CW/BofA Short Sale now D-I-L in Florida

[CinFL]

First, I would like to thank all of you who have posted information here. I have been reading posts for about a year and this site has been tremendously helpful.

My brother has a $180K first mtg and a $25K 2nd - both with Countrywide/Bank of America in FL. His house cost $235K when he bought it three years ago but is probably worth about $65K now. He worked in construction and has been unemployed for 12 of the last 18 months. Even working fulltime he couldn't afford the adjustable rate CW loan without spending his savings and retirement keeping his mortgage current. After he lost his job and couldn't make payments he got me involved but by then he had no savings left. It was too late to do anything to help him since he was unemployed and so underwater - he couldn't qualify for a loan modification or anything.

Anyway, his last payment was more than 18 months ago and he's been trying to do a short sale that entire time. The foreclosure process was put on hold during this time but the collection calls continued. Through all of this, CW has told my brother that if he did a short sale they would forgive deficiency on both the first and second mortgage. The BofA collection callers also said that, but based on information from this site, we are doubtful. It'll be interesting to see what they do in the end as he has no assets left.

The Realtors started off with a listing price of $150K and reduced it 4-5% every 3-4 weeks until it got into the $65K range. They were trying to establish a listing history to validate a future selling price but in hindsight I think they were chasing the market values down.

We finally got an offer in early May but the buyers backed out after not hearing anything from BofA for more than a month. The house went back on the market, price dropped a little, got another offer in June, no response from bank for several weeks, buyers walked again. The house went back on the market, price dropped to $62K, got another offer in July. (Through all of these offers, the Realtor was calling the negotiator several times a week.) After a month of not hearing anything my brother started e-mailing Patricia Pikul. He e-mailed every week or two asking for her help getting something to happen on the Short Sale. After two months he told her that the buyers were starting to look at other houses (true) since they had heard nothing from the bank. As a result an expediter contacted him and asked him for updated financials, bank statements, etc. The expediter also got the appraisal completed two weeks later. We were really excited that FINALLY something was happening on the short sale as he'd been in phase 1 for months.

Well the appraisal came back with a value of $102K. The buyers can't afford it and the Realtors don't think they could get an FHA appraisal at that value anyway. So - another short sale has fallen through. They could challenge the appraisal by buying their own appraisal but the BofA review would take at least a month and there is no guarantee they'll change their value. By then the buyers would lose out on the first time homebuyer credit.

Anyway, I wanted to write to let people who are trying to do a short sale with BofA know that while their short sale processing timeline is 30-60 days per their website, you likely won't get any response from them for months. Their process is so ineffective that your data becomes obsolete waiting for them to look at your file again - my brother has submitted financials three times in the past 6-7 months.

Today we contacted the bank and asked that his loans be transferred to the Deed in Lieu department but now I see on this site a DIL is even less likely to happen than a short sale! If we can get a DIL, the appraisal and financials we've already submitted can be used for the DIL. But if they can't get the DIL going, they can just foreclose. And if they try to come after him for a deficiency judgement, he'll just file BK - he has no assets left anyway.

Sorry this is so long but I am hoping that something I have shared will help others as much as we have been helped by this site. And as the DIL progresses (or doesn't) I will post updates to let you know how we're doing. In the meantime, I would appreciate any input you have that might help us. BTW, we already have a real estate attorney to review any documents we'll get from BofA.

CinFL

[CinFL]

I called BofA today to inquire regarding the status of the DIL and was told that as of tomorrow, the loans are being transferred to a new servicer!(?)

They couldn't tell me who and said we should be getting a letter. Is this happening to any other Countrywide customers?

CinFL

[Riley18]

Bank of America is sending the mortgages to BAC which is a subsidiary of theirs. When you get the letter it will tell you when the switch will be made. Mine is set for November 16, 2009.

I thought it was just the "bad" mortgages, but a friend of mine is also being switched to BAC.

[CinFL]

Thank you, Riley18 - it's good to know where it is going!

[CinFL]

Well we found out today that Chase is the new loan servicer on the (originally Countrywide) loan first mortgage. We haven't gotten any info yet on the HELOC. But when I try to call the Chase customer care number, they have no record of the new loan number or SSN yet.

[CinFL]

Found out today the HELOC is still being serviced by Bank of America but they have transferred servicing of the first mortgage to Chase.

Each bank will analyze the property to determine if it saves money to accept a DIL vs. Foreclosure. If both say yes, they will each consider a DIL.

In order for Chase to consider a DIL the HELOC at B of A needs to be discharged first. I have been told that B of A will sometimes settle a 2nd mortgage for 10% of the unpaid principal balance in cash or 20% if they take a promissory note.

I am trying to figure out if it is even worth pursing this. We can file for BK for about $2K and that would flush all the credit card debt too. Credit is already destroyed due to 18 months of late payments; would BK be much worse? Should we continue to pursue the DIL?