Is a Letter to escalate, the same as a default letter?

[Tartbird]

Hi all this is a great forum. Learning alot. What a stressful time. We stopped paying our 1st in December and our 2nd in Jan.

We got a notice that Countrywide(the 1st) sent us a certified letter. We have never actually gotten the letter, just a notice from the post office that they tried to deliver it, but I did call them recently to ask about a Modification because of the new Obama plan. They said it was a letter to escalate and said we had to pay a payment by the 14th or else. (Whatever that means)I did notice though when we called there are messages at the beginning of the phone call that say they are a debt collection agency or something. Does that mean I am not actually even talking to Countrywide? I called the number they gave me to call.

We gave them all our info, we know we have a Fannie Mae loan. They said we qualify for the modifcation guidelines, but that is all they will say. They keep stalling and saying call back every week and check the website, even though the website never changes or updates anything. Not sure if they just don't know how to use the new government plan yet, or are stalling us.

We basically are just trying to figure out how long we have before they kick us out.

We will be filing CH7 in a few months also. Ah life, it just gets better and better.

Tartbird

[The Professor]

Tartbird:

Thanks for joining the forum. As to your question, I think what you as asking is if there is any legal significants to either of these letters. They may serve as a conditional step before your lender can proceed to foreclosure but they do not evidence the beginning of a formal foreclosure process.

I need a favor. This forum is designed to help others. It looks like you have made a decision to walk and file bankruptcy. Could you provide us with a summary of your facts so we can understand why you have chosen this path. It will help others to better understand what they should do. In conjunction with this, please answer the following questions:

1. In what state is the property facing foreclosure located?
2. Identify each of your lenders and whether the loan was created at the time you purchased the property and the entire loan proceeds utilized to buy the property.
3. What is the fair market value of the property?
4. Has the property been your primary residence since you bought it?

Daniel

[Tartbird]

I should have said a letter to "Accelerate" not escalate.

Thank you for answering Professor Shay.

Actually, we have not made a actual decision yet to walk from the home. We own a very new business we just opened and we acquired a lot of debt to get it going, sales are not where we need them to support our payments to the credit cards and and the home and the business, so we are filing on the debt of credit cards and we are trying to save the home and business. Not sure if we can.

1.We are in CA
2.Countrywide owns a 1st on the home(Currently $238,000)taken to purchase property. We put down a huge down payment(Something like $180,000 or something because we wanted lower payments) and then we took out a 2nd with Wells Fargo($163,000) and then took that money for other things, not to buy the home.(It is a long story, we were waiting for our business space to be built and they said it would be 6 months and it ended up being more like 3 years so in hind sight we would and should never have taken out the second so soon)
3.When we bought the home we paid $405,000 it is now worth about $240,000. Every house on our street has foreclosed and sold in short sales etc.

4.Yes, we have lived in the house since 2005 when it was built.

Obviously if we could get a mod under the Obama plan the payment potentially would be cheaper than any rent we would get. Maybe.

But we don't know why Countrywide is saying pay them some money or something. It feels like they are just trying to get money out of us.

I think maybe I posted in the wrong forum??

[The Professor]

At the heart of your challenging situation is that second loan. It clearly doesn't fall into the "non-recourse" treatment afforded purchase money loans on residences here in California. There doesn't appear to be any equity (well maybe $2K) in excess of the amount owed on the first loan. So what that effectively means is that absent a bankruptcy filing you would remain personally liable on the second loan. Unfortunately Chapter 7 doesn't appear to provide a mechanism commonly known as "lien stripping" which is available through a Chapter 13.

I would recommend talking to a bankruptcy lawyer to see if the Chapter 13 option makes sense. It is one of those good news/ bad news approaches that can better be explained by the lawyer in a manner that takes into account your personal situation.

Take care,

Daniel

[Tartbird]

Thank you for taking time to answer us!

We actually do have a bankrupcy attorney. I think the 2nd is basically an unsecured loan at the moment with the upside down nature of our home value.

Our attorney said he thinks we will be able to get rid of them one way or the other. Hopefully he is correct.