Thinking of walking-away...in Cali

[noespahm]

Man...reading this site is scary, but educational.

Here is my story:

• Current on both loans
  • Not interested in Loan Modification or staying in home
• FICO: ~800
• State: California
• Purchased for primary residence: 1/2007....doh!
• 80/20 loan
  • 1st Loan - 333K - National City
  • 2nd loan - 80K - Greentree
• Recent Comp: 190K on 8/25/09 (exact model)
• Zillow: 298K

Here is what I think I know (after reading here):

• I'm fairly certain both loans are covered under CCP 580b since they were used to purchase the home, but haven't verified by looking a the contract...fine print waivers. Hell I probably signed my 1st born away =)
• For Federal tax purposes, COD will not be taxed as income (expires 2012), but CA state will (expired 2008).
• ....And just to verify....Greentree CAN NOT come after me for the 80K....right?

Consequences:

• Credit shot to hell
• Harassed by collectors
• Credit cards closed interest rate through the roof
• Difficulty renting/job hunting
• 200k taxable income in California
• lose of property tax and interest tax deduction

Questions:

• Who pays Property Tax - Let's say I stop paying 1/01/2010. Who pays the property tax due in April? What if I stop in November 09, who pays December property tax?
• HOA is $241, can I stop that when I stop paying the mortgage.
• Can I take the appliances? W/D, dishwasher, stove, microwave, and A/C?
• When should I move out?
• Will my Loan references get harassed by calls. Do I need to call them to warn them?

Why:
Self-inflicted hardship.....I didn't want to buy in the first place, but my wife did. For marital bliss, I let her look. I was SURE there was nothing we could afford in a nice area, so what was the harm. Based on my calculations, our mortgage shouldn't have been more than 260K. To my shock and amazement, we were approved, but I knew it wouldn't/couldn't last. My wife was too emotionally invested at that point for me to say "NO" especially with everyone (RE agent...loan people...builder) The loan was a 80/20 30yr fixed, but IO for 10yrs. If it wasn't for the property tax, we would not be in the red each month. One car accident and one car dying has pushed our credit cards over 10k.

[noespahm]

sorry for the double post...how do I delete it?

[knownick]

Your situation, figures, dollar amounts, etc. are very similar to my own. We made the decision to walk and the house was just sold at auction on Saptember 1.

Originally Posted by noespahm

I'm fairly certain both loans are covered under CCP 580b since they were used to purchase the home, but haven't verified by looking a the contract...fine print waivers. Hell I probably signed my 1st born away =)

While it's always a good idea to have an attorney look over the contract, it's also important to note that "what the contract says" can't change whether or not the loan is covered under CCP 580b or not. A contract that runs afoul of the law won't hold up in court.

• ....And just to verify....Greentree CAN NOT come after me for the 80K....right?

• Well, they can come after you for whatever they want - but their odds of doing so (and success) are slim to none assuming your loans indeed fall under 580b.

• 200k taxable income in California

• This may not actually be the case. Definitely talk to an experienced CPA about this, but there's some question as to whether or not there is actually any "forgiven" debt on a non-recourse loan, since their only recourse is to take back the house.

• Who pays Property Tax - Let's say I stop paying 1/01/2010. Who pays the property tax due in April? What if I stop in November 09, who pays December property tax?

• If you've resolved to walk, don't pay the taxes. Property taxes are a senior lien to your mortgages and the lender will have to make them current before they can sell the property.
  

  HOA is $241, can I stop that when I stop paying the mortgage.

  You are personally responsible for HOA dues, and they can get a judgment against you even if you lose the home. Most people continue to pay HOA dues until they are no longer the legal owners of the property.

  Can I take the appliances? W/D, dishwasher, stove, microwave, and A/C?

  This is a gray area. Things that are "installed" in the house are generally a no-no (like the range, dishwasher, A/C), and the bank can come after you for "waste" even if your loans are non-recourse.
  "unattached" stuff like the W/D, fridge, etc. are generally assumed to be yours to take.

  When should I move out?

  Totally up to you. Until the property is out of your name you are legally responsible for any damage/vandalism, so in many ways it's advantageous to stay until the bitter end. Not to mention the free rent and possibility that they will offer you cash to vacate after the trustee sale (I was just offered $5,000 to voluntarily leave the premises in a neat and orderly condition within 30 days).

  Will my Loan references get harassed by calls. Do I need to call them to warn them?

  Possibly, yes, depending on how aggressive the bank is. We didn't have this happen to us, but several others have.

Good luck to you whatever you decide.

[noespahm]

Thanks for the info.

How long did it take from when you first stopped the payments to Sep? This is scares the hell out of me


Did you use a lawyer? if so, how much did they charge. I'm afraid of making a mistake that may cost me more $$.

[knownick]

Originally Posted by noespahm

Thanks for the info.

How long did it take from when you first stopped the payments to Sep? This is scares the hell out of me


Did you use a lawyer? if so, how much did they charge. I'm afraid of making a mistake that may cost me more $$.

Our first missed payment was November 2008, house was sold September 1, 2009.

We didn't retain a lawyer's services, but did pay to consult with one for an hour. We brought our loan paperwork and a list of questions which she answered. She left us with a decent understanding of the law and how it would pertain to our situation. I think it was $150 for the hour, and it was money well spent - if for no other reason than it put our minds at ease.

[Sparky06921]

Quote:

• 200k taxable income in California

• This may not actually be the case. Definitely talk to an experienced CPA about this, but there's some question as to whether or not there is actually any "forgiven" debt on a non-recourse loan, since their only recourse is to take back the house.

Knownick- Since your house just sold in September, are you expecting a hefty tax bill from CA this year or do you even know yet?

Considering all of the forclosures that I've read about on here in Cali this year, I'll be curious to hear about everyones experiences come April 15th.

Thanks

[knownick]

Knownick- Since your house just sold in September, are you expecting a hefty tax bill from CA this year or do you even know yet?

We are not "expecting" one but are prepared for it should that be the case. As I understand it you can also avoid taxes on forgiven debt by proving insolvency (debts > assets), which we should have no problem doing.

[ultimate4799]

Originally Posted by knownick

Our first missed payment was November 2008, house was sold September 1, 2009.

We didn't retain a lawyer's services, but did pay to consult with one for an hour. We brought our loan paperwork and a list of questions which she answered. She left us with a decent understanding of the law and how it would pertain to our situation. I think it was $150 for the hour, and it was money well spent - if for no other reason than it put our minds at ease.

Hey Knownick, just curious, when did you move out to a rental home? Did you do it as soon as you got the NOS with sale date(Sept 1st)? It seems you were able to rent free for almost a year, ha... Reason is my spouse and I are debating if we got to move out now or wait till the last minute and negotiate $$$forkeys..

[knownick]

Originally Posted by ultimate4799

Hey Knownick, just curious, when did you move out to a rental home? Did you do it as soon as you got the NOS with sale date(Sept 1st)? It seems you were able to rent free for almost a year, ha... Reason is my spouse and I are debating if we got to move out now or wait till the last minute and negotiate $$$forkeys..

We started looking for a place once we got the NOS. As it turned out we ended up signing a lease on a place we liked in the right neighborhood that started the 5th of Sept. We moved most of our stuff on the 6th.

Seems we could have easily stayed another 2-3 months past the sale date, but hindsight is always 20/20. We heard absolutely nothing from the bank about "vacating" the premises until Tuesday of this week (September 27). That's when they offered us the cash for keys deal - $5000 if we were out within 30 days of the notice, $3500 if we were out within 31-60 days. So really we could have stayed until the end of November, saved three more months of rent, AND gotten $3500 to boot.

Ah well. Can't win them all I guess. Given the incentive that the banks have to get you to leave amicably, I'd recommend that everyone in this situation stick it out as long as possible. It can be very lucrative. From the time we stopped paying, we managed to save back ALL of our down payment plus an extra $10,000 or so assuming the C4K deal closes next week. One bright spot in this mess that we called homeownership.

[roa625]

Originally Posted by knownick

We started looking for a place once we got the NOS. As it turned out we ended up signing a lease on a place we liked in the right neighborhood that started the 5th of Sept. We moved most of our stuff on the 6th.

Seems we could have easily stayed another 2-3 months past the sale date, but hindsight is always 20/20. We heard absolutely nothing from the bank about "vacating" the premises until Tuesday of this week (September 27). That's when they offered us the cash for keys deal - $5000 if we were out within 30 days of the notice, $3500 if we were out within 31-60 days. So really we could have stayed until the end of November, saved three more months of rent, AND gotten $3500 to boot.

Ah well. Can't win them all I guess. Given the incentive that the banks have to get you to leave amicably, I'd recommend that everyone in this situation stick it out as long as possible. It can be very lucrative. From the time we stopped paying, we managed to save back ALL of our down payment plus an extra $10,000 or so assuming the C4K deal closes next week. One bright spot in this mess that we called homeownership.

knownick,
my trustee sale is tomorrow.can you tell me or anyone on here how much estimatable time i have before i get kicked out.i appreciate all feedback
i was thinking of emergency BK-ing,to stay longer

[sharona]

Originally Posted by roa625

knownick,
my trustee sale is tomorrow.can you tell me or anyone on here how much estimatable time i have before i get kicked out.i appreciate all feedback
i was thinking of emergency BK-ing,to stay longer

Roa625,

I would start negotiating with the lender now. I know a lot of people wait until after the sale but not all lenders offer cash for keys. Also you don't want an unlawful detainer(eviction) on your record. Nobody will rent to you. Three days after the sale date they can start the eviction process.

I thought this link was a good article.

Good Luck!

Cash for Keys: Why Banks Pay Homeowners to Move Out

Sharona

[roa625]

Originally Posted by sharona

Roa625,

I would start negotiating with the lender now. I know a lot of people wait until after the sale but not all lenders offer cash for keys. Also you don't want an unlawful detainer(eviction) on your record. Nobody will rent to you. Three days after the sale date they can start the eviction process.

I thought this link was a good article.

Good Luck!

Cash for Keys: Why Banks Pay Homeowners to Move Out

Sharona

sharona,
thanks for the 411.
i guess tomorrow a.m ill call the lender and start negotiating cash for keys.
i was considering a 911 BK,but i hear it runs about 3000-3500.
also another thing..i have a servicing company,and they were real jerks when i tried to negotiate a loan mod with these people.
and how do i approach them regarding c4k?appreciate your feedback thx

[roa625]

Originally Posted by sharona

Roa625,

I would start negotiating with the lender now. I know a lot of people wait until after the sale but not all lenders offer cash for keys. Also you don't want an unlawful detainer(eviction) on your record. Nobody will rent to you. Three days after the sale date they can start the eviction process.

I thought this link was a good article.

Good Luck!

Cash for Keys: Why Banks Pay Homeowners to Move Out

Sharona

sharona,
thank you for your input.
now, how do i approach my lender with this c4k process?
this servicing company are real jerks and have had problems with them in the past.im pretty sure they wont budge..
thx appreciate all feedback

[Irish Gal]

knownick,

Who were your lenders? Love how your story played out for you, made deposit back, plus $10k, etc. That's great. Best of luck to you and your family and thanks for sharing, esp. all the details re finalizing everything, cash for keys amount, etc.

Also, for the newbies, you may want to do a search here on Professor Shays posts in the Deed in Lieu/Foreclosure thread. He's a foreclosure expert (ex CA atty) and educated many here on how to walk while protecting yourself in the process. He always advised to seek legal counsel experienced in real estate and debt collection practices in the state where property located before you make any major decisions on which route to take.

Good luck!

[sharona]

Originally Posted by roa625

sharona,
thank you for your input.
now, how do i approach my lender with this c4k process?
this servicing company are real jerks and have had problems with them in the past.im pretty sure they wont budge..
thx appreciate all feedback

I would call and tell them what your hardship has been (loss of job, ect) and ask for more time to move and money for moving costs. Be nice when doing so and emphasize your hardship.

I will be doing the same thing in about 4-5 weeks. Let us know how things turn out.

Good luck!

Sharona

[knownick]

Originally Posted by Irish Gal

knownick,

Who were your lenders?

Wells Fargo for both first and second. They owned the second, and serviced the first (Freddie Mac was the investor on the first).

ALL of my post-foreclosure correspondence has been with Freddie Mac (their contracted real estate agents and attorneys) and NOT Wells Fargo. This has been the saving grace. WFB was nothing but trouble right up till the bitter end, but once the place sold, it wasn't their problem any more.

Still waiting to see what the second loan is going to do (if anything). It should pretty clearly be non-recourse. They called once after the trustee sale to ask what was going on and I told them the place sold. They asked "and this was a purchase money loan?" I said yes. They said thanks and hung up. Haven't called back since.

While the silence is nice, I have a feeling that won't be the last I hear from them.

[knownick]

Originally Posted by roa625

knownick,
my trustee sale is tomorrow.can you tell me or anyone on here how much estimatable time i have before i get kicked out.i appreciate all feedback
i was thinking of emergency BK-ing,to stay longer

There seems to be a very wide range of how things play out from the point of the sale. I think it depends a lot on who your lenders are and who purchases the house at the auction. A non-bank investor might want you out immediately and start eviction proceedings the same day. If it reverts back to the bank during the trustee sale, they might be more interested in taking their time and getting you to leave under favorable conditions.

One thing to note is that at least in my experience once the trustee sale was completed, I was dealing with the INVESTOR on my loan (Freddie Mac in my case), not the servicer.

If my experience is indicative, those with Freddie Mac loans are in a very good position in terms of either staying in the property for a period of time or getting a nice C4K "relocation assistance" payment to vacate. They even offered to let us lease the place short-term at market rate (thanks but no thanks).

I'd sit back and wait for someone to come around after the sale and see what's going on. We were contacted by a Real Estate agent representing Freddie Mac 2 days after the sale.

[sharona]

[QUOTE=knownick;132827]There seems to be a very wide range of how things play out from the point of the sale. I think it depends a lot on who your lenders are and who purchases the house at the auction. A non-bank investor might want you out immediately and start eviction proceedings the same day. If it reverts back to the bank during the trustee sale, they might be more interested in taking their time and getting you to leave under favorable conditions.

One thing to note is that at least in my experience once the trustee sale was completed, I was dealing with the INVESTOR on my loan (Freddie Mac in my case), not the servicer.

If my experience is indicative, those with Freddie Mac loans are in a very good position in terms of either staying in the property for a period of time or getting a nice C4K "relocation assistance" payment to vacate. They even offered to let us lease the place short-term at market rate (thanks but no thanks).

I'd sit back and wait for someone to come around after the sale and see what's going on. We were contacted by a Real Estate agent representing Freddie Mac 2 days after the sale.[/QUOTE]

Knownick,

Good for you on your deal!

You are so lucky you have Freddie Mac. My lender is a "private investor", whatever that means. I don't have the nerve to leave things to chance like that. With my luck I would get the 3 day eviction notice and no cash for keys. I am going to ask for 5k and start negotiations a week before the sale date. Do you know how I can find out who the lender is? My servicer won't tell me.

Sharona

[roa625]

Originally Posted by knownick

There seems to be a very wide range of how things play out from the point of the sale. I think it depends a lot on who your lenders are and who purchases the house at the auction. A non-bank investor might want you out immediately and start eviction proceedings the same day. If it reverts back to the bank during the trustee sale, they might be more interested in taking their time and getting you to leave under favorable conditions.

One thing to note is that at least in my experience once the trustee sale was completed, I was dealing with the INVESTOR on my loan (Freddie Mac in my case), not the servicer.

If my experience is indicative, those with Freddie Mac loans are in a very good position in terms of either staying in the property for a period of time or getting a nice C4K "relocation assistance" payment to vacate. They even offered to let us lease the place short-term at market rate (thanks but no thanks).

I'd sit back and wait for someone to come around after the sale and see what's going on. We were contacted by a Real Estate agent representing Freddie Mac 2 days after the sale.

knownick,
thanks.my home sold to the beneficiary??
is that the bank who bought the property?
ill play by ear tomorrow and find out who purchased the property.
im thinking ill be getting a call from an REO soon,too.
i hope they offer c4k.i called the servicer today and he stated they dont handle ther c4k another dept does.so im hoping for the best.

[roa625]

[QUOTE=sharona;133005]

Originally Posted by knownick

There seems to be a very wide range of how things play out from the point of the sale. I think it depends a lot on who your lenders are and who purchases the house at the auction. A non-bank investor might want you out immediately and start eviction proceedings the same day. If it reverts back to the bank during the trustee sale, they might be more interested in taking their time and getting you to leave under favorable conditions.

One thing to note is that at least in my experience once the trustee sale was completed, I was dealing with the INVESTOR on my loan (Freddie Mac in my case), not the servicer.

If my experience is indicative, those with Freddie Mac loans are in a very good position in terms of either staying in the property for a period of time or getting a nice C4K "relocation assistance" payment to vacate. They even offered to let us lease the place short-term at market rate (thanks but no thanks).

I'd sit back and wait for someone to come around after the sale and see what's going on. We were contacted by a Real Estate agent representing Freddie Mac 2 days after the sale.[/QUOTE]

Knownick,

Good for you on your deal!

You are so lucky you have Freddie Mac. My lender is a "private investor", whatever that means. I don't have the nerve to leave things to chance like that. With my luck I would get the 3 day eviction notice and no cash for keys. I am going to ask for 5k and start negotiations a week before the sale date. Do you know how I can find out who the lender is? My servicer won't tell me.

Sharona

sharona,
im on the same boat (private investor)
im thinking just like you and waiting for that notice.
but today i called the servicer and they stated they normally give people 30 days or so.
so im hoping for that at least and c4k as well. good luck
its almost over! im asking for 5k also,im gonna tell thell them its not that easy..
moving is one thing i dread.

[sharona]

[QUOTE=roa625;133027]

Originally Posted by sharona

sharona,
im on the same boat (private investor)
im thinking just like you and waiting for that notice.
but today i called the servicer and they stated they normally give people 30 days or so.
so im hoping for that at least and c4k as well. good luck
its almost over! im asking for 5k also,im gonna tell thell them its not that easy..
moving is one thing i dread.

Good luck Roa! I am definetly hoping the best for you! It's good to know they usually give 30 days. Make sure you tell them how hard it has been for you and you will need moving costs ect...

Please keep in touch and let us know what happens.

Sharona

[roa625]

[QUOTE=sharona;133047]

Originally Posted by roa625

Good luck Roa! I am definetly hoping the best for you! It's good to know they usually give 30 days. Make sure you tell them how hard it has been for you and you will need moving costs ect...

Please keep in touch and let us know what happens.

Sharona

thanks and same to you.
i hope all goes well also.
ill keep everyone posted.

[roa625]

[QUOTE=roa625;133052]

Originally Posted by sharona

thanks and same to you.
i hope all goes well also.
ill keep everyone posted.

its been 4 days and i havent heard a thing.im gonna contact the servicer and monday and see whats going on.im surprised nothing yet.

[Sparkss]

Originally Posted by joe84780

Quote:

• This may not actually be the case. Definitely talk to an experienced CPA about this, but there's some question as to whether or not there is actually any "forgiven" debt on a non-recourse loan, since their only recourse is to take back the house.

I had posted about AB1580 which appears to align CA tax code w/ the Federal Tax Code.

Originally Posted by Sparkss

I had read in the SF Gate paper that AB 111 and SB 97 were both dead, but that AB 1580 had similar provisions aligning Ca tax code with the Federal code for exemptions : Those who lose homes may face state tax hit

I checked and AB 1580 was voted on Friday. The unoffical ballot showed it passing by a 50% margin (44 for, 30 against) : AB 1580 Assembly Bill - Vote Information

I do see however that 1580 was amended before it was voted on, but after that article in the SF Chronicle. I have not grabbed the full text of the bill to see what changed and/or what it means for those of us going through foreclosure, but maybe someone more versed in leagalese can check it out and interpret it for us ? I also don't know what other steps are required before that bill gets signed into law, so there could be more bumps along the way, I suppose ?

I checked the last history and it shows the bill on the Governors desk : AB 1580 Assembly Bill - History

BILL HISTORY
2009
Sept. 28   Enrolled and to the Governor at   4 p.m.
Sept. 10   Senate amendments concurred in.  To enrollment.  (Ayes 44. Noes 30.	Page  3304.)

[homesweethome]

I got my first offer for cash for keys, $1,000 for leaving Oct. 31st, I told them no deal, I would like to negotiate $5,000 90 day move out, that at least gets me through the holidays. If I have to fight an eviction, I am prepared.