Ditching a foreclosure

[Matchka]

:upsidown:

Just about a year ago, my wife and I enjoyed a 700+ credit score. Over-extended? yeah, but our payment history was spotless, nevertheless. So hard times hit us and as a last resort we finally rolled over and filed chapter 7 (like taking an $80k dump, if you ask me). Things improved, but we were not able to catch up our mortgage. Consequently our house foreclosed 3 months later.

The foreclosure was a coupla weeks ago. I understand that if I want to I can walk away from the whole deal (credit can't get much worse than it is now anyway) and any shortage still owed on the mortgage gets pitched in with the CH7 as "unsecured debt" *poof* gone. Thus is Matchka back to the long credit-building road ahead. But now something interesting is happening.

Long story short, some dude checks the local loser listing and sees that my house just foreclosed. He says he'll give me $5,000 if I'll sign a quit claim deed. He will then engage in a valiant battle against my evil mortgage company and, by virtue of his silver tongue, get them to sell him the house for a sum which is less than the amount owed. He says once I sign the quit claim deed, I can take his $5k and mosey off into the sunset with Mrs. Matchka and the kittens, never to be bothered by this particular demon again(apart from having a foreclosure on my credit report snuggled closely with the CH7).

OK, my momma didn't raise no fools (just incredibly financially short-sighted chilluns). The little research I have done so far seems to support my mysterious benefactor's story, but it seems too good to be true that I can actually get kissed after what I've gone through in the last 6 months. Is this guy on the up and up? Or is he neglecting to tell me something negative about this whole deal?

[kb9tbq]

I don't understand why the gentelman would even approach you on this. If he wanted the house he would apply and secure purchase if all is fine with his credit.

I am not familiar with the term quit claim deed, just purchased a home myself so I am not to up on things in this area.

But I thought that home loans where just like car loans. Once you default - they sell the property - then come back after you for the difference lost.

But in your case that should not matter being that you filed chapter 7, just have to make sure that the company is included (or that you still have room to add the company).

But for you to come out $5,000 ahead don't sound right - what is the hook on this deal. What is the quit claim deed all abount? That is what you need to find out before you agree to this deal.

[SpoonyNix]

Foreclosure laws vary by state. I buy houses in Texas, pre-foreclosure and post-foreclosure. You obviously aren't in Texas because all the foreclosures for this month took place yesterday.

If your foreclosure already took place then I imagine your interest in the property went to the lender. You're out of the picture. UNLESS there is some quirk in your state's laws that gives you redemption rights. If your redemption rights are assignable, then that would explain why the guy is willing to give you cash for your interest in the property. He would go to the lender and show them why it would be in their best interest to take less than what's owed on the house, just to get out and move on.

It's all stuff you COULD do yourself, but then $5000 for doing nothing is pretty cool, especially since you were resigned to $0.

[SpoonyNix]

Oh, and the debtors obligation to pay deficiencies varies from state to state.

A quit claim deed basically says "I give my interest in this property, if I have any interest (and I'm not saying I do), to Freddie FiveThousandBucks."

A warranty deed basically says "I give my interest in this property (and I swear I have an interest) to Freddie, and I hereby bind my heirs, successors, etc. to this promise."

One thing, though. Once the guy has that notarized quit claim deed in his hands, your interest in the house is now his, so make sure the funds he gives you are good.

[kb9tbq]

You just hit something that remined me a while back of government refunds allowable on property.

FHA and the such will pay back a refund should certain obligations be met, but most of the time people move on and get lost that they can locate them later for the refund.

So there are tracers out there they will charge a commission fee for bringing it to your attention that you have money due to you. It is their job to get your signature though and agreement to cut them in on the profits available.

There is a web site I had found - can't remember where now, that allows home owners to check to see if they are due refunds; thus cutting out the tracers from making any money off of you.

If this might be your case, definately do a search on line to find out the fact of the matter first before signing anything.

I might be off track on something different, but worth checking out none the less.

[Matchka]

:upsidown:

Made some calls (I have friends in low places) today.

First to my sleazy real estate acquaintance (the guy that got me into "fix & flip" houses). "Quit Claim Deed" as has been observed, says, "Yup, I hereby give all interests and liabilities associated with said property to Freddy FiveKB." As an insurance agent I saw this instrument used by mom & dad to give a home to their kid: Kid had my kind of credit, Mom & Dad had the good stuff, so they buy the house, make a coupla payments and then Quit Claim Deed it to Kid who then shows the bank (seething with rage at this point) that their model of credit worthiness is BS by making his payments as scheduled. As someone experienceing the softer underbelly of real estate, the QCD can be used to give any interest/liability in a property to another enterprising individual. Colorado (where I am) gives the homeowner 75 days after the foreclosure to make things right with the bank. That means I could, should I just happen to find the $20k under my mattress, bring the loan current and regain/maintain ownership. It ALSO means that I can hand this hot potato off to Freddy. By so doing, Freddy picks up the gauntlet, swaggers up to the nasty old mortgage company, and says, "Listen, Bub, I'll give you $150k for that $200k house--and you better take it now cuz ain't nobody else gonna slice that kinda bread for you for that dump" or something to that effect. Freddy is making a bet that the bank will see wisdom (or at least his way) and sell him the house for the offered amount. If this happens, Freddy makes 33% gain right away on his investment which he can use to settle any encumberances like back taxes, etc. HIS risk is that the bank will say, "Um, no. And you can pay up now you're the new super."

Second call was to my Bankruptcy Attorney (never thought I'd have a good relationship with one of those, but then again, who gave me the box of silver bullets?). She advised (for free by the way) that I make sure the Quit Claim Deed had language in it to the effect that Freddy FiveKB assumes ALL encumberances and holds me harmless of any shenanigans that go down as the result of his taking over Casa del Loco. In the worst case scenario (for me) I get $5 grand and the bank comes storming up to me for the $50k shortfall...at which time I direct them to observe that their willingness to sell the house for $150 k concedes the fact that the value of the house was just that, and that the other $50k must have been "unsecured" debt which, oh DAMN, gets a silver Chapter 7 bullet right between the eyes...and Matchka slinks off with a $5,000 kiss for all the screwing he's been getting.

And, of course, Freddy needs to pay in cash or other guaranteed funds like a stack of money orders, cashier's check, postage stamps, AVALANCHE SEASON TICKETS, etc.

Cool? Now, where is Freddy...?

[morrow]

Well, I cant tell you where Freddy is, but I can tell you that you have a unique way with words :upsidown: I like your style, I read through your entire story and your a funny character who made me laugh! :D

Good luck to you and your family and welcome!

[Matchka]

:soppy:

I write this way to impress YOU. I'm all in love with your icon.

Actually, we moved to Colorado from Redmond, WA because the cost of living was getting silly out there. Then shortly after the sharp decrease in office space in NY the cost of living here plummeted, but then so did the housing market in which I had intended to make my fortune. Now I'm marooned in this drought-plagued no-man's land where they think a 1/2-mile wide body of water is called a "lake." Mrs. Matchka & I (and the kittens) still wear our tattered Mariner's t-shirts about town...and there's not a Rockies fan dares to mirk!

[morrow]

<blockquote>Originally posted by Matchka

:soppy:

I write this way to impress YOU. I'm all in love with your icon.

Actually, we moved to Colorado from Redmond, WA because the cost of living was getting silly out there. Then shortly after the sharp decrease in office space in NY the cost of living here plummeted, but then so did the housing market in which I had intended to make my fortune. Now I'm marooned in this drought-plagued no-man's land where they think a 1/2-mile wide body of water is called a "lake." Mrs. Matchka & I (and the kittens) still wear our tattered Mariner's t-shirts about town...and there's not a Rockies fan dares to mirk!

</blockquote>

Get the F*ck out!! I live in Mt. Vernon!!

[Matchka]

:ooh:

Don't shout like that it frightens me.

In retrospect moving north would have been a better decision. We'd still probably be destitute, but at least we'd have blackberries & salmon cruising up the neighborhood creek. People here don't believe me when I tell 'em we used to grab sockeye out of May Creek when they left Lk Washington to continue upstream. Ah, the life. $80 worth of poached (as in unlicensed acquisition of) salmon smoked over freshly chopped alder. Fish out here is...trout.

Is the Tulip Festival in Mt Vernon? I know it's up there someplace.

Oh wait, about credit, I know there's probably a good thread in this site about where I should go from here towards rebuilding the smoking remains of my credit. What thread would that be? I need to get info on cleaning up the old report.

[morrow]

<blockquote>Originally posted by Matchka

:ooh:Don't shout like that it frightens me.

sorry

Ah, the life. $80 worth of poached (as in unlicensed acquisition of) salmon smoked over freshly chopped alder.

Thats like, every weekend for me!

Is the Tulip Festival in Mt Vernon? I know it's up there someplace.

Why, YES IT IS!! Although havent seen the tulips (do the ones at the grocery store count)in the past few years, too many tourists.

Oh wait, about credit, I know there's probably a good thread in this site about where I should go from here towards rebuilding the smoking remains of my credit. What thread would that be? I need to get info on cleaning up the old report.

You can find info ALL OVER THE PLACE!! Pick a subject, any subject!

</blockquote>

[Edit by morrow on Wednesday, June 4, 2003 @ 11:47 PM]

[SpoonyNix]

Sounds good to me. Take the $5k. getting the bank to take less on the loan is called a short-sale. I haven't tried that yet. There are, of course, seminars being given about how to approach lenders on short-sales.

Hey, I'm a "fix and flip" guy. Did you ever do a flip?

[Matchka]

Short sale...don't GET me started!

Had our house on the market well below value, just to get rid of it you understand, and had only 2 offers in 8 months. One was for less than we'd paid for it despite the improvements we'd made. That is how much of a buyer's market it is out here right now: People offer you a beating and you start looking for a rubber hose and a night stick to assist them! Well, we told the dude where to go as a matter of pride. I'm still not sorry. The second offer was a bit low but by now we were ready to dump the place to anyone with a cute smile. The Evil Bank dude in charge of the preforeclosure wanted a ton of docs to get our PMI company to get behind him in the event the sale price came up short. Well, he screwed around for so long not giving us a green light to unload the place for $220k (which would have broke us even) that our buyer gave us a rather unpleasant look and wandered off taking her earnest money with her. So now the house is foreclosed. I guess we'll see if the bank can do any better.

Yup, did a flip. It was the beginning of the end for us financially. Back when we had good credit we saw bad times coming up about 9 months out. I'd heard about the Fix & Flip deals and at the time the housing market was not bad. Took us WAY too long to find a project home (we learned a lot about how to get one in the meantime though!) and by the time we'd finished it we were over budget by 25% and overdue by 3 months. Then of course, housing market was getting soft, our house was for sale as well by now, and it took a couple months to unload it. Someone got a FANTASTIC home for a song. We filed CH7 shortly before it sold, so our share of the renovation costs were erased. My partner was too solvent, however and ended up losing money. When the house sold, his share went to offset his investment (he handled the mortgage, I handled the materials) whereas mine went to pay off the credit cards that were maxed at Home Depot...which had since been erased.

I'm absolutely rabid to get back into it again. I ain't the only Yutz in Denver who's walking away from a house. Anyone able to get a million or so in capital--either in cash or credit--could pick up 6 or 7 good size houses and hold on to them as rentals (seem to be a lot of renters around here lately) and sell 'em for an easy 50% gain in a couple years. If the actually "fixed" 'em, that number would go way up.

But alas, my recent education relegated me to the position of armchair quarterback. I know a lot more about timing and where & how to get houses, but am unable to do anything about it for a while (sappy violin music).

Now my plan is this:

1) locate a nice foreclosed home

2) get the poor sod to quit claim the place over to me for $5k

3a) negotiate with the bank for a new payoff and/or,

3b) sell the place for enough dough to clear the mortgage + tidy little profit.

4) giggle feverishly to myself for my new found ability to enter the real estate game with a negative credit score.

5) pay cash from now on and never look back

[Sky Warner]

Avalance Season Tickets?!?!?!?

<growls> I hate the "Lanche....

As to your credit woes.. join the club kind sire.

We all gots em and we all lives with em.. t'aint none here gonna judge ya none.

Welcome to the group and .. umm..

Go Red Wings!!!!