Update: Trying to avoid foreclosure by working with the bank on a quick sale #132 - Page 3

[hookahgirl]

I also would be worried about trying to rent after the fact. Anymore its getting pretty darn hard, most landlords are running credit checks and depending on the amount of rental in your area, denying alot of people. Maybe call a few landlords in the area you want to move into and ask them what they would do with a maybe tenent who had a foreclosure on their record. I think everything is getting less and less forgiving where credit is involved.

Whitney

[MissMommyNiceNice]

If the op is up to date and current on her loan, now is the time to fix it before she starts falling behind. Story after news story goes on & on about the problem being once the mort. holder is behind in payments, they cannot get refinanced. If they were making the payments in full before, she should contact the company & lock in the rate before it gets too high!

Congress is looking at it now, but we all know how that goes. If your company won't do it and are being financially shady, you need to find one that will! call the housing council in your area for advice. The biggest mistake people make is pretending it's not happening and that it will go away. Not talking to someone will cause more problems.

I do think it is financially irresponsible to try to walk away from something like this. Get a rate you can afford and sit it out until the market goes back up. My guess it'll probably sometime around November of next year when a new president is coming into office.

It will ruin your credit for about forever to foreclose. And that is the truth.

[ShaggyDaddy]

Originally Posted by CathMac

This might suggest that they couldn't afford the loan when they got it.

If you can't afford the payments after the ARM reset and your income has not changed, then you couldn't afford the loan, and everyone involved should have known that, but the borrowers, the banks, and the investors in the banks were SPECULATING on the continued increase in home values. When specilation happens, crashes happen.

Originally Posted by CathMac

ETA, Do you have any tips for the OP on how to get the bank to the negotiating table?
~Cath

My company (and likely your company has one too) has a "home retention division" who work with arm reset doomsday scenarios daily. They have likely heard your story before, and would likely be able to help you. Banks DO NOT want to foreclose. They would rather work for weeks and hours at a time to come up with a plan that works for both parties.

[DesireeH]

Dont know what to offer in way of suggestions but wanted to tell you we are in the exact same situation. Probably every 6th house on my street is empty from forclosure (newer development). One street over there are 5 IN A ROW. It's sickening to me.

I also called and they treat you less than human, the market is horrible, people have these horrible ARM loans (we do too) and the bank is completely unwilling to help UNLESS we sign ANOTHER prepayment penalty for 3 years which is 5K. Heck no, not ever again! The problem with refinancing for us is that it will make my payment go up. Because ARM loans allow you to pay lower than the minimum....which ultimately screws you in the long run but when you are just trying to KEEP it, it's all you can do sometimes.

I can see why forclosure looks like an option for a lot of people (not making 2K payments for 5 months is more than you can "make" than selling it and EATING money in a bad market......) But having ruined credit isnt worth it either. Sigh. I hate money.

[jennica]

Originally Posted by chinaKat

Wow. Just... wow.

I realize the OP is in a tough place, but I'm pretty flabbergasted that people actually think this way.

I guess I come from the "you made your bed now you lie in it" school, though. Which is probably why I wouldn't touch an ARM with a ten foot pole.

Um, hello, I'm still here. Kindly talk to me and not about me. I've been trying to make this work for over a year. I pay our bills and then find that there is only one hundred dollars left in checking. Now our payment is going up by $200.00 and I feel overwhelmed. I sell things off to make ends meet. I shop at the Goodwill. I skimp on everything. And all to stay in a house that I hate. Sorry If I entertained a thought long enough to actually post about it here and ask for advice. We have over ten years of awesome credit. Never been late on a payment in our lives. And what do we have to show for it now? A house that is worth less then we owe on it. All that work for nothing.

Originally Posted by Knittin' in the Shade

OP, I'm sorry if you'll be offended by this, but I think it really needs to be said. You got into this situation, and it's completely irresponsible (not to mention unethical and just plain unwise) to purposely default on your mortgage. It's awfully convenient to just not have to deal with it anymore since you don't want to live in that area. But really, the responsible, grown-up thing to do would be to do exactly what you would if you did indeed love the house and area and wanted to stay there - just because it's not all new and shiny anymore doesn't mean that you're not responsible to do what you signed on the dotted line to do.

Oh God, it was never new and shiny. We could only afford the crappiest house in the crappiest area and thought to ourselves, "well, we can fix it up and then make a profit if we sell it, or we'll just stay and live there if we like it." Yeah, it was a big mistake. We've spent hundreds of dollars in order to fix the house up, in order to sell it, which we can't seem to do. We've put so much time and money and work into this place it makes me want to cry to think about. We could have turned around and sold it the day after we bought it and actually made a profit on it. Yeah, we were idiots. We made a huge mistake. We figured that out right away and we've living here for three years trying to make it work ever since. But thanks you two for rubbing it in.

Originally Posted by ShaggyDaddy

So although each individual should get a wake-up call for falling for the ARM trap, you can't just blame the mouse because they got stuck in a very complicated mouse trap. Sure the mouse gets some blame, but you have to place the blame firmly on the group... Consumers who borrow too much are guilty, banks who lend too much are guilty. The concept of "The American Dream" is guilty. Not everyone wants, needs, or can afford to be a home owner, but we are all lead to believe that is the only option.

You are totally right. We wanted a house, we wanted a baby, we wanted the american dream. We knew the payments would be kind of high, but we thought we could make a go of it. I had no idea that gas prices could and would go so high. I didn't know that property taxes in a small town could go up that fast. I thought DH's raises would cover our mortgage increase, but they don't even cover inflation and now he is facing a possible lay off. I know we were stupid to think that the mortgage and our income would increase at the same rate, and that outside expenses would stay level, but we did, and there are thousands of other stupid people around who did the same thing as we did.

Originally Posted by Knittin' in the Shade

I think it is both helpful and constructive to advise her to fulfill her obligation and responsibility. It will destroy their credit to foreclose on this home - the ramifications of it will be far reaching (much further than the 2 years she wrote about in the OP.) I can tell you that a lot of employers pull credit records of potential employees (including my DH's very large company) and they screen out applicants who have filed bankruptcy or foreclosed, because it signals irresponsibility that they don't want in an employee.

Okay, I didn't know this. Thanks for pointing it out, even if your tone was a bit harsh.

Originally Posted by Knittin' in the Shade

My impression was exactly the opposite. Her pros and cons list seemed to me to be very stacked towards making it look like foreclosure was the best option.

I honestly don't know anything about foreclosure or bankruptcy, other than the people in our lives that we have seen be extremely irresponsible with their money and then file bankruptcy and then get to keep everything they charged up on their credit cards. They don't seem to have any repercussions at all from doing this, except that they have to rent for about five years. I always wanted to save my credit in the past in order to buy a home, but now I don't care if I have to rent. I wasn't aware of any other repercussions, I wasn't trying to make it look like foreclosure was the best option, I just feel like it is and that obviously came out in my post.

Originally Posted by Knittin' in the Shade

How about considering the possibility that if they foreclose on the home the DC will now be homeless, with the possibility of t being very difficult to find a rental since most landlords do credit checks, as well. If they are willing to foreclose on a mortgage, I don't think it's unreasonable to expect that they'd have NO qualms about not paying rent every month.

No way. Now that is uncalled for. We have never, ever, in our lives payed a rental or mortgage payment late, nor have we payed a credit card late, nor a utility bill unless it was a total accident, which happens to us mortals. I have a long credit history that I can point to. Anyone who wouldn't look at the whole picture is not worth renting from anyway.

Originally Posted by hookahgirl

I also would be worried about trying to rent after the fact. Anymore its getting pretty darn hard, most landlords are running credit checks and depending on the amount of rental in your area, denying alot of people. Maybe call a few landlords in the area you want to move into and ask them what they would do with a maybe tenent who had a foreclosure on their record. I think everything is getting less and less forgiving where credit is involved.

Whitney

Yikes, I didn't know this either.

Originally Posted by ShaggyDaddy

If you can't afford the payments after the ARM reset and your income has not changed, then you couldn't afford the loan, and everyone involved should have known that, but the borrowers, the banks, and the investors in the banks were SPECULATING on the continued increase in home values. When speculation happens, crashes happen.

My company (and likely your company has one too) has a "home retention division" who work with arm reset doomsday scenarios daily. They have likely heard your story before, and would likely be able to help you. Banks DO NOT want to foreclose. They would rather work for weeks and hours at a time to come up with a plan that works for both parties.

Thanks for the advice. We obviously could not afford the loan initially (but we didn't know that at the time) and had trouble paying it right away. It has steadily gotten worse.

[Starr]

I don't have any advice but just wanted to give you a hug. We bought our house 4 years ago and were presented with the option of and ARM or a fixed rate for 30 years. The fixed rate was a little higher but in the end we chose to go that route, if we hadn't we would be in the same boat.

I would call or go in wherever you got your mortgage and see if they have any suggestions. Many people are, or could be, in a similar sitution you are not alone.

[jennica]

Update...

I called the bank again today. I told them the person I talked to yesterday would not help me out, so they took a long time in transferring me to someone nice. She was nice, and she nicely told me that she would not be willing to work with me on any loan readjustments. The reason is because the house is already on the market. I told her it most definitly would not sell and we would end up in foreclosure. She said that as long as it is on the market, they can not offer me anything in order to stay in my home. What they can offer me is a quick sale or giving back the dead. She said that I will need to not pay my bill for 30 days. I said, "are you serious, you don't want me to pay my bill?" She said, "well, we can't do anything untill you are late 30 days, so yes." So then after 30 days, we send in our income and our expenses and if we have a zero balance at the end (including gas and groceries), then we will be approved for a quick sale. If we try a quick sale and it doesn't work, then we may be approvedto just hand over the dead back to the bank. Both of those things go on our credit for 10 years. She said it likely would not infringe on us being able to rent a place, but that we should check with prospective landloards. She said there is no tax liability, we just walk away free and clear, and our loan is forgiven. She said that it isn't a good thing to have on your credit, but it is not as bad as foreclosure.

So, what do you all think? Should we do a quick sale or no? I guess our options are to do the quick sale, or for me to get some type of job and make it work here for at least another year. Not sure what I want to do yet. I'm going to talk to DH tonight about all this.

Don't be mean now, this is stressfull.

[shayinme]

I can't speak to the issue of foreclosure but I can speak to the issue of having bad credit and I will say that I would do any and everything to preserve your credit. As other posters have stated more and more jobs require credit checks, heck I applied for an adjunct teaching gig that required a credit check. My credit at the moment is not too good and its problematic.

Yes, you see people who file BK and seem to move on but those days are gone with the recent changes to BK law.

Right now you are in a jam and you want to get out but what happens 2-3 years from now when you need a car and the only place you can get a car from is the buy here pay here place at a inflated interest rate? You dh gets a gig that requires travel and you got no cc or you end up with the card at 29% interest. Or you try to rent and the potential landlord says no so you end up in a crappy part of town because that's what your credit affords you?

No, if it were me I would look to work weekends or evenings opposite dh while you are looking to sell that house.

Bad credit has a ripple effect that generally can be felt a lot longer than 2-3 years. Heck my dh filed BK 11 years ago and when we bought a car 5 years ago we still got jacked on the interest rates.

I would see work as a short term way to bring some money in while you are getting out of this jam.

Shay

[happyfrog]

is taking your house off the market now - is that an option at all or are you under contract for x # of days??? Sounded like the bank person would have room to wiggle with you if you didn't have a house on market??

If not option, and you're going to have to move anyway regardless of what happens to your house, i'd say LOOK NOW for an apartment. Get that set up now BEFORE your credit goes bad (if that's the route you end up going) so you'll have a place for a year - then go month to month or whatever (new lease?). ..

((hugs))

hard situation all around.

bettyann

[Starr]

Questions I would ask myself are, how hard is it to come up with $200 extra each month? For some this might be easier than others. Your already selling stuff but typically if you were to find a PT job how much would you have to work? Can you see yourself working that much for possibly 6 months to a year?

I agree on not wanting bad credit, these days credit counts for a lot. Some may argue this and you may not need it now but 7 years down the road?

[SneakyPie]

Is there a financial or real estate advisor you can talk to? A message board isn't a bad place to start but really I think the help of a professional is really what is going to give you some solid options.

I also think that if this were my situation, I would opt for the full-time job and some day care for my child. I know it is not your ideal. But many people do find a good center or even a reliable person who can come to your home to help care for your child while you earn some cash. Having enough money around, even for a short time while you catch your breath, can be just the stress relief you need to ride things out while you and your husband strategize what to do next.

Do you have a reliable friend who could assist w/child care, for a "friendly" fee? Or do you belong to a group, church, or spiritual community that can assist in that area? Or do you know anyone or any company that may be looking for someone to do some work from home?

I'm sure you've already thought of these things. It's just that foreclosure is such a bad thing on the evil credit report, and going to work may not be the permanent trap you fear.

[choli]

I lived in London in the late 80s when the property market crashed after rising insanely for several years. SO MANY of my friends were in your situation after saving hard and putting everything they had into the downpayment: It really sucks. It sucks that the banks lend more than they should. It sucks that this kind of lending puts house prices up to an unrealistic level, only to drop.

However, as others are posting, the impact of foreclosure would be immense. Far better to get a part time job to pay the $200 a month. I'm sorry you are in this situation. The rise in gas price is having a horrible impact on a lot of people these days.

[Mothra]

I have absolutely no advice, I live in military housing and have for the better part of my adult life, but I just wanted to offer you a few words of support. It sounds like you have found yourself in a sucky situation. Sure, you might not have made the best decisions, but who does all of the time? I DO know that those ARMs are killing people. It's not just you. NO ONE could have predicted that gas prices would do this. My husband has a 40 mile roundtrip commute each day, and gas prices have almost doubled here over the past three years. We can suck it up, but it pisses me off. Anyway, it sounds to me like you're doing the best you can. Much love to you and good luck.

[superstella]

So sorry you are in this situation, just wanted to offer some hugs and support.

[Free Thinker]

I'll start by saying I am sorry you are in the place you are in, however I don't think forclosure is the way to go. I think lenders in the future are going to be MUCH more harsh on who they approve, and that includes auto loans incase your car breaks down and you must replace it! Even if buying another house isn't in your immediate plans, you probably will have to get a new car in the next 5 years or so, and if you don't have enough $$ saved up you'll be stuck w/ a high interest rate. I agree what KITS has said, even if you think it sounds harsh. If I were a landlord and had 5 people inquiring about a rental, and I pulled all their credit and saw your forclosure, you may well be out just b/c of that. Just b/c you had a perfect record before, now you DON'T and I would be having to take a chance on getting my rent each month, KWIM?

I really think you should re-visit the idea of getting a job. I really do not understand why you think that just isn't an option. You can always do inhome daycare, work at the grocery store, deliver papers, ect. I am ALL for being a SAHM, but I have to be a WAHM, and that's just fine w/ me. It's what we have to do for our family, and there just isn't another option. I don't whine about (okay, sometimes I do), I just DO it, b/c that's waht NEEDS to be done. Being a good mom isn't just about playing together, doing crafts, cooking and caring for our little ones, it also includes financial responsibilities. If you and your DH cannot make it on what you have, you need to make more $$. I can see NO reason why you cannot pull in a few extra hundred $$ per month just doing odd jobs, clean houses, babysit, ect. even without any education, and even without putting your DC in daycare. Get creative! You have SKILLS, you just need to figure out what they are. Sewing custom outfits to sell on e-bay is another really cool option if you can sew, or you can make diapers and sell them on-line. The options are endless and I really hate it when I hear someone say that CANNOT make more $$.

[CathMac]

Originally Posted by jennica

I called the bank again today. ... she nicely told me that she would not be willing to work with me on any loan readjustments. The reason is because the house is already on the market. ... She said that as long as it is on the market, they can not offer me anything in order to stay in my home. What they can offer me is a quick sale or giving back the dead. ...

jennica,
It kind of makes sense that they'd be unwilling to renegotiate if it's on the market since there's a chance you may wind up making a profit at their expense. Or, she may just be putting you off because she doesn't want to deal with the aggravation, notwithstanding the fact that she sounds nice.

It seems to me the solution is simple. Take the property off the market. I realize there is probably a clause that prohibits you from going to another realtor but they can't force you to sell the house.

I'd verify that the property does have to be off the market and ask them what if any paperwork they need to show that it isn't actively being marketed. It may be as simple as calling the agent and sending them a letter asking them to take the house off the market and/or there may be a bank form you need to fill out (probably part of the package my father referred to).

Perhaps it's not that straightforward, perhaps ShaggyDaddy can chime in here.

Good luck
~Cath

[phatchristy]

Banks usually won't work with you until you are behind on payments, so I'm not surprised at the response which you received when you spoke to them.

Objectively, to me it seems like doing what the bank said sounds reasonable. Down here, in FL, it's happening very similarly. 6-7 houses on each block for sale, not able to recoop anywhere near what the mortgage is on the house. And, if the banks won't accept a short sale, the people abandon the property and leave it into foreclosure. Often in these cases it's investors with multiple properties as well.

As for your credit. I would think that a quick sale/deed in lieu or foreclosure would be nearly as bad as foreclosure. However, I do believe that you would not be alone in your situation. It's happening all accross the country sadly. As long as you are able to find a reasonable apartment, and SAVE money for emergencies I would think that would lower your risk of needed a loan in the next several years. I have friends who went through bankruptcy about 4 years ago...after having serious medical bills and having no other options. They were able to get a GOOD mortage rate for a new home, as their credit score was up to 730 several months ago.

You own your cars outright which is good, hopefully you don't have any credit card debt. Can you live a lot more cheaply if you rent? Do you have any family you could stay with on a temporary basis?

I'm sorry people are being so hard on you...they shouldn't be. This situation is stressful enough, you don't need people to be harsh. So many people accross the country are in your situation. I know people locally who purchased a home a condo a couple of years ago, and now her DH has been transferred and they either have to bring $55,000 to the closing table or abandon the property. In particular the value of condos have plummited down here...!

[momma earthical]

no advice or information, just

[candiland]

Putting it up for auction is a really quick way to do away with the whole headache. Your Realtor can give the listing to the auction house if you're already in a contract with him/her. You probably won't get as much as you want for it, but with a really good auction company who advertises really well, it should at least attract several bidders. (I'm a Realtor and just helped out with one of these recently).

[normajean]

I still really think that refinancing for a fixed rate & lower payment & sticking it out until the market improves is a temporary headache while rotten credit & no hope for a better loan in the future because of bad credit is a long term one.