my wife wants me to do around the house so sometimes I wonder (in a good way) if this was the right decision! No rest!

We also spent the last week getting the former house cleaned and ready for tenants. They move in this weekend....yay!

We stopped paying the 2nd on the former house 2 months ago but are able to keep the 1st current with the rent coming in, in fact it will wind up being cash flow positive for a couple of years with these super low rates.

Interestingly enough the C&D letter we sent GT on the 2nd wasn't formally acknowledged for 2 weeks after receipt, but at least the calls stopped.

This week now that we are almost 2 months behind, we received the notice of default which I was slightly surprised about considering its not even 60 days late. The letter is dated 5/22 and we didn't pay April, pretty quick but I am really not too worried since the first is still easily $130K + under water even with the slight RE market recovery in our area and that doesn't include the cost to FC.

I just wish there was a program so I could modify the 1st on this house. Unfortunately not sure I would qualify for any modification program and the only way I could justify keeping the place is if I could mod the existing first. Perhaps some miracle will occur for HAMP III that could help but I doubt it. With the market recovering each month I see less and less incentive for politicians to do anything further to help.... unfortunately.
 

Cat Damiano

Mortgage Wars
Sep 10, 2007
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Been a long busy month, due to moving! We are in our new house for almost 2 weeks now and its been great paying a significantly reduced mortgage for a nicer home. Of course there is so many projects that my wife wants me to do around the house so sometimes I wonder (in a good way) if this was the right decision! No rest!

We also spent the last week getting the former house cleaned and ready for tenants. They move in this weekend....yay!

We stopped paying the 2nd on the former house 2 months ago but are able to keep the 1st current with the rent coming in, in fact it will wind up being cash flow positive for a couple of years with these super low rates.

Interestingly enough the C&D letter we sent GT on the 2nd wasn't formally acknowledged for 2 weeks after receipt, but at least the calls stopped.

This week now that we are almost 2 months behind, we received the notice of default which I was slightly surprised about considering its not even 60 days late. The letter is dated 5/22 and we didn't pay April, pretty quick but I am really not too worried since the first is still easily $130K + under water even with the slight RE market recovery in our area and that doesn't include the cost to FC.

I just wish there was a program so I could modify the 1st on this house. Unfortunately not sure I would qualify for any modification program and the only way I could justify keeping the place is if I could mod the existing first. Perhaps some miracle will occur for HAMP III that could help but I doubt it. With the market recovering each month I see less and less incentive for politicians to do anything further to help.... unfortunately.
Thank you for the update, what was the reason that you were unable to modify the loan again? Is it backed by Fannie Mae or Freddie Mac?
 

driftwood

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Sep 17, 2012
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Hi Cat, the loan is neither Fannie or Freddie. Furthermore I believe many of the mod programs look to get the monthly payment below 31% of gross income, could be wrong about that but I have read so much about mods, yet I think I am starting to confuse programs. In any case the 1st is currently IO with a super low rate due to the current market conditions. When Chase looked at it a couple years back they essentially said the current monthly is easily affordable... well duh, it is NOW because there is no principal repayment included, but its a ticking time bomb and will significantly increase once the IO period expires and rates begin to rise... to coin a phrase from a 1980's game show, double whammy!
 

Cat Damiano

Mortgage Wars
Sep 10, 2007
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Hi Cat, the loan is neither Fannie or Freddie. Furthermore I believe many of the mod programs look to get the monthly payment below 31% of gross income, could be wrong about that but I have read so much about mods, yet I think I am starting to confuse programs. In any case the 1st is currently IO with a super low rate due to the current market conditions. When Chase looked at it a couple years back they essentially said the current monthly is easily affordable... well duh, it is NOW because there is no principal repayment included, but its a ticking time bomb and will significantly increase once the IO period expires and rates begin to rise... to coin a phrase from a 1980's game show, double whammy!
The reason I asked is because the HAMP Tier 2 may apply to your situation. Look through that eligibility and see if it may be an option at this time.

Modification of Loan Secured by Rental Property:

A borrower seeking to modify the mortgage loan on his or her rental property must provide evidence of that income, which is generally documented on IRS Schedule E (Supplemental Income and Loss) of the borrower’s tax return for the most recent tax year. When Schedule E is not available to document rental income because the property was not previously rented, servicers may accept a current lease agreement and bank statements or evidence of damage deposits. All net income or loss from a rental property that is security for the loan being modified as well as income from any other rental property owned by the borrower must be documented and included in the calculation of the borrower’s gross income.

The monthly net income or loss on a rental property to be calculated for HAMP Tier 2 purposes should be 75 percent of the monthly gross rental income, reduced by the monthly principal and interest payment plus 1/12th of annual real property taxes, annual insurance premiums and annual homeowners’ associations dues, if applicable (PITIA). If 75 percent of the monthly gross income of a rental property securing the mortgage loan being evaluated for modification under HAMP Tier 2 is equal to or greater than the pre-modification PITIA of the rental property, the servicer must verify and document the cause of the borrower’s hardship as delinquency alone is not considered a hardship.

Monthly Mortgage Payment Ratio:

To qualify for HAMP, Tier 1, verified income documentation must confirm that the borrower’s monthly mortgage payment ratio prior to the modification is greater than 31 percent. For HAMP Tier 1, the monthly mortgage payment ratio is the ratio of the borrower’s current monthly mortgage payment to the monthly gross income of all borrowers on the mortgage note, whether or not those borrowers reside in the property.

If the borrower’s monthly mortgage payment ratio is less than 31 percent, the borrower is not eligible for HAMP Tier 1 and the servicer must consider the borrower for HAMP Tier 2.

In the case of HAMP Tier 2, the borrower’s post-modification monthly mortgage payment ratio (also called a debt-to-income ratio or DTI ratio) must be greater than or equal to 25 percent and less than or equal to 42 percent (Acceptable DTI Range). In HAMP Tier 2, the DTI ratio is the ratio of the borrower’s modified monthly mortgage payment to the monthly gross income of all borrowers on the mortgage note. If the borrower is seeking to modify a mortgage secured by a rental property, the DTI ratio is the ratio of the borrower’s total housing expense to the monthly gross income of all borrowers on the mortgage note including any net rental income from the rental property being modified.

If a borrower being considered for HAMP Tier 2 has a modified DTI ratio that is outside the Acceptable DTI Range, the borrower is not eligible for HAMP and the servicer must send the borrower a Non-Approval Notice, and consider the borrower for alternative loss mitigation options.
 

driftwood

LoanSafe Member
Sep 17, 2012
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Cat thanks so much for providing this insight, perhaps there is a chance after all since I have converted the property to a rental. The home was purchased originally in 2007 as a primary residence so not sure if that makes a difference?
 

Cat Damiano

Mortgage Wars
Sep 10, 2007
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Cat thanks so much for providing this insight, perhaps there is a chance after all since I have converted the property to a rental. The home was purchased originally in 2007 as a primary residence so not sure if that makes a difference?
I don't think that would make a difference due to the fact that initially for HAMP the mortgage loan would need to have been originated on or before January 1, 2009.
 

driftwood

LoanSafe Member
Sep 17, 2012
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A minor update as I am now about 5 missed payments on the GT 2nd. When I log into the account online, no information is present except a note to contact so and so about seriously past due payments. Statements still get mailed to me all with a note about calling the same individual. Calls stopped shortly after I sent a C&D letter so no more thought about it. The bail home is rented and cash flow positive even though I am still keeping the 1st current.

My 2nd loan is owned by BofA through CW purchase, serviced by GT for a few years now. Just wondering what will happen with the charge off if anyone knows. Does the servicer make that decision? Or is it charged off by BofA? Technically the servicer doesnt own the loan so I would not expect they will have anything to charge off, but not 100% certain. When it goes to charge off could BofA take it back and sell it off to someone else? Just wondering if anyone has insight out there.... I doubt if left with GT they will ever entertain a settlement offer, so ideally I would like to see it go to someone else.

Our credit score has taken a decent sized hit, that we expected, falling to around 650 or so. I am not watching it closely because I dont want it to distract me to from the objective. Its hard to break that dreadful feeling that regarding my credit score as I have never had anything negative. But I have come to realize that is what the banks and other lenders want us to feel so we will do whatever necessary to make the payment no matter the best business decision.

I am still not sure about trying for a mod on the first under rental property under HAMP, I haven't had time to research the terms and if I have a prayer at being qualified.

I am holding out a little hope that the recent whistleblowers and evidence against the banks that has surfaced recently will really shake things up and perhaps lead to additional changes in HAMP or modification success in general. Not betting on it but I do hope it happens. I have resolved myself that I will lose the bail house eventually so if I am able to mod and keep it then I will be pleasantly surprised.
 

driftwood

LoanSafe Member
Sep 17, 2012
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Pulling out a couple of questions from my lengthy post since I am looking to see if the experts have any insight:

My 2nd loan is owned by BofA through <acronym title="Countrywide Home Loans" style="border-width: 0px 0px 1px; border-bottom-style: dotted; border-bottom-color: rgb(0, 0, 0); cursor: help; color: rgb(51, 51, 51);">CW</acronym> purchase, serviced by GT for a few years now. Just wondering what will happen with the charge off if anyone knows. Technically the servicer doesnt own the loan so I would not expect they will have anything to charge off, but not 100% certain. Does the servicer make that decision? Or is it charged off by BofA? When it goes to charge off could BofA take it back and sell it off to someone else?
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
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SF Bay Area CA
Hi driftwood

Thanks for your post. Since BOA is the owner of your 2nd, any charge-off or write-off would be done by them.

And any note owner can sell the paper
 

driftwood

LoanSafe Member
Sep 17, 2012
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Thanks TomEason always appreciate you taking time to answer! A quick follow-up BOA would write off the loan but does that assume GT tells them the loan is more than 6 months past due and ask them what they want to do? I would assume they communicate on the portfolio of loans they service and the status... but honestly GT is pretty seedy in my opinion and I wouldnt put it past them to prolong charge off since they may lose fees and / or the collection of the loan itself.

In other news 2 recent developments if there is any input out there I welcome it.

First, AMEX is our first consequences from not paying the 2nd as sent us an email yesterday reducing our credit card limit down to the current balance which wasnt much to be honest. I expected it and we dont use the card much (and pay it off monthly) so not the biggest deal but now wondering who might be next.

Secondly I send GT a cease and decist letter months ago. They returned a letter acknowledging receipt. However in the last couple of days they called a relative on his cell phone, identified themselves as GT and looking to reach me. I need to do some research because it seems to me to be a violation federal and Ca state laws. Any thoughts? I was considering writing a letter citing the specific laws and action I can take against them.
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
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48
SF Bay Area CA
Hi driftwood

Thanks for your post.

Not sure why you're showing all the interest in "write-off" status and who does it. Write-off aka "charge-off" are accounting terms; lenders are required by regulation to move late accounts to that status when they're deemed likely uncollectable. However, write-off doesn't make a debt go away; it's still owed. IMO a charge-off is irrelevant.

I recommend you download and refer to the FDCPA and CA's Rosenthal Act. If you can identify any abuses, I recommend you write a letter to GT stating they're in violation, citing the section of the law, and threatening to both report them to the FTC, and sue them if persist.
 

driftwood

LoanSafe Member
Sep 17, 2012
315
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Hi driftwood

Thanks for your post.

Not sure why you're showing all the interest in "write-off" status and who does it. Write-off aka "charge-off" are accounting terms; lenders are required by regulation to move late accounts to that status when they're deemed likely uncollectable. However, write-off doesn't make a debt go away; it's still owed. IMO a charge-off is irrelevant.

I recommend you download and refer to the FDCPA and CA's Rosenthal Act. If you can identify any abuses, I recommend you write a letter to GT stating they're in violation, citing the section of the law, and threatening to both report them to the FTC, and sue them if persist.
I probably should have responded to this in a more timely manner.... just got a little sidetracked. :)

Tom thanks for the feedback and yes your point is well taken, the charge off is generally irrelevant. However I am dealing with GT and from all the research I've done they are most likely going to sit on this forever! lol I guess I am betting that after charge off perhaps BofA might take the loan back and / or send it to a CA where I might have better chance of negotiating a tiny settlement. It might just be wishful thinking on my part. In either case I am in no hurry, I can wait, the positive cash flow is a nice bonus.

I think GT is waiting for the resurgent housing markets to give their customers equity so a FC can be profitable. Problem is while homes have gone up a lot in my area things are leveling out and well in my humble opinion, things are becoming stagnant. I predict tiny gains from here forward and a part of me thinks we may even see another modest downturn.

On another note I never bothered to spend my energy in writing GT a letter about their violation of FDCPA. Mostly because I don't have enough time for important things let alone sending them a threatening letter that would confirm they did get a hold of someone who knows me. They haven't called back my relative since and there is really no other activity from them that is impacting me so just rolling along. I am going on 8 mo's of not paying them. For a couple of months I was getting monthly hits to my credit report for payment past due, 60 days then 90 then 120, etc. But the notifications I get from the monitoring service has stopped the last 2 months.