Buy and Bail questions

CuriousGeorge

LoanSafe Member
Oct 25, 2009
21
0
1
=-=-update=-=-

=-=-=-=-=-=-=-=-UPDATE=-=-=-=-=-=-=-

When i called them in march, they said they were planning to start the
foreclosure proceedings in April. (last payment early Jan 2009).

Today is May 28th and i called them to see how the process was coming
along. I spoke with a supervisor. In April they did a drive by of the property,
they said, and at this time they have no intention of foreclosing.
my guess is they would perfer to have a $130k mortgage on the property
instead of a $120K loss for booking reasons.

In the mean time i have to keep hauling my ass on that 90 minuite drive
to the property to keep cutting the grass so i don't get fined by the
city - even though vandals have already stolen the a/c, spray-painted the
fences, broke out the doggie door and vandalized the inside. (yes, i made
sure to file a police report so the lender can't say I did this to the house)

And I STILL get calls from their collectors to pay my mortgage even
though I told them the only thing I'll do is cooperate with foreclosure.

Anyone have any ideas on how to get them to actually foreclose?
1st - Select Portfolio Services.
2nd - First Franklin.
 

KFish

LoanSafe Member
Oct 27, 2009
964
5
0
San Diego, CA
Curiousgeorge
If you find a way to get them to do it, please pass it along. There are many of us that cant get the banks to take the places! Gets frustrating for those of us that want to get on with it and move on!
 

eeter

LoanSafe Member
Dec 25, 2009
12
0
0
Residential Insurance on 2nd home

I stopped payments 6 months ago and my credit history is already affected
Can I get a fire hazard insurance on a new home if I purchase it in cash?
Will the insurance company deny me the insurance based on my credit history?

Thanks
 

KFish

LoanSafe Member
Oct 27, 2009
964
5
0
San Diego, CA
Eeter
Only some insurance companies pull credit reports to determine your risk for coverage. In some states, laws even forbid them doing this. You will have to check with the insurance company or your state law.
 

CantPayWontPay

LoanSafe Member
Feb 16, 2010
95
1
0
camilami and spinner - happy for you, but to say "the future" as in any borrower's future performance with respect to loans, is not a consideration for lenders is ridiculousness bordering on absurdity. These lenders are making predictions that you will pay in "the future" despite what happens in "the future." The note you sign does not say "pay me unless in 'the future' you can't." Again, if what you "intend" to do "in the future" will not or should not matter to lenders, then be up front with them. Tell them "look I'm buying this new house because the one I have now is deeply underwater and I don't want to keep paying for that loss so I will walk away from it as soon as you give me this new loan." You keep making my case for me when you insist "the future" is not relevant but you won't tell them the truth even if you rationalize it by saying it is irrelevant. It's their money, they get to decide what is relevant. Now if you jump through all their hoops - as it appears you both have - then it's on them and they have accepted the risk. But you will never convince me that deliberately withholding information (such as your intentions "in the future") that could affect a lender's decision isn't material misrepresentation and that is fraud. It's my opinion, we all draw the line somewhere and that's where my line is.
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After throwing some insults around you mentioned that you have a good income and have paid off your house. Explain to me why you are on this forum Jakey boy???
 

dazedconfused

LoanSafe Member
Jul 29, 2010
30
0
0
CA b&b situation

Hi Everyone! New to the forums here, been lurking for a the past couple of days now and still not sure what to do with our situation. I hope you guys can provide some input/feedback/advice:

Location: California

My wife and I have been living in this home the past 6 years (the house is about 14 years old). We originally had 100% financing when we bought it around $290K with an adjustable loan. After 2 years, we refinanced it with GMAC, 80/20 fixed rate loan, both from the same bank/lender, and have never missed a payment as of today. We have a flawless credit history. Fast forward today, our home is probably valued under $200K. I can't distinguish if our mortgage is a recourse loan or not, since we already refinanced it, however we didn't take any money out. Also, will the CA one-action rule apply if we decide to walk away?

My wife has been hunting for bigger and much nicer homes, we've already set our eyes on a couple of them. We tried applying for one, and it turns out we got pre-approved. They said our combined income is sufficient to pay for both mortgages and we have a very solid credit history. Of course if we buy this new home, we absolutely see no reason to keep the existing one, so it has to go. My questions are:

1.) If we are going to do this, what's the best approach? How do we time this like when to stop paying for our existing home?

2.) What are the other consequences (aside from destroying our credit) like taxes, etc? What about the Debt Forgiveness act?

3.) What are the chances of the existing lender pursuing us in court?

Aside from the questions above, any feedback will be highly appreciated.

Thank you very much in advance!
 

dazedconfused

LoanSafe Member
Jul 29, 2010
30
0
0
Also, can you guys recommend a lawyer in CA who specializes in this? Or should we find a real estate lawyer locally? My wife wants absolute peace of mind.
 

brunapilne

LoanSafe Member
Apr 5, 2011
1
0
0
Camilami, did you suffer any tax liabilities as a result of your foreclosure?

My understanding is that the Mortgage Forgiveness Debt Relief Act of 2007 and the Anti-Deficiency Statutes are intended to apply to a primary residence. Since the foreclosed property was no longer the primary residence, was the deficiency amount (for which I believe you'd have received a 1099-C) counted by the IRS as income?

I did it in CA. No fraud - the application didn't ask what I was doing with my current (old) house. They wouldn't consider rental income, anyhow, so I qualified with both mortgages. I was completely honest about the old mortgage (verified with docs anyhow) and the current home value (verifed by property tax docs) that showed the old house underwater by 3x the value. My old house has 2 non-recourse mortgages, so they can't come after me for deficiency. My current home - purchased 1 year ago - is already under water. But at a good price and a great fixed interest rate, I'm here for the long haul. If my current bank made an issue of "intent to fraud" I could walk away from this home - also non-recourse loan. But why would they when I'm making my payments on time? Other than the foreclosure I have perfect credit, so if they looked at the circumstances they would see that I really had no choice and I'm still not a bad risk. So really, in a civil action, who would come after me? I'm not worried about the FBI. I hope they have more important things to deal with. And after extensive research, I haven't heard of anyone being criminally prosecuted for this. I feel very fortunate for having had the opportunity to find a way out of this financial mess while most people end up in bankrupcy.
 

CuriousGeorge

LoanSafe Member
Oct 25, 2009
21
0
1
========= STATUS UPDATE ===========
last payment Jan 2010.it is now sept 2011.

they still didn't foreclose.

they don't have our contact info any more.
the only way we know it wast foreclosed is because the city still sends us yearly tax bills and "property blight" notices.
we stopped up keeping the property and paying taxes.
this means we are still listed as the property owners.
the state will place assessments on the property. (for taxes and city cutting the grass)

21 months and not foreclosed. go figure.

no lawsuit threats or garnishment threats received in the mail.

posted from my iPad
 

TerryC

LoanSafe Member
May 31, 2010
21
0
0
Hi curious george. I am in the same boat as you. I bought a 2nd house in a different state with cash and walked on the old house in oct 2010. I received foreclosure notices with sale dates in Jan, Feb, March, April and May of 2011. Then in June they sent me a letter stating that they were releasing the Lien on the deed of trust, which they did. Wells Fargo walked away from house too and turned the amount owed over to a collection agency. I hope that the city/county takes the old house for back taxes
 

TomEason

LoanSafe Guide
Jun 18, 2009
12,390
85
48
SF Bay Area CA
dazedconfused

Just curious. Have you made an offer on a replacement home yet?

You've already been pre-qualified on the new purchase loan, which is the most challenging leg of a "buy and bail." If you aren't yet in escrow on the new home purchase, you might want to get busy and strike while the iron's hot.

Good luck to you!
 

spinner

LoanSafe Member
Dec 7, 2009
87
0
0
brunapilne

My understanding is that the Mortgage Forgiveness Debt Relief Act of 2007 and the Anti-Deficiency Statutes are intended to apply to a primary residence. Since the foreclosed property was no longer the primary residence, was the deficiency amount (for which I believe you'd have received a 1099-C) counted by the IRS as income?
I believe camilami has a purchase money loan. Purchase money loans (Non recourse) don't create cancellation of debt. More of a question about primary residence in a buy and bail situation of the loans that has been refinanced (recourse loan) for example. Gray area in which is it the main home definition or the 2 out of 5 year occupancy test to qualify as principal residence.

-spinner
 

CuriousGeorge

LoanSafe Member
Oct 25, 2009
21
0
1
Still No Foreclosure

last payment Jan 2010, House is not foreclosed. lender hasn't called in more than a year.

We have since bought another house free and clear.
$29k for a 3 bedroom, full bath, 1064 sq ft home in not too bad of shape AND remodeled it.
house waiting for foreclosure cost $139,000 ; 1 bedroom, 1 bath, family/kitchen combo, 532 sq feet.

Total time lapsed: approx 46 months. or approx 1,380 days (46*30)
 

Deep thoughts

LoanSafe Member
Feb 19, 2010
47
0
0
Still No Foreclosure

last payment Jan 2010, House is not foreclosed. lender hasn't called in more than a year.

We have since bought another house free and clear.
$29k for a 3 bedroom, full bath, 1064 sq ft home in not too bad of shape AND remodeled it.
house waiting for foreclosure cost $139,000 ; 1 bedroom, 1 bath, family/kitchen combo, 532 sq feet.

Total time lapsed: approx 46 months. or approx 1,380 days (46*30)
Congrats! We have bought our new home, but lack the guts to stop paying on the first. Can you tell me how the credit ding affected you? Did any credit cards close or did you have difficulty getting insurance?
 

CuriousGeorge

LoanSafe Member
Oct 25, 2009
21
0
1
Congrats! We have bought our new home, but lack the guts to stop paying on the first. Can you tell me how the credit ding affected you? Did any credit cards close or did you have difficulty getting insurance?

1 - Is credit rating really that important? I DO NOT KNOW what credit score my wife and I have. This doesn't bother us because we DON'T NEED credit. If we need something, we have the $$. I make 20k a year and she isn't working. Because the house is paid off and the taxes only run $400/yr my income is plenty enough to pay our bills and still set back a little nest egg (we currently have over 15k saved) We didn't have any credit cards close because we DON'T HAVE ANY credit cards. We shun them. even after the awesome credit reform bills that Obama put into effect during his first year in office won't change our minds. Credit Cards are evil and the use of credit, making payments on anything in a lay-away fashion, or making payments on a "Drive today but pay for 4 years" should be avoided at all cost. If we don't have the cash for something then we don't buy it. Or we save and buy it later. Or we save and say "hey, this money would be better spent on ...." (because things look different when you have the actual cash to pay for something saved up)

Here's my understanding of the credit situation: For the past 46 months the lender has reported on our credit either "Not Paid" or "Not Paid Yet" or something along those lines. So our credit is likely in the toilet. EXTREMELY in the toilet. BUT, if they ever foreclose, Then all of those non-payments will be removed and replaced with a single foreclosure. We don't have any credit cards. We don't need any. I doubt we could even get any (also a student loan problem i'm trying to rectify and my wife hasn't brought our water bill current and left $30 outstanding for the past 1.5 years while standing on her principles that the charges are bogus)

if you can afford to pay cash for everything then do you care about your credit score? Credit score measures your ability to stay in debt while making payments. not your actual trustworthiness.

However, if you insist on using credit and mortgaging a house later on then the general rule is: "have a foreclosure? Has it been 2 years? have a big down payment? no problem but higher interest" Current "High" interest is about 6%. Low interest if about 3.2%. and you can always Re-Fi if you want to reduce interest later when the foreclosure drops off the record.

2 - Home insurance? No problem. we have homeowners insurance. It didn't cost much. And all of our payments to AmFam have been on time for years prior to our new home so they didn't have any problem jacking us for some home coverage. The fact that the house is paid off in full i am sure helped reduce the price.

3 - 1099 and other tax worries: In my state - i don't know about yours - but in my state a foreclosure is full payment - but still a credit foreclosure - for the property in question.

So in my state, if we did a deed in lieu of foreclosure (or a shortsale) then we'd have to worry about the IRS saying "You bought the house for $140,000 , sold the house for $40,000 , and owe nothing. this means you made a $100,000 profit that needs taxing." instead, in this state, the foreclosure counts as a full payment of $140,000. so there is no profit to tax should foreclosure occur. This is the specific reason why we chose foreclosure over deed in lieu or shortsale.
 

Deep thoughts

LoanSafe Member
Feb 19, 2010
47
0
0
1 - Is credit rating really that important?
we pay our cards in full very month, and only carry balances on loans that serve us for cash flow purposes (like auto loans if necessary). The actual carrying a balance or needing loans doesn't bother me at all.

What worries me- I travel quite a bit for work and need to use my credit cards to do so - I can charge 5k a month at times, work reimburses me before the bill is due - but not having the ability to utilize credit would jeopardize my earning potential and have my job look at me differently.

We like to travel as a family - we can afford this, but again credit cards make it infinitely more convenient and I believe cheaper.
Are these things worth the 150k we are underwater, probably not (the job piece could be though). That said I need to quantify them and include the impact in plans.
 

CuriousGeorge

LoanSafe Member
Oct 25, 2009
21
0
1
status update
----=== STATUS UPDATE===----

Ok, it's been 6 years since I gave an update and 7 years since my last payment on the house.
They still did NOT start foreclosure procedures.
no taxes have been paid on the house since we've walked away.
i gave up on trying to keep the house up to par because it's 45 mins away, the AC, Water heater, and generally everything was gutted by vandals and scrappers one at a time.
The property has multiple liens from the city for abandonment and poor condition reasons.

I found out the mortgage company is a subsidiary of Bank Of America and BOA decided to stop attempting to foreclose on houses from that time period because their paperwork is all screwed up.

So now I'm just waiting for the tax man to finally take it.

If BOA sues after words for the mortgage then i will meet them in court and say "Show me the proof of mortgage".
If they have the promise note and i lose the lawsuit (because tax man takes it and mortgage went unpaid) then I will declare bankruptcy.

What an Albatross.

So for the last 7 years i have on credit a failure to pay mortgage... every month... for each month of the 7 years.

I'm not watching this thread, but i will post up when there is a conclusion in case anyone is still curious after all this time.