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

vantuckian

LoanSafe Member
Mar 22, 2012
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Those are some twists and turns! It seems that BoA transfers to Seterus when they suspect a foreclosure is the eventual end-game. Although it is interesting that you got your NOTS already. Usually, it is after the transfer that occurs.
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
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The trustee hasn't changed, still Trustee Corp. My guess is that the 1st SS fell through so they just put it back in the foreclosure hopper at BOA and the NOTS was kicked off again. Then they tossed it over to Seterus. There is still a hope that this can get approved before the transfer officially occurs. We shall see.
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
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The transfer to Seterus has occurred. We almost snuck in the SS under the wire, but there was a minor technicality that held it up, so the transfer went through. I think most of the paperwork will transfer, but we had to fill out a new 3rd Party Authorization form for Seterus so that our real estate agent is clear to negotiate with them. We are hopeful that the SS will go through this time. In hindsight, we are fine that the 1st attempt melted down and that we didn't contribute to the closing. It saved us the $7k to close and allowed us to continue to collect rent for another several months. This time, we would be happy to get the deal done if we can get them to waive our contribution or significantly reduce it. Ultimately, it will all end up back on the desk of a Fannie Mae negotiator (aka, "the closer"). Then the fun begins again.
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
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Here we are a month after the transfer. It had been kind of quiet until I heard from my agent late last week. It looks like my short sale file is back into HomePath system and into the hands of the Fannie Mae negotiator. Sounds like the appraisal, valuation are completed. Now its a matter of them determining what my "eligibility" is (aka, its time to negotiate). We should be hearing something this week. I'll keep you posted.
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
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I'm in a little bit of a holding pattern. Seterus basically requested all our financials. 2 months bank statements, paystubs, etc. Our file has been setup and waiting in HomePath for Seterus to take the next action. Seterus seems much more aloof than BOA. So we wait...
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
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Short Sale Offer accepted!

Well, it looks like we are in the home stretch of the short sale attempt #2! Interesting events for sure. Last time we rejected the final offer by Fannie Mae of $7k to close (originally asked for a promissory note of $122k. This time they asked for $80k to start again...huh, go figure! We turned it down, had to provide a Letter of Explanation. Then they came back with $4k one time contribution. I said, OK, lets get this done. The buyers accepted the offer of $379k purchase price and it all looks like we are going to get this done and beat the impending July foreclosure sale right? Waaaaaaaait!!! Hoooooolllldddd! Now GreenTree, who had accepted the $6k settlement from BOA and produced acceptance letters 3 times now wants a new financials package. Oh brother! So I had to put that together, send it to my agent, so he could upload it to HomePath. Now the GreenTree rep said its all administrivia. I say it better be or they are going to see one unhappy camper.
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
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Coming down the home stretch! Friday we received the official approval letter for the short sale. I had to provide a couple more documents to GreenTree, but the word is that they will issue the settlement acceptance letter in a day or so. So, I'm happy to say that it looks like we are actually going to get this short sale done! The plan is to close middle of July.
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
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We have the GreenTree acceptance letter! Its official, GT issued an acceptance letter last week agreeing again to take the 6k settlement offered by BOA and fully extinguish our debt. All the planets are aligning. The final hurdle is for the buyers to complete their financing and we close before the scheduled July auction date. Right now we are on track to close a few days before the auction. Looks like we are about to put this behind us. Its been a wild ride for sure.
 

bythebay

LoanSafe Member
Jun 24, 2011
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WA
SDinWA would you mind sharing the contact info for your agent? We are looking at initiating the short sale process as well. I've been recommended to use McFerran & Burns, P.S. but wanted to know what options are out there for us in the area.
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
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Just when you think nothing could go wrong, it goes wrong. We were in the final stretch of the short sale a few weeks back. Then we got word that our buyer lost their job....DOH!!!! So it was looking pretty grim with the foreclosure sale approaching and no buyer. My agent scrambled to get it relisted, and Seterus said if we get a buyer under contract before the sale date, they would request a postponement. Nothing was happening and the trustee sale was a week away when boom, our original buyer got a new job. We hustled in the new contract and the postponement was issued a couple days before the sale! So the roller coaster continues! Now, assuming this all goes as expected, we will close sometime in August. Still might get this Short Sale done after all.
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
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My Strategic Default Journey Ends! Happily Ever After!

Or at least the first book. Last week, we closed on the Short Sale with the Seterus 1st and the Green Tree 2nd. We are completely out from under our old house and didn't have to take the foreclosure hit on the credit. All debts, 1st and 2nd are completely satisfied. Its an incredible relief. All said and done I will maintain that this is the single best financial decision we have ever made.

It might sound counter intuitive, but its the truth. Sure, we purchased some houses in the past, built equity and rolled it forward. However, when we purchased the last house, all prior equity was lost. So we went from making very high mortgage payment of approximately $3500 (inc taxes and insurance) to living rent free for about 24 months and for 12 months, generating a $500 net profit each month in rental income. Now I'm no nuclear physicist, but if I get out the old slide rule, slide this down, move that there.....Okay, Okay, that is a net savings of roughly $90,000. To be fair, it did cost me $4k to close, but I would say that was a bargain. I was forgiven about $130k on the first and about $95k on the 2nd.

Never in my personal financial history have I been able to do that. Good decision? No, excellent decision! I owe a huge debt of gratitude to the Loan Safe founders/moderators and members. Thanks for all the transparency, excellent advise and encouragement. I will be back to check in on other's walks as well as update folks on my next journey to repair the credit and eventually, hopefully, purchase another home at a steep discount in this down market.
 

driftwood

LoanSafe Member
Sep 17, 2012
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Congrats! I have a question if you dont mind, you said that you didn't take a FC hit on your credit report, I thought a short sale was in effect the same credit report hit as a FC? Or has something changed?
 

Washington Walkers

LoanSafe Member
Apr 11, 2012
54
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Congratulations, SDIW!!! What a relief. Out of curiosity, have you spoken to a CPA or other tax professional about the tax implications of this resolution? Specifically, I am wondering whether you were given any advice on what portion of the forgiven debt might be taxable. Since you have not been living in the house for some time I am curious whether the personal residence exclusion might still apply, assuming that it is extended (which is anything but certain). I'm in a similar boat and could use any anecdotal stories you might have. Thanks!
 

bkakca

LoanSafe Member
Jul 5, 2013
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Congrats! I have a question if you dont mind, you said that you didn't take a FC hit on your credit report, I thought a short sale was in effect the same credit report hit as a FC? Or has something changed?
Drift, they are reported differently, these two. M-5 is a Short Sale, and M-8 is a Foreclosure. They are treated differently when you want to buy or refinance. The codes are sometimes incorrect on the credit report, and borrowers are being told they will need to have them corrected to proceed with their new home loans.

Current Waiting Periods (I tried to upload a chart, but it won't take) for each type of loan, are as follows:

Foreclosure: Conventional- 7 yrs from Completion. FHA- 3 Yrs from Completion Date. VA -2 Yrs from Trust Deed Date.

Short Sale: Conventional- 4 Yrs FNMA. FHA- 3 Yrs from Completion Date. VA-No Specific Info, Assume same as Foreclosure.

Chapter 7 BK: Conventional- 4 Yrs from Discharge/Dismissal. FHA-2 Yrs from Discharge. VA-2 Yrs from Discharge Date.

Chapter 13 BK: Conventional- 2 Yrs from Discharge/4 Yrs from Dismissal. FHA- 1 Year of the Payment Period must have elapsed with Satisfactory Payment Performance or 2 years from the Discharge Date. VA- 1 Day from Completion of the Payment Plan if all payments were satisfactory.
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
318
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Hey Driftwood, it looks like BKAKCA answered the question pretty well on the Foreclosure vs. Short Sale hit. Its primarily the time before being able to get a loan. I do get the impression that my credit scores will bounce back quicker. There is also the added advantage for me that my 1st and 2nd are completely settled. So I wont have Green Tree continuing to harass me for years, not that I really care.
 

StrategicDefaultInWA

LoanSafe Member
Apr 19, 2012
318
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Hey Washington Walkers. I haven't been too concerned about the tax implication because from what I understood going into this, we are insolvent. If you are insolvent, you are exempt from paying taxes on the forgiven debt. Also, it appears that in all likelihood that the MDRA (Mortgage Debt Relief Act or Mortgage Debt Forgiveness Act) is going to be extended for 2015 and 2016. The bill is before the house and senate and hopefully its passed into law.

Here is the article showing that the Senate Finance Committee voted to extend:

http://www.mondaq.com/unitedstates/x/417862/Financial Services/Senate Finance Committee Votes To Extend Mortgage Debt Forgiveness

Here is the Bill Info page: https://www.congress.gov/bill/114th-congress/senate-bill/351/all-info