willingtocope

Suggestions? Got a house to sell...

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So, I got this house in a small college town in Iowa I'm trying to sell.  Not a great house...2 bd, 1 and half bath on 1/4 acre.  Needs a new roof and probably windows.  35 yrs old.  Remodeled main bath...newer kitchen...all appliances.

 

Its empty...I moved to an assisted living facility about 10 months ago.  I owe around $140k...comps in the area are in the $120k range.

 

I'm still working full time plus drawing SS (yeah, I'm that old) so I can afford payments on both places with enough left over to stick in my 401k.  Interest on the loan actually helps my income tax burden.  Mortgage is thru Chase, and after reading their web site, I'm pretty sure i wouldn't qualify for a sort sale without being responsible for the deficiency.

 

I'm dealing thru a realtor who's been looking after the place so I'll have her commision to pay also.  Monthly payment is too high for renting it out to cover..

 

Any suggestions?

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Hopefully the values are going up.

 

If the prices are moving up fast enough and you can afford to hold on until the market comes back that might be an option.

 

A lease with option to buy to a buyer with damaged credit and a chunk of cash (and some home repair skills) might be one possibility. Theoretically there should be a bit of pride of ownership so they take better care than a regular renter during the lease period. The flexibility in setting 150% (or whatever makes sense to the parties) credit toward the purchase for the option portion of the payment should allow the tenant/buyer to pay higher than market rate rent permitting them to cover the payment. Scope out the applicable laws. I am not sure whether an agent would be on board or not.

Not without some risk but underwater is usually a pain for those of us without a lot of resources.

 

Make sure to check out any and all programs that could assist underwater homeowners in your state.

 

Another option would be to negotiate no deficiency as part of a short sale with Chase.

 

A Deed in Lieu would seem a lot less grief than a short sale. I hear stories of "moving" payments to those "cooperating with a lender. Those were likely post default so the lender was a probably a bit motivated.

 

This site claims there is no deficiency in Iowa:

http://www.foreclosurelaw.org/Iowa_Foreclosure_Law.htm

and further states:

Borrowers in Iowa have the option of avoiding a foreclosure suit by voluntarily conveying all of their rights in the property secured by the mortgage to the lender. If the lender accepts the conveyance from the borrower, they are given immediate access to the property. However, they must waive any rights to file for a deficiency judgment against the borrower.

 

Perhaps the law requires you to be living in the home at the time of foreclosure. I am not familiar with Iowa laws.

 

Perhaps not on your list, but a strategic default and fighting foreclosure is also a possibility for those so inclined.

 

Hope it works out well regardless of the direction taken.

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I am reluctant to contact the lender until I have a firm plan in mind.  The property values in that smal town are going up...slowly...but the big problem I'm fighting is that one of the local nursing homes has bought up about 30 distressed houses, torn them down, and replaced them with brand new 3 bedroon ranches in the $170k range.  All the old farmers who have given up farming and "moving to town", are buying those.

 

The price is higher than I'm asking, but they're getting a brand new 3 bedroom for not much more than I'm asking.

 

I'm considering engineering my own "short sale".  I can take $20k as a loan from my 401k, reduce what I owe the bank, and list the house for $128k.  Gets me out of the mortgage (assuming someone buys it) which is at 6% with a $20k loan at 4.5% which I can pay back pretty quick with increased contributions to my 401k.  Probably saves me some taxes too.

 

Somebody talk me out of this...

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I would not use a 401k to solve a bank's problem. If there is no deficiency it is the bank's problem IMHO. Even with deficiency as a remedy is can still be a bank problem. The ROI and risk of the 401k loan is above my pay grade but I would not go there regardless.

 

I am assuming from your signature line that you are not focused on your credit score. Therefore I would suggest you do what is right for yourself. It is obvious to me that breaching a contract term, where there are remedies available to the other side, is not a moral question. It is simply business. Both sides made a business decision. Values dropped and both sides are having a bad hair day.

 

Borrowing money even from yourself to pay off bad debt is not something that a smart business would do (aside from a significant PR debacle or similar externality). I believe it is important that people make rational and intelligent business decisions as if they were a simple corporate entity. We owe that much to ourselves IMO.

 

Of course the engineered short sale described would in fact a straight sale and there would be no discussion with the lender other than a pay off request when under contract by a qualified buyer.

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I would not use a 401k to solve a bank's problem.

 

I am assuming from your signature line that you are not focused on your credit score. .....

 

Of course the engineered short sale described would in fact a straight sale and there would be no discussion with the lender other than a pay off request when under contract by a qualified buyer.

You're right of course.  I've often counseled against borrowing from a 401 to pay off CC debt.  Back in the day, I actually closed out a 401k to try to keep my business afloat...really, really dumb.  The taxes hurt a lot.

 

And, no, I'm not concerned with my credit scores.  I'll have no need to borrow money from here on out.

 

If it would work out that I contact the bank...negoiate with them to take the house so my payments would stop immediately...and then use my 401k to make up any defficiency when THEY sell it, that would make sense.  When the house payments stop, I'll put that money in my 401k since I don't need it to live on right now.  As long as I continue to work, I've got all the money I need.

 

My only real concern is logistics...reading their web site, the bank would want me present when they appraise the property to arrive at a selling price.  I've got MS and no transportation to get me there...its 80 miles away.

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So, 4 months later...an update.

 

No joy in selling the place...not even a offer at a reduced price.  House was inspected.  Hail damage on the roof...at least 5 years old...insurance says "too bad, you should have filed a claim earlier'.

 

Company I work for is closing the division I'm in.  At best, I've got a year as support for the system I wrote is phased out.  My 50 years of system design and programming experience carries no weight with the "who cares if its crap, getter 'er done" people in charge.  No real chance of finding work at my age, so I'll be down to SS, a small pension, and whatever my little 401k brings.

 

So, I got the "Short Sale Application" packet from Chase. I'm absolutelty sure I don't qualify for HARP or HAMP or whatever acronym it is. I'm going to try for a "deed in lieu" settlement.  Only complications I see is:  at the moment, payments are current;  CURRENT income and 3 yrs of tax records show I can continue payments, as long as I'm employed.

 

I could wait for the coming termination or layoff, but I'd rather be putting the money into my 401k.

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I would just put as much in the protected accounts and let it go. Your SS and retirement accounts should be safe. I don't see anything positive out of continued payments if you are that far upside down. Sure your credit will take a hit, but that extra 30K will be much more of a benefit to you down the road. You should be able to get some assistance from legal aid in your situation. 

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As previously suggested, I believe treating such situations as a business decision aids clarity.

 

I'd ask myself if a smart business would continue to dump money into a non producing asset that was likely to be repossessed or would such a business have a clear duty to their shareholders to cut their losses immediately.

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Filled out the papers...talked to Chase...the "customer care" rep said if I wanted to offer a "deed in Lieu" I should write a letter...did that...got a call from the "customer care" rep assigned to my loan who said I should fill out all the paperwork for a loan modification and their "committee" would consider the next step.

 

I explained I not interested.   I've stopped making payments.   I want them to take the house. 

 

He sent me another letter with a list of documents they want...including 2 pay stubs and two bank statements.

 

I'm inclined to just let it default for a couple of months and see if I can get their attention.

 

(My realtor says Chase got smacked by the government for predatory loans last year so they're being super cautious).

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If you are looking to foreclose, then don't send them anything and make them go through the regular foreclosure process. In the meantime, why don't you try to do a short sale yourself. The worst they can do is say no.

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I've got a realtor who is still trying to sell it.  I've told her...get an offer and we'll see what the bank says.  (I suspect, however, she might be waiting on the foreclosure auction...and her company would put in a bid.  That's okay with me.  I just want it off my bucket list).

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I've got a realtor who is still trying to sell it.  I've told her...get an offer and we'll see what the bank says.  (I suspect, however, she might be waiting on the foreclosure auction...and her company would put in a bid.  That's okay with me.  I just want it off my bucket list).

If foreclosure/short sale is on your "bucket list" you might need a better list! Move that over to the todo list and cross it off soon. :-)

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The saga continues.  Just got off the phone with the bank.  They want the papers filled out.  I haven't paid for two months.  I guess I'll print off some stuff from January and see if that satisfies them.

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Why bother? If you are planning on letting them foreclose, let them foreclose. Unless there's a new law that requires you to send documents to a bank that bugs you to send them, let them sit and stew.

 

It's not like they can kick you out, right? Didn't you say that you are already out?

 

AND...if you really want to get nasty, when they do foreclose, because the mortgage is old enough, it's nearly dead certain that theychain of title, as regards sale of the mortgage, is really messy. If this were my house, I'd be checking the title info at the county courthouse, and searching for judgments against foreclosing banks d/t poor to non-existent record keeping.

 

You may end up with a house that you own free and clear, except for the taxes and (of course) insurance. If you were paying the taxes and insurance with your payment, at the least, pay them.

 

And ignore Chase till you really need to pay attention.

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I'm going to take one more shot at playing nice.  I've got the paperwork filled out, so I'll send it off to them over the weekend.  Any more games, I'll stop talking to them.

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Okay, I think I've run out of patience.  Since my original documentation was from December, I dug up two bank statements and two pay stubs from that time period, filled in the boxes they said were incomplete, and resent the paperwork.  That was two weeks ago.

 

Today, I get a certified letter "warning" me of possible foreclosure.  I called.  Got the "...yes, we got your papers, but we need you to send CURRENT data.." response.

 

Ain't gonna happen.  I told the guy that I'll show up in court in my power wheelchair doing my Stephen Hawking routine and we'll let the court decide.

 

He's going to call back next week...

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I know of several cases where filing a complaint with the CFPB was helpful under the facts you have listed above. You might get a favorable response in your "call back next week" if you file a CFPB complaint today.

 

Good Luck!

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So...finally...got a call from Chase today.  They're finally satisfied with the paperwork and will be forwarding the file "to the underwriters for a decision".  I asked what he thought that might be...he said it looks like I have a case and I should be hearing in 30 -45 days.

 

Hmmm...I still have a sense of impending doom.

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So, I got the underwriter's decision in the mail Saturday.  The only thing I qualify for is a possible refinance...but only after I send them a check for 6 months payments.

 

Ain't gonna happen.

 

I'll wait for their next call.

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The whole HAMP HARP thing is a fiasco that only benefitted the banks.  VERY few customers benefitted.

 

DH had his house in SC broken into while he was deployed. (His then-wife bought a TH with HIS pay and moved out of the 'family' residence......leaving it 'abandoned'.)  15 mo later, when he returns, it has broken out windows, broken in door, mold, mildew, etc.  He tried boarding up the place and the local druggies kept breaking in.  The insurance co denied payment due to the abandonment.

 

FF to 2011...after yet another wonderful deployment.....DH is told his pathetically small mtg pmt doubled due to forced placed insurance.  He now stops payment.  Tells them to foreclose.

 

2.5 yrs later, we get a call from the neighbor who wants the land and wants to tear down the now condemned house.  We call Citi.  Tell them that the guy is willing to pay $15K.  DH owed $16K (with late chgs and FP ins) plus $14k on a 2nd.  This is a condemned house at this point.  Tell them we need a short sale.  They tell him to file for a HAMP.  NO!  Won't do it.  1 month later, they file for foreclosure.  1 month later, they dismiss their own case.  Yep, you got it!  They don't WANT the property.  We had a buyer.  Dipwads!!!!

 

So they charge off the mtg.  The house is condemned.  We can't sell it because we don't have title.  DH is just ignoring it.  Oh well, maybe the County will sell for back taxes.

 

Some folks shouldn't be in banking!

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The saga continues.  Received 4...count 'em 4...separate collection letters all dated the same from the same law firm threatening foreclosure on the house.  I'm waiting for them to call so I can point out I offered a deed in lieu way back in December.

 

Not only are big banks too big to fail...they're too big to know what the hell they're doing.

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WTC, don't bother. You, of all people, know that talking sense to a CA is a waste of breath.

 

Let them spend the money to foreclose. Hang on to your cash and your house payments.

 

Pay the taxes and insurance directly to the county and the insurer. In your spare time (when you are NOT answering the phone or responding to threatening letters from pond scum) read up on chain of title and MERS. Look at your abstract (or if your home has one, the Certificate of Title, written on property that has been surveyed and the title certified back to when the first landowner bought the land from the US government). It's very likely that somewhere will be the name MERS as holder of mortgage.

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So, piecing together things they're not actually telling me...or perhaps they are telling me but they use words to mean different things than I understand...here's where I'm at.

 

First, it appears that FHA "owns" my mortgage.  Chase refers to FHA as "the underwriters", but what it amounts to is Chase is indeed acting as a debt collector on their behalf.  Any decisions regarding the mortgage have to come from FHA.

 

My realtor finally came up with a sort sale offer for the house and now Chase is making me trudge thru that pile of paperwork.  Its basically the same forms I filed out earlier in the year but since short sales go thru a different set of hands, I need to "update" the info.  The new wrinkle is that I need to submit a "hardship" letter (pointing out I have MS, can't live alone, and moved to an assisted living facility almost two years ago).  I'm guessing they will ask for a note from my doctor.  The complication is, I'm still working (from home) and drawing social security.  Between the two, my gross income is substantial, but so are my expenses. 

 

Anyway...appraisal on Friday.  We'll see what happens next.

 

ETA BTW:  My goals here are two fold: 1). Get rid of the house, B). Learn what I can about the process.

 

If they keep jacking me around, eventually I'll lose patience and they can go thru with their foreclosure.  I'll show up in court in my power chair doing my Stephen Hawking impression and waving the "offer for deed in lieu" I sent the in Dec 2013.  Bottom line...all this fooling around is costing them money.

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