Please take a look at my letter...I need help with a DIL

[dontwantthehouse]

Here is my situation--complicated one at that--I haven't seen any similar situations yet. Any suggestions on how to get Countrywide Home Loans to approve my DIL? My name is the only name on the 1st mtg and HELOC but they want total household info--even if I use my husband's income we still can't afford both homes nor do we want to keep the other property. So do I provide both of our information or just mine?--don't want to put his credit or business in jeopardy--not sure if Countrywide Home Loans can go after him for asset but business still in debt (2years old). Any advice appreciated!

Here is my hardship letter:

To Whom It May Concern:

I am writing this letter to explain my unfortunate set of circumstances that have caused me to become delinquent on our mortgage. I have done everything in our power to make ends meet but unfortunately I have fallen short and would like you to consider working with me to consider a short sale for my home and ultimately, a deed-in-lieu of foreclosure if a short sale should not occur soon.

The main reasons that caused me to be late are that we cannot afford two homes as we can barely keep up with having one with the economy the way it is today and let alone being self-employed in today’s economy. Furthermore, to add to the complexity of our situation, we were blind-sighted by the property management group that was leasing this property causing us to lose our savings entirely.

We have spent all of our savings and much of our income to carry both homes since the lease was breached. We have spent thousands of dollars to repair the home after the property management group defaulted on the lease option agreement in April. Their tenants left our home needing extensive work both inside and out. The repairs and carrying of the home have cost us over $17,000 with a running tab on utilities and maintenance bills since we had to take over the expenses. These were repairs that the property management group was contractually liable for but they have since “disappeared” on us.

However, we wanted to do what was right and that was to have the repairs done: entire house, inside and out, repainted, lawn maintained again, new carpet installed in the entire house, fixtures replaced, and etc. Needless to say, we are maxed out as we used our entire savings on doing what’s right.

Please be aware that it was never our intention to retain two homes whatsoever. Please also be aware that this home was originally put on the market in October 2005 since we went into a contract to build a smaller home that would be easier to manage, both financially and physically.

With this event, it was our first time ever buying a home while still owning an existing home. We believed that we went into the second-home purchasing process as most buying homeowners traditionally do: found a house they liked and then put their previous home on the market and typically everything worked itself out. I also had professional experience with this process as I used to sell homes as a builder’s rep for 3 years and all my customers did the same thing: they found a floor plan they liked, signed a contract, found a realtor, listed their existing home, existing home sold within 6 months or by the time the new home was completed and everyone was happy. This was the process that 90% of my customers went with as they decided to make their next move. Well, little did we know that our decision to move would be during the real estate market down fall.

Again, it was not our intention to have two homes. We made the decision to buy a smaller affordable home as this was the time that both my husband and I became self-employed. Buying a smaller home would allow us to build our business which we knew would take much of our initial earnings to invest back into the business as it was started up and still be in debt. So along with the blind faith to go on our own came many expenses that the self-employed has to acquire: self-employed taxes, individual health insurance, credit debt to help invest into the business start up expenses, and etc.

So while we were waiting for our new home to be built and the starting up our business, there were few showings and no offers. We reduced our sales price a few times with still no offers. We had a terrible realtor that never even suggested about a short sale. We have never known that there was such an option or even a deed-in-lieu for us to consider. We thought foreclosure was our ultimate doom with this property; otherwise, we would have explored these above options two years ago.

Since we were not aware of the other options, we had to move into our new home in March 2006 when it was completed and made the decision to continue paying the mortgage on the Baccarat house with our savings / emergency fund.

So it has been a long haul for us just to keep current and to keep our creditworthiness sound. We ultimately decided to go with the property management group’s lease when it was presented to us in August 2006. We thought this as our only option to keep current with both mortgages since the first property had not a single offer presented during the 10 months it was on the market. We never intended to have this home rented out but after months of paying two homes, it was our last resort and our dwindling checking and savings accounts supported our decision.

So from August 2006 to this past April of 2008, we were able to carry the two homes with no impact on our good standing with you. Unfortunately the outcome of the lease was, needless to say, far from what we believe the lease option agreement was going to provide us in the end. We were told that the property management group’s subtenants had paid the option down payment to buy the home outright but unfortunately, they decided to buy another home after 20 months on the lease and in turn that was when the property management property management group defaulted on the lease with us as they could not afford to carry the cost of the home without tenants.

Their breach cost us our savings, now my good standing with Countrywide, and has negatively impacted my excellent credit history as a whole.

We are selling the home once again because as soon as the repairs were completed we put the house back on the market in the first week of June. Since listing it, we have reduced the sales price 4 times in the last 90 days of it being on the market and still no offers. The house is impeccable and move – in ready but the competition out there is fierce. We are competing with homes that should be selling in the $275k and up pricing but they are undercutting the prices so they can sell faster—understandably because that is what we are doing as well.

Our home is now priced where it will be a short sale if an offer is presented. We also recently received a letter from the county auditor stating that home values have been reassessed due to the market from the last two years and our home is now well undervalued at approximately $230k.

As I have explained, we have done our best and certainly have gone to lengths to keep current with the mortgage and HELOC with you all. We have no additional income to carry two homes without jeopardizing our basic needs and keeping our primary home.

As many homeowners, we have been living paycheck to paycheck. We count every cent and prioritize where each one must go. Therefore, we ask that you please look over our situation and request that you consider a short sale for us as soon as an offer is presented and to expedite the process. And if a short sale offer should not present itself soon, we ask the same of you for a deed-in-lieu request. It has been very hard for me to see how my creditworthiness will be impacted after many years of monitoring it and taking pride in keep it in good standing so time of the essence would be much appreciated. The quicker that I can be approved for either event in order to have the least amount of negative impact on my credit history will be greatly appreciated by me.

Please let me know what else is needed from me in order to assist you in this process and have it be resolved as soon as possible.

Best regards,

[Moe Bedard]

dontwantthehouse,

They will not be able to approve a DIL with a HELOC on the property.........if there are other junior liens against the property such as a second mortgage, HELOC (equity line), mechanic's liens, or other loans or liens junior to the first mortgage, the lender will never take back a Deed in Lieu of foreclosure. He would never do this because he would be accepting the responsibility of paying off these liens before the property's title could be sold or transferred. The only viable alternative for the lender is to go through the foreclosure process and go to the foreclosure auction to buy the property with all the junior liens extinguished. When the auction is completed, the lender will get a title free and clear of junior liens and encumbrances.

[dontwantthehouse]

Hi ***,

I asked the rep in the loss mitigation dept about this and she said they would consider the HELOC joint with the 1st mtg.

At the time I refinanced with CW in 2004, the representative had me take a HELOC out for $25k at a variable rate. I honestly don't know why the HELOC was taken because I have never used it just paid it--never requested myself because had no plans to do anything with the home or pay anything else with it. It was what the CW LO who suggested the HELOC as part of my refi at the time. My original outstanding balance was $216k but to refi with CW I had add'l closing costs etc and that was when she suggested to take out the HELOC.

so am I SOL? once again!

[Moe Bedard]

Just send the letter and see what they say...........
I have never heard of an investor considering a HELOC jointly with the first, because they are two very different products, unless Countrywide happens to be the investor on both...........which would work out good for you...........

[dontwantthehouse]

Yes, both the 1st mtg and HELOC are with CW if that is what you mean by investor. However, one time when I called CW's loss mitigation, the rep said he would look up the investor on the loan and said that it was Fannie Mae.

Anyway, regarding my letter, do I have too much information? Is less best but I just have so much going on in our situation.

Also, if I do include my husband's info, can they go after him for anything. Ohio is an equal dowry state but I bought the house before marrying and only my name (maiden name) is on the papers and deed only.

[Moe Bedard]

That question is an attorney question.......

And the letter looks good..........
Good Luck!!

[dontwantthehouse]

ah, yes, the attorney deal---this is our other "what to do" hurdle. Sounds like that may be the route we have to take.

OR have homeowners ever tried to do it on their own first and if it doesn't work out get an attorney to step in?

And one more thing, I was told that you can request the lender to sign off on something stating to the effect that they would not go after you for a deficiency but that can be just luck of the draw if they actually grant that.

[faith]

Originally Posted by dontwantthehouse

ah, yes, the attorney deal---this is our other "what to do" hurdle. Sounds like that may be the route we have to take.

OR have homeowners ever tried to do it on their own first and if it doesn't work out get an attorney to step in?

And one more thing, I was told that you can request the lender to sign off on something stating to the effect that they would not go after you for a deficiency but that can be just luck of the draw if they actually grant that.

Hello,
Dontwantthehouse,
I have never heard of CW approving DIL, they will however, approved a Loan Modification and Short Sale but not on DIL.

I have requested CW for Loan Modification and DIL they denied my request but they approved Short Sale and they gave me a letter stating that when the escrow closed they will not pursue the deficiency judgment. The escrow closed on 07/09/08. I have 1st and 2nd with CW and the investor is Fannie Mae.

Maybe they have change their procedure now and accepting DIL instead of foreclosure, because they spend around $50,000 to foreclose a house that's per foreclosure. So good luck and wish you the best. May God give you favor from your Negotiator and Investor.

Take care.


Faith

[Moe Bedard]

Alot of homeowners try it themselves first................and also if you do either receive approval on the short sale or the dil, then have your agent negotiate the deficiency and make sure that you receive the decision in writing.

[dontwantthehouse]

Originally Posted by faith

Hello,
Dontwantthehouse,
I have never heard of Countrywide Home Loans approving DIL, they will however, approved a Loan Modification and Short Sale but not on DIL.

I have requested CW for Loan Modification and DIL they denied my request but they approved Short Sale and they gave me a letter stating that when the escrow closed they will not pursue the deficiency judgment. The escrow closed on 07/09/08. I have 1st and 2nd with CW and the investor is Fannie Mae.

Maybe they have change their procedure now and accepting DIL instead of foreclosure, because they spend around $50,000 to foreclose a house that's per foreclosure. So good luck and wish you the best. May God give you favor from your Negotiator and Investor.

Take care.


Faith

Hi Faith,

Did you request this from CW or did they actually voluntarily sent you this bit of information?

Thanks!
Jamie

[dontwantthehouse]

Okay, this is my workout information. I still plan on calling them this week to make sure they are actually working on my account or at least get a status update. by doing so before 10/14 as they requested, will this really cause delays with my workout just because I call Countrywide Home Loans before then?

Current Workout Status

Deed in Lieu	View the Details	Hide the Details

Workout Status Details:	Your request for assistance is under review. During the review process, a thorough examination and analysis of your loan will be completed. During this time, we may or may not need additional information from you. It is common that you will not hear anything from us during the review period, but please be advised that all collections activities have been temporarily suspended during this review period. We expect more information to be available on 10/14/2008. If your status remains unchanged after the 10/14/2008, please call and speak to a customer service representative. Please do not call back before 10/14/2008 as that will delay the process. Please respond promptly to any calls or requests that you may receive from us during this period. Lack of response will cause your workout to be delayed or cancelled. Thank you.
Information as of:	09/23/2008
Workout Stage:	Processing
Phase/Sub-Phase:	Active Processing

[dontwantthehouse]

I submitted my hardship letter and finally got a call from a Negotiator named Khadi. Anyone work with her?

Anyway, she asked me about being able to pay back $10000 on the Heloc once and if Countrywide Home Loans approves a DIL for the first mortgage. I told her that I was told that both would be considered joint and that I thought a DIL would wipe everything out. She said that CW just services the Heloc and that a Bank of NY is the investor which contradicts what a previous representative told me. THey told me FAnnie Mae was the investor.

She also wants me to provide my husband's information along with mine but the house is only under my name. I am worried that they would go after my husband's business as an asset but the business is only 2 years old and still has debt but I don't want anything to affect it.

She also asked me about the cash given to me since her file shows that when I refinanced this loan back in 2004 is was for a cash out refi which I never requested and had never spent a single dime of whatever cash was supposedly taken out. I never even requested a heloc it was the CW representative at the time that suggested I take out to pay closing costs. Looking at my loan docs, I can't tell if it is a cash out refi. I know it's 5yr IO arm set to adjust in March 2009 and that the Heloc is on a variable rate amortized for 30 years.

She also told me that according to her notes that my financial info was updated in July showing that I had a surplus of $638 or something like that and I told her that I never gave any information regarding my finances so how would they even come up with that information if I never provided any financial information and she said apparently from the conversation I had with that particular rep in July enabled the rep to come up with the number. I told her that I don't recall ever talking about any monetary amount for either income or expenses for anyone to be even able to come up with a surplus or deficiency. I have only called to ask about my options in lieu of foreclosure.

So with the news about the cash refi and now wanting my husband's info, is it time to get a lawyer?

She said that she is sending out an appraiser this week.

[Moe Bedard]

Even if you retain a real estate attorney familiar with the foreclosure laws in your state for an hour or two, at least you will be able to ask any questions that you have and be informed about what your next step should be that would be best for you........

[dontwantthehouse]

okay, I am working on my expense / income sheet. I have a 401k so I will need to include that info as asset but can CW request that I take money out of that to get myself current or to pay for any difference? I obviously do not want to touch my 401k--don't want to get penalized or put any more money into the property.

[faith]

Originally Posted by dontwantthehouse

okay, I am working on my expense / income sheet. I have a 401k so I will need to include that info as asset but can CW request that I take money out of that to get myself current or to pay for any difference? I obviously do not want to touch my 401k--don't want to get penalized or put any more money into the property.

dontwantthehouse,
Hi, hello and hope all is well with you. No, please don't let CW know about your 401K they cannot touch 401k's and retirement or pensions. I hope Professor Shays will share his knowledge about this issues.

Borrowing Against a Retirement Plan

Another alternative that many people utilize when they are over-burdened with credit card debt or other debt is to borrow the money they have accumulated in their 401K or other retirement plan. A retirement plan is another type of property that is ordinarily protected in a bankruptcy proceeding. It is generally a mistake to borrow from a retirement plan to pay off debts. Although the repayment to the retirement includes some rate of interest, that rate is usually low. Had the money been left in the retirement plan it would have been able to grow at a rate of two, three or even four times the rate in which the loan was being repaid.

With the growing concern of the condition of our social security system, it is important now more than ever to sufficiently provide for ones own retirement. The lost earnings that a person would experience from borrowing from their retirement to pay other debts will never be recouped.

For that reason alone, the retirement plan should never be used to pay off other debts

Information from bankruptcy law

Hope this helps.

Faith

[dontwantthehouse]

Hi Faith,

Thank you. I thought it would be best to leave that out. But that brings up another question, did CW ask for your last 2 tax returns?

I am thinking about just providing my info first and see if they will just take it alone but my returns and bank statements also have my husband's name on it since they are done jointly. So I guess I will have to go ahead and provide his info?

A real estate lawyer told me that it sounds like they will just put my file to the side unless i can provide everything and get it done with and that I should not be concerned with CW going after my husband for more info since he legally is not responsible for the mortgage--his name is not on anything, I bought the house before marriage. And his company is an llc.

[dontwantthehouse]

I called today to get an update on my DIL status. A rep told me that they received a clear title today and that they will proceed with the next step in my request for the DIL.

I asked him what were the specifics and he said that at this point they will further review my case and get back to me if anything else is needed. So at this point I just have to sit tight again for them to contact me.

Does anyone know what happens after a cleared title has been received and does this mean I will get my DIL?

[Moe Bedard]

Clear title means that there are no other liens against the property.........then they will forward that information to their attorneys..........you should hear something soon.........

[dontwantthehouse]

My negotiator called me today. She said a cash contribution of $3k was needed because the investor would lose too much money if I didn't provide the money.

She said it would cost them more money to do a DIL than a foreclosure! I asked her why $3k b/c that seems much lower of an expense for them than to go through a foreclosure.

I also asked what the terms were for this contribution and if I would get the DIL approved and be done, but she said it was not an official offer yet because the bank was waiting to hear from me first if I can do $3k and then they would present the terms. That doesn't sit well with me.

I told her we don't have the additional money sitting around to provide a lump sum and reminded her that we had already spent over $17k to fix the house up and she said that yes she knows and mentioned that to the investor but they still would lose money doing the DIL.

I also asked her about our last conversation in which she mentioned that I had done a cash out refi and that I had taken out about 3k and some dollars--which I didn't and never requested or knew I had a cash refi done I thought it was a straight refi. I asked her if the bank was trying to get that money back since the amount of cash contribution was for a similar amount. She said no and that it was just what the bank came up with when looking at the numbers to make the DIL work for them.

She also mentioned that she had told me at the last conversation that I could also do an installment plan of $167/mo for 10 years to pay back $10k but the bank will now consider the lump sump of $3k as the contribution.

So she said it was either or for me which I think is a rather odd set of choices given. Of course I do not want to pay back $10k and have it drag out for another 10 years. We can probably borrow the $3k from someone but she also said it was negotiable amount. I asked her how about $500 she said they are looking for at least $2500.

If this is a legitimate procedure conducted by CW then we will do our best to provide the $3k but I don't feel right about agreeing to that without seeing the terms--learning my lesson through all of this.

I told her I would call her back.

[dontwantthehouse]

so has it been common practice for CW to ask for a cash contribution if a DIL costs them more money than a foreclosure? I find that hard to believe and skeptical that the cash contribution really alleviates any burden for them.

Are they just trying to get money from me somehow? I find it extreme to offer me first to pay $10k and now give me the option to pay $3k.

[Moe Bedard]

it is a settlement...............the 10k was in payments over a certain period of time...........the 3k is to settle the debt in a lump sum offer.........just make sure that it will indicate that the debt is settled in full and there will not be a deficiency left over of any amount and that the documents state that.

[dontwantthehouse]

Countrywide has looked over my request for a DIL and have now asked me if I can agree to providing a $3k cash contribution because they do not see my property justifying a mitigated loss without this contribution. They said it would cost them less to do a foreclosure.

Should I just throw in the towel and agree?

I also originally was going to go with the Griswold law offices to help with my request but I've done everything on my own so far and have gotten this far with CW (4months so far) to have them provide this "option" but now I wonder if I should pay the money to the attorneys to do the work because the cash contribution thing sounds shady to me but I am worried that what if I go with the attorneys and still end up having to do a cash contribution. So I would end paying more money.

*** / or anyone:
FYI, I also looked over my loan docs and saw that on the line for "cash to / from borrower" was marked "to" borrower for $3200 and I never received any money at the closing, how can I find out what happened to this money?

[Moe Bedard]

The cash contribution is in lieu of you signing a promissory note which you would have done if you had gone with the 10k in payments.........this is a decision that only you can make...........and it is an either/or situation..........it would seem that the only thing standing in your way of wrapping up your DIL is 3k.............and keep in mind that a DIL is very hard to get an approval for.

Also in regard to the money from closing.........you would need to ask the title company or lender that drew up the docs.

[dontwantthehouse]

Thanks ***.

Why do some owners who go through the DIL process not have to agree to a cash settlement? How does CW determine that one is needed?

Sorry that I keep asking these questions but I just have no clue, obviously.

My negotiator said the cash is needed because CW could not mitigate a loss but I don't know what that means and when I asked her she just said that it costs them more to do the DIL but to offset it they are asking for a cash contribution.

Is it because there is probably no equity in the house?

I know that I am upside down on my house (was not told what the CW appraiser came up with for current house value) but I am pretty sure that I have little to no equity. I owe $224k, listing price lowered to $219k. The house was originally valued at $250k when I took out this loan with CW in '04, so obviously if it wasn't for the market this house would be worth a lot more as with many other homes.

Since I am upside down on my home and tried for a short sale for nearly 5months, aren't those reasons for my DIL to be approved-I hope.?

[Moe Bedard]

Those would be the reasons why a DIL is being approved..........we have only had 2 other DIL approvals.........so that wouldn't be a good comparison as to why your investor is charging you........

when processing a deed in lieu there must be a cost savings rather than going to an auction/sheriff sale........so they must be showing a deficit by going the DIL route in this case...........that is why they are not able to mitigate (to make less severe) the loss.