My Strategic Default in Olympia Washington (1st BOA, 2nd Green Tree)

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
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I'm all in! Constant lurker, now a club member. I unofficially started my walk 2 months ago (in my mind) and officially started on 3/13/2012 after a reaffirming meeting with an attorney. Here is my story:

My Mortgage Specifics
Goal, Plan: Strategic Default, Debt Free Lifestyle
Location: Olympia Washington
1st: Bank of America, $405k
2nd: Green Tree Servicing, $95k
Home value: $402k - Zillow Zestimate
Underwater: Approx $100k
My estimate of Home value break even: 8 years (approx)
Credit Rating Before walk: 700+
Financial Loss in Meantime: Huge
Value in Strategic Defaulting: PRICELESS

My Important Dates
First Missed payment on 1st (BOA): 3/16/2012
First missed payment on 2nd (Green Tree): 4/10/2012 (staggered)
First letter that I'm late on my 1st: 3/25/2012

I will update my walk continually here in the hopes that I gain some mental therapy and help others in journey. I have no plan to talk with the lenders and/or collectors. I'm playing a hybrid hamster game as I will run it up to the option of mediation, but not partake in that game.

I have a lot to share and learn about folks perspectives on dealing with second mortgages in Washington. I hear that a lot of folks are feeling obligated to settle them. This is sad to me. I say, bag it. Unless you are liquid and have assets what I'm hearing is that the 2nd in WA will almost never pursue borrowers for a deficiency because the expense is not worth the gain. So my opinion, is walk from 1st and 2nd, don't settle the 2nd and In the event that they sue (highly unlikely) you can settle for pennies on the dollar or as a last resort file for bankruptcy. My thoughts on that, but that is my plan as well.

Good luck to all on your journey and let me know if you would like to exchange ideas on this thread!
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
318
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Time for an update...Got my first letter from BOA dated 3/17 stating we were late on our April payment and would be assessed a late fee. Technically I've missed the grace period on seveal payments over the last 2 years, but only once in my life have I ever been 30 days late on a payment and reported to the credit bureaus. So May 1st will mark my first inentional 30 day late payment. Normally by now I will have heard from BOA's collections department with a "friendly" reminder to make that payment, but I haven't heard boo. Its kinda weird actually.
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
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Question: Mortgage Debt Relief Act (MRDA) Expiration, Does it matter?
Answer: Probably not if you owe more than you own (insolvency)!

I preface this with I'm not a CPA or attorney.....I've seen a lot of walkers concerned about the impending expiration of the MRDA. For a great many of us, it doesn't matter. The likelihood is that it will be extended, but even if it isn't, the IRS insolvency rules are likely adequate to exclude all or part of the forgiven debt. My attorney and several articles I've read are clear on this. If you owe more than you own at the time of the debt forgiveness (foreclosure, short sale, DIL), then you are insolvent. If you are insolvent at the time of forgiveness, then generally speaking, the forgiven amount is excluded from taxation or at least reduced by the amount of your insolvency. This was true before MRDA was adopted and will be true after it expires.

I highly recommend that people study the IRS Publication 4681 - Canceled, Debts, Foreclosures, Repossessions and Abandonments located here: http://www.irs.gov/pub/irs-pdf/p4681.pdf . Checkout the insolvency worksheet and exclusions sections.
 
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BustedBrokeBeaten

LoanSafe Member
Nov 8, 2011
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I just want to say welcome, welcome, welcome and good luck to you. I'm a fellow Washingtonian walker and look forward to watching your process. We are one year since our walk and still with no NOI on the 1st. As soon as we stopped paying our 2nd, which was several months after we stopped paying our 1st, BOA did send an NOI on the 2nd, but they were blowing smoke and trying to scare us. Thank goodness for LoanSafe because I wasn't even really scared or worried when I got that notice. I just came to this website, asked my question, received the answer which confirmed my thoughts and moved on. Being a member of LoanSafe has allowed me to learn so much about this process, but it's also provided the benefit of having support during something that can be frightening. I haven't lost one night of sleep since becoming a member.

Washington walkers get together occasionally for lunches, the last one was up your way I think, so you might want to look for those luncheons. I attended one and it was really nice to share information with other people from Washington. Good luck to you!
BBB
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
318
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thanks bbb

I appreciate the warm welcome my fellow Washington walker. I will continue to update my quest for financial freedom!
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
318
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All is quiet on the western front. April payment due on 1st, here it is the 3/28 and still no calls from BOA. We wont be late with Green Tree until next month and I fully expect an onslaught of calls then.
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
318
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Question: Have any walkers / strategic defaulters in Washington with second mortgages been sued by the lender (of the second)?

I hear a lot of questions around this and the advice I've received indicates that it is rare if ever that they will sue in Washington state. I also here that its rare if ever that the first lender will pursue a judicial foreclosure. Thoughts? Stories to share?

Question 2: Have any walkers / strategic defaulters in Washington been pursued with a judicial foreclosure?
 

Octanefam

LoanSafe Member
Dec 8, 2011
136
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I have just heard it's very UNCOMMON to be sued by second unless you have lots of assets and even then still probably not going to happen. I'm in the same boat as you if you haven't checked out my situation I started the Feb/March thread. I have heard very little from WF my second lender. I get phone calls and some mailings on how they can help and that's about it.

Thanks
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
318
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Hey Octanefam, thanks for responding. I did read through your thread and it does sound like we are on a very similar journey in Washington. I've been thinking about the credit pay down vs. stockpiling concept. Our first inclination is to pay off our debt as quickly as possible, but I do like the options and safety net of stockpiling. The main advantage I see in stockpiling is that in the even that your credit card and/or line of credit lenders decide to whack your limits, you wont have the safety net in the event you need cash. We've always had credit to lean on in a tough time, but now that will likely change as our credit score erodes. Just curious, which way did you decide to go?
 

Octanefam

LoanSafe Member
Dec 8, 2011
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Stockpile just mainly because of the second. When the first is done and we move back into our rental and we are settled then I may pay off some but I did pay off all the little credits that we had. I just didn't want second to run our credit report and see lots of available credit and pressure us into a settlement etc....


Hey Octanefam, thanks for responding. I did read through your thread and it does sound like we are on a very similar journey in Washington. I've been thinking about the credit pay down vs. stockpiling concept. Our first inclination is to pay off our debt as quickly as possible, but I do like the options and safety net of stockpiling. The main advantage I see in stockpiling is that in the even that your credit card and/or line of credit lenders decide to whack your limits, you wont have the safety net in the event you need cash. We've always had credit to lean on in a tough time, but now that will likely change as our credit score erodes. Just curious, which way did you decide to go?
 

Calvinball

LoanSafe Member
Jul 14, 2011
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In this situation, with a first and second mortgage, is it better to default on the first or second one first? Or does it really matter? I am in a similar situation to you in regards to the structure of my mortgage. I can't tell what you have in the way of assets, as referenced by Octanefam, but I'm concerned about the possibility of them coming after my stock portfolio.
 

StrategicDefaultInWA

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Apr 19, 2012
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Calvinball...Once you've decided to walk, I would do them both right away. Especially in WA. This seems consistent with all the advice on this forum. I happened to pay my 2nd one last time before I met with an attorney, otherwise I would have stopped paying on both at the same time. As for assets, I owe more than I own. However, even if you had a stock portfolio, the only implication I see is that you might not be insolvent which I see as a tax issue more than an issue with you being sued by the 1st or 2nd. I wasn't sure if you were asking me or Octanefam about the assets.
 

Modsnrockers

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Feb 6, 2012
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StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
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Greetings to you as well Modsnrockers...Actually it turns out that we are probably on the same timeline. I messed up my dates by one month when I started my thread. Anyway, we were offically late on on our BOA 1st on April 17th and I fully expect the calls to start streaming in this week. Its a little weird they haven't started already.

Fortunately I'm a contractor and don't have a "work" phone so I don't have to worry about that. We also don't have a landline, so that isn't an option. I'm waiting for the cell phone to start ringing at which point I will log into my mobile account and block some phone#s.
 

StrategicDefaultInWA

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Apr 19, 2012
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Eerily Quiet (30 days late)

Officially 30 days late today and got a letter from BOA saying "oh by the way we haven't got your April payment...". I haven't received one call from BOA. Not that I want any. Its just odd because last time I was one week past my grace period date I got the phone call from a BOA rep (collector) with all kinds of "oh how can we help". Makes me wonder if they are going to push this through quickly or drag it out. I'm hoping for the drag it out scenario.

I've never thought much about this, but it makes me wonder about the approach the 1st lender takes when I'm not upside down based on what I owe them alone. I owe them $395k, but the home is worth as much as $405k. So their debt is fully satisfied by taking ownership and selling, it just leaves the 2nd high and dry.
 
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vantuckian

LoanSafe Member
Mar 22, 2012
97
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GreenTree will be calling roughly 15-18 days past due. I made a mistake on my check to them once, less than $100 short, but they wanted payment on that difference right then and there. Had to let them do a ACH debit from my bank account, which bugs me because I'd rather not let them have that info.

I ended up setting up a google voice number, and put that as my new phone number on the next payment stub :)
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
318
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Hey Vantukian, thanks for the encouraging words on Green Tree (jk). Actually, funny story here....

I have a bit of a track record with them as I've had to harang them a few times over them screwing up some payments. I had a "late fee" that I kept getting charged for like for 4 months. I didn't notice it and they kept charging me but applying it to principal. So then I get hit with a double late fee, even though its not legal for them to do that in a single month. I finally figured out what was going on and called them to, you know, make it right (I chuckle as I will never pay them again)...anyway, I digress...So they finally work it all out and and re-apply them all to my final payment which I made in April...now I'm walking.

So my thoughts on GreenTree is that they are vigilant and I fully expect to hear from them a few days after I'm late this month.

Does anyone want to start a pool on this thread as to how long after May 10th I will wait until I get a call from Green Tree?

Take care VanTuckian!
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
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Finally got the "We want to help you avoid foreclosure" letter

Days since last 1st payment: 56
Days since last 2nd payment: 27
#Phone Calls thusfar: 0

Finally received the friendly reminder letter and "Borrower Response Package" (18 pages) stating that BOA is there to help, you have lots of options blah, blah, blah. This quote from the cover letter is the main thrust of the package for those that haven't made it to this milestone:

Please act quickly before your options become limited. Send us your Borrower Response package with the requested financial information in the enclosed Homeowner Checklist by June 3, 2012.
To which I'm asking myself, "Where's the option to drag this on for 24 months because thats the only one I'm interested in"! Anyways, no such luck.

So this package will go promptly into my "Path to Financial Freedom" file along with the past and future correspondence. The irony at this point is that I got that package and still nary a phone call from BOA. But I will say this, I've waited in anticipation for a letter like this and when my wife informed me it arrived I was actually excited! Reminds me of the warm and fuzzy feeling when we closed on our construction loan and the subsequent 2 refinance loans on the 1st. Kinda weird, but just thought I would share that.

Keep a stiff upper lip WA walkers!
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
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Update: 5/8/12

Just a day later...missed April pmt, May is due and 2 more letters from BOA. One is the typical, "hey you are late on a payment and here is your new bill". The other is another "IMPORTANT MESSAGE ABOUT YOUR HOME LOAN"...."as a result of the payment default on your loan" we can send you to the knuckle crackers, etc. etc.

So you know what I did, I added it to my "Path to Financial Freedom" file.