Let Home Get Foreclosed Upon or Try To Catch Up?

[MamieCole]

edited for privacy

Edited by MamieCole - 5/29/11 at 11:00am

[leavemealone]

I would contact them about a short sale or deed in leiu of foreclosure (where you sign the house back to them without going through foreclosure). The bank may or may not be willing to do either, but it can't hurt to ask. The worst they can say is no. Do you have a lawyer that can help? I know, that costs money and if you had money, you'd be paying on your house, but sometimes a lawyer can make more progress than an individual homeowner. Maybe contact something like Legal Aid in your area. If they can't help, maybe they know an organization who can. I would also check into if the bank can sue you for the difference between what you owe and what they get when they sell the house after foreclosure. In some states, they can and some states, they can't.

[SunshineJ]

At this point you and your DH have made every good faith earnest effort to try to resolve this situation - to the detriment of your financial security. You owe the mortgage company no futher consideration imo. Contact the mortgage company about a short sale and see if you can't go that route. I'm sorry!

ETA: One thing I just remembered too is that the "forclosure department" is often a scare tactic by mortgage companies to get people to pay up. If you contact them, they can certainly take a partial payment for just one month and may be willing to set up a payment plan ($100 - $200 per month) to catch up the previous balance. Might be worth a call.

[SleeplessMommy]

What is your monthly payment on the mortgage?

Is the mortgage fixed rate or adjustable?

What is the rental payment you are receiving per month?

What state is the house in?

[MamieCole]

For a short sale or deed in lieu of foreclosure, what is the turnaround time on that? Having renters in the home really complicates things, since we obviously want to give them as much time as possible to find a new place. Also, can we be sued by our renters for not fulfilling our end of the lease if we do decide to let the house go back?

Originally Posted by SleeplessMommy

What is your monthly payment on the mortgage?

Is the mortgage fixed rate or adjustable?

What is the rental payment you are receiving per month?

What state is the house in?

We have a 30 year fixed rate mortgage. Our payment is $1642.00 per month.(That includes property taxes and insurance.) We are receiving $1350.00 per month from the renters and we pay the $300.00 difference. The house is in Oregon.

[MamieCole]

Originally Posted by SunshineJ

At this point you and your DH have made every good faith earnest effort to try to resolve this situation - to the detriment of your financial security. You owe the mortgage company no futher consideration imo. Contact the mortgage company about a short sale and see if you can't go that route. I'm sorry!

ETA: One thing I just remembered too is that the "forclosure department" is often a scare tactic by mortgage companies to get people to pay up. If you contact them, they can certainly take a partial payment for just one month and may be willing to set up a payment plan ($100 - $200 per month) to catch up the previous balance. Might be worth a call.

I am pretty sure they turned it over to full blown foreclosure. We were told by USAA today that we'd have to contact GMAC to find out what $$$ amount we'd have to pay to stop the foreclosure process. When we did, there were attorney fees that have been added to the past due balance, etc. So, unless they are pretending to be two different companies, they've begun foreclosure proceedings on us.

I know part of being a grownup moneywise is fulfilling obligations that have been agreed upon. We didn't pay them on time for two consecutive months, so we didn't techinically hold up our end of the deal. But I just feel so SCREWED and sort of tricked right now. When I think of what we could have been doing with that $1700 per month since we got behind... instead of throwing it down the toilet to a company that seems to have sent us on a wild goose chase with applying for and waiting around for modification results which they obviously never intended to approve, all the time telling us not to worry about those silly foreclosure letters. We just should have stopped paying them altogether instead of trying to find ways to solve our past due balance. Hindsight is 20/20 I suppose. And now, more than likely, an innocent family is going to have to pack their stuff for the second time in just a few months and go through the stress of moving again.

[SleeplessMommy]

You might want to research your lender and modification options here:
http://www.loansafe.org/

(I am assuming you have attempted the federal loan modifiaction program - if you were living in the house it might work for you.)

Short sale requires a buyer - possibly you could "buy time" by looking for a short sale buyer. Wouldn't hurt to ask. Deed in lieu is easier - just get them to agree and sign some papers.

With the renters, there is a chance the mortgage holder will pay them to vacate the property. Might not be much, but the chance is there. I don't think the renters will sue you, as it is pretty much assumed you don't have the money.

Originally Posted by MamieCole

We have a 30 year fixed rate mortgage. Our payment is $1642.00 per month.(That includes property taxes and insurance.) We are receiving $1350.00 per month from the renters and we pay the $300.00 difference. The house is in Oregon.

With this payment, I would lean toward foreclosure/deed-in-lieu. Unless you could get a "miracle" lowering of the interest rate for the loan. If you stop making payments today, you still have some time to change your mind (or win the lottery) before they finish the process.

[an_aurora]

Don't worry too much about the renters. We were renting a house that was in foreclosure. The last payment the owner made was Jan 2008, and the house just went up for auction in August 2009. The house went back to the bank, and the bank refused rent which means we are in the house rent-free until our lease is up (in Feb).

[SunshineJ]

With our house, the mortgage company turned the loan over to another company to handle it through foreclosure. When we contacted them, they were thrilled that we were willing to try to work something out to get caught up and keep it. If one of us could have found a job in that area, we'd still be there making our payments and slowly catching up. As it is, they were more than happy to let us do a short sale (provided we can find a buyer sometime in the next month or two) and we haven't made a payment for about 4 months now. Definitely talk to them and see what they're actually willing to do. If they're not willing to work with you at all, then stop paying on it and wasting that money. Honestly I've never heard of a company following through with any actual action beyond paperwork until a mortgage was 3 months fully behind. It's worth looking into at least.

[RollerCoasterMama]

We're about to start the short-sale process through our USAA loan as well. We had a deferment, but once they heard we were planning to divorce, they told us we needed a realtor and get the house on the market. We can't even talk short-sale until the house is listed. I'm willing to help sell it, but if it drags for too long, we'll just do a deed-in-lieu. Our situation is that the house is $50K upside down since all the other houses in our townhome development are selling at foreclosure rates...that's become the going rate. Awesome.

It's a hard spot to be in, but you are NOT ALONE these days.

I'd probably do what you suggested...talk to your renters about the situation. If you give them free rent for a few months, they'll be able to save to move very quickly and be no worse off.

I'm pursuing the short-sale for my own sake.

BTW, it took them from early July until almost October to even acknowledge our hardship paperwork had arrived. And then the woman didn't even have all of it, AND she didn't know we were wanting to get rid of the house. The people processing the hardship paperwork aren't particularly thorough!!!

Nothing in this is quick. None of it feels good. The best you can do is to try and be calm and practical and focus on what you need to do for your family.

[MamieCole]

Originally Posted by SunshineJ

If they're not willing to work with you at all, then stop paying on it and wasting that money. Honestly I've never heard of a company following through with any actual action beyond paperwork until a mortgage was 3 months fully behind. It's worth looking into at least.

I know. Which is why I feel we are worth more to them in foreclosure than we are in any sort of modification, deferment, etc. and just will never be able to win. They actually bill us based on when we missed the two payments. So, since we didn't pay in March or April and they bill one month ahead, that puts our actual statement "Due Dates" two months behind. Like the statement we received for September says the payment is "Due July 1st" automatically making us 60 days late no matter what. So we have, on paper, been consistently 60 days behind since April, even though we have been making regular payments again since May. From the research I have done, most mortgage companies start the foreclosure threats around 60 days, but don't actually act upon it until 90 days.

Originally Posted by RollerCoasterMama

We're about to start the short-sale process through our USAA loan as well. We had a deferment, but once they heard we were planning to divorce, they told us we needed a realtor and get the house on the market. We can't even talk short-sale until the house is listed. I'm willing to help sell it, but if it drags for too long, we'll just do a deed-in-lieu. Our situation is that the house is $50K upside down since all the other houses in our townhome development are selling at foreclosure rates...that's become the going rate. Awesome.

It's a hard spot to be in, but you are NOT ALONE these days.

I'd probably do what you suggested...talk to your renters about the situation. If you give them free rent for a few months, they'll be able to save to move very quickly and be no worse off.

I'm pursuing the short-sale for my own sake.

BTW, it took them from early July until almost October to even acknowledge our hardship paperwork had arrived. And then the woman didn't even have all of it, AND she didn't know we were wanting to get rid of the house. The people processing the hardship paperwork aren't particularly thorough!!!

Nothing in this is quick. None of it feels good. The best you can do is to try and be calm and practical and focus on what you need to do for your family.

Ugh...well I guess at least they are consistent with their miscommunication, dreadfully long processing time and what seems to be a "right hand doesn't know what the left hand is doing" approach to working with their customers.

I'm sorry you are having to deal with a sucky situation as well.

I feel sort of stupid for not knowing about "Deed In Lieu" before now. I wonder if it is too late? I mean, obviously our credit is already screwed because of being behind on our mortgage payments. DH's credit went from 720 to 546 because of it. But I know a foreclosure stays on there for 10 years. Should we contact USAA about the deed in lieu or the company handling the foreclosure? We have until October 8th to pay them the full amount before they proceed further with the foreclosure. (according to GMAC) I can just imagine if we call USAA they are gonna say "Sure, we'll take that information from you. You should hear something in 30 days." Which, of course, will be AFTER the deadline to pay in full to stop foreclosure. Argh.

Ok, I am just going to let DH know all of the advice you guys have given and take a deep breath. Thank you all so much for your help. I really appreciate it.

[RollerCoasterMama]

Originally Posted by MamieCole

I feel sort of stupid for not knowing about "Deed In Lieu" before now. I wonder if it is too late? I mean, obviously our credit is already screwed because of being behind on our mortgage payments. DH's credit went from 720 to 546 because of it. But I know a foreclosure stays on there for 10 years. Should we contact USAA about the deed in lieu or the company handling the foreclosure? We have until October 8th to pay them the full amount before they proceed further with the foreclosure. (according to GMAC) I can just imagine if we call USAA they are gonna say "Sure, we'll take that information from you. You should hear something in 30 days." Which, of course, will be AFTER the deadline to pay in full to stop foreclosure. Argh.

Ok, I am just going to let DH know all of the advice you guys have given and take a deep breath. Thank you all so much for your help. I really appreciate it.

I think you can do deed-in-lieu at any point before the foreclosure is officially final. It's still a ding, but about the same ding as a short-sale. And it's cheaper for the bank than a foreclosure...you get out of the house willingly and fairly quickly instead of sitting there for free for up to a year. And in your situation, it may be like mine...a deed-in-lieu provides something you don't have with a foreclosure---a little bit of the control back. You are done with your mortgage because you negotiated it with the bank. Not because you were forced out with a foreclosure. If we can't sell in a reasonable amount of time, I'm 100% doing the DIL route and not waiting for a foreclosure. In our case, we did a bankruptcy 2.5 yrs ago so we took the financial ding back then--the mortgage was officially part of the discharge even though we kept paying. So our credit won't look any worse (it's actually not bad now). But it will affect our ability to get an FHA type mortgage for a few years. Not a biggie for me! I'm more than happy to rent for a while!!!

They're so slow, that even if you tell your renters to start looking for housing but that they don't owe any rent during that time, you should hopefully be ok while they deal with paperwork. I'd be perfectly open with the renters. As a tenant, if you gave me that courtesy...esp waiving rent while I scrambled to move...I'd be perfectly civil about it. This mess is happening all over the country and it's going to continue happening for a few years.

20 years from now, it will be interesting to look back and see how many people have battle scars from this recession. It's not leaving many people untouched!!!

[Porcelain Interior]

We just finished a home loan modification and one of the items on the list to see if you qualify was whether or not you lived in the home, rental homes were excluded from the program- you had to be living in the residence.

At least through the government's program. I'm not sure about private mortgage companies doing mods.

[boobybunny]

Here is a really good link that talks to this situation

http://realestate.oregonlive.com/?cl...=42&guid=99695

[SunshineJ]

Just remembered one other thing about foreclosure that you need to be aware of. Check the laws on the state the house is in and see if the mortgage company can come back after you after a foreclosure or not. What I mean is, in some states if you have a house foreclosed on, the bank will try to sell it. If you owe $100k on it and they only get $75k for it, in some states they can legally come back after you for that $25k if it was foreclosed on. With a short sale they cannot do that, and I'm not sure about a DiL. It varies by state so look into that as well.