Another possible walker from Washington State.

[Hondo]

Hey guys. I've been lingering for a few days and thought I'd finally chime in. I first off want to say thank to everyone in the forum, the last two days of reading thread after thread has been incredibly informative and inspirational. Particularly to my fellow Washitonians Magic beans and Izzle, your threads have been very helpful, so thank you. Hopefully you guys can help me out further.

My wife and I are considering a strategic foreclosure on our home here in the south sound. We bought it in the summer of 2007 (lucky us) and currently owe around $190k. Other units in our complex are currently selling for around $80k, so for us "under water" is an under statement. We have one loan with no refi, originally through Countrywide, which of course is now BofA. We are current on all our payments and have good credit, but are willing to sacrifice that in order to get out. At this time, I want to say that we are about 90% sure that a strategic foreclosure is what we want to do, but we're still kind of on the fence. Our next payment is due in about a week and I'm starting to feel the pressure.

So a few of our questions/concerns are:

In Washington state does a lender have to do a non-judicial foreclosure if there's a "power of sale" clause in the mortgage, or is that what they're just more likely to do?

Can my PMI company come after me, or do they fall under the same "non-recourse" laws as the lender?

At what point, if any, do you open up communication with the lender? Or do you just ignore them through the whole process?

And lastly, Lawyers. I've been thinking about seeking one out, but from some of the threads I've read it seems that they often try to talk you out of "strategic default," or basically tell you what you already know. Opinions? Is it worth it?

Anyway, I'm going to continue reading and hopefully answer some of these questions on my own, but until then any help would be appreciated. Thanks again.

[bythebay]

We are in an almost identical situation and so I am very interested to see replies to this post. We have all the same questions. We bought a house in N. Kitsap (WA state) for $341 in 2007 that is now worth $229. We have 2 mortgages through the same lender, one is a balloon. Since it was used to purchase the home, the balloon loan should be considered "purchase money" and thus be also covered by non-recourse but we're not sure.

RE: At what point, if any, do you open up communication with the lender? Or do you just ignore them through the whole process?
We bought the house with the intention of fixing it up. We had big plans. But as the home has lost so much value we have stopped our progress. I wish the banks were smart and would negotiate with us to reduce the principal to current value and have us sign a contract with us requiring in exchange we do the specific work on the house it so desperately needs. In the end the house would be worth more once repaired and they would turn a profit. But alas we are only a number and such negotiations would require banks to think outside the box.

RE And lastly, Lawyers. I've been thinking about seeking one out, but from some of the threads I've read it seems that they often try to talk you out of "strategic default," or basically tell you what you already know. Opinions? Is it worth it?
So we are thinking strategic default at this point to cut our losses and pay less in rent. We've opened channels to a lawyer (friend of ours) who specializes in short sales but indicates he can help us in this matter. I am curious to see if he tries to steer us towards short sale. I'm not sure we want to go that route as I've been reading about how if the language isn't carefully constructed lenders may be able to insert collection clauses to pursue you later - more easily than with default. I would like to better understand short sale versus strategic default and will be seeking the second opinion from a different lawyer to make sure the advice is sound.

[gettinout]

Hi Hondo, I'm also strategically defaulting in Washington state and have a thread going on the process.

In Washington state does a lender have to do a non-judicial foreclosure if there's a "power of sale" clause in the mortgage, or is that what they're just more likely to do?

The power-of-sale clause allows them to do a non-judicial foreclosure but it does not force them to. The lawyer I saw said that it is 99.99% certain that a lender will go the non-judicial route.

Can my PMI company come after me, or do they fall under the same "non-recourse" laws as the lender?

I don't know the answer to this definitively, but I would think PMI falls under the same category as second: recourse. We only have a single loan but I have to say, watching stories on the forum unfold, settling recourse loans for a fraction of what's owed seems very possible and much less daunting than I would have thought at the outset. I think once you adjust your frame of mind and just don't give a damn, you've turned the tables on a debt collector. See TomEason's sticky:

Strategy for Settling Your 2nd

At what point, if any, do you open up communication with the lender? Or do you just ignore them through the whole process?

I talked with mine twice, about 6 months apart, once by accident, once by design. Both times it was generally pretty useless and unnecessary and only mildly informative. Frankly, I see no reason to ever talk to them, especially if the loan is non-recourse. The whole process will proceed on its own. You may have to talk to the PMI people eventually to settle, but there' no rush.

And lastly, Lawyers. I've been thinking about seeking one out, but from some of the threads I've read it seems that they often try to talk you out of "strategic default," or basically tell you what you already know. Opinions? Is it worth it?

We talked with a lawyer and she was very blunt. Walk away, she said. Don't bother talking to the bank, they don't care, short selling in this economy? forget it. DIL? The bank does not want your condo. Want to leave town? so go. The whole meeting consisted of us coming up with these grandiose ideas of how we might magically and painlessly resolve the situation. She disabused us of every one. Frankly, it was refreshing and it was the push we needed. Don't know about other lawyers, but she was no nonsense: Your f'ed, get over it and move on. So we did.

[confusedinseattle]

Hi Hondo,

I don't have my own thread, but have posted several times on Magic Bean's thread. Very similar situation to you here in Washington, and started my walk in February. I have a few answers to your questions from my own research, but would advise to still seek the counsel of an attorney for your own piece of mind. I did, and it was well worth the $250.

In Washington State the lender does have the option to pursue judicial foreclosure. However, what I have been told (and seems to be true from first hand accounts) is that they choose the non-judicial route in the vast majority of foreclosures. My lawyer told me that he has only seen one go judicial, and that the person they went after had millions of dollars in liquid assets. So if that does not sound like you, AND you only have the one loan, you are likely going to be foreclosed non judicially, with no possibility of deficiency judgement.

I also have PMI and was very worried about that. Again, my lawyer said that the PMI company 'steps into the shoes' of the lender. Thus if the lender cannot pursue for a deficiency, neither can the PMI company.

I have not talked to the lender once since starting my walk. They have called multiple times - especially at the beginning, but I just had the number forwarded through Google Voice and never picked them up. If you have no desire to modify, or to keep your home, then there is no point to talk to them. They are not, repeat not, your friends

Hope that's helpful! In terms of timeline, I'm five months into my walk and no official NOD (thought I had received it, but wasn't actually it). It looks like in Washington it's taking about 9 months - 18months from start to finish depending on your lender and other factors...

Best luck in whatever you decide to do - the hardest part for me was making the decision.
ConfusedinSeattle

[Hondo]

Thanks guys, the info so far has been great and much appreciated.

Gettinout, I've read your thread on your experience and it's been helpful. I too will have an HOA to deal with, but the dues aren't that high, so I plan on keeping them current. But it's definitely something else to think about.

Another question, At what point in the foreclosure process do you know whether or not your lender is pursuing a non-judicial foreclosure.

Thanks again.

[Cat Damiano]

Hondo,

You can check your loan documents to determine this.

Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".

Washington State Foreclosure Law



As far as an attorney goes, we can not recommend specific attorneys here on the forum but can point you in the direction of where to look, you would need to do a search through a lawyer referal:

Find Legal Help

National Association of Consumer Advocates | Consumer Protection Advocates and Attorneys - Help for Consumers

[Hondo]

Sorry about the referral request. I did read through the rules, but I might have missed something.

As for the link you've posted I've read it several times and from what I understand It's when you receive the "notice of sale" that you know the foreclosure is non-judicial. Hopefully I have that clear.

It was that same page though, that gave me the impression that the bank has to go non-judicial if there's a "power of sale" clause, but that doesn't seem to be the case.

[Cat Damiano]

It would be referencing your original loan docs. Have you checked the "power of sale clause" in your deed of trust?

[Hondo]

I have checked....several times actually, but every time I read it I get more confused. I think i need a break, I've been researching this for three days straight, and I'm starting to go a little crazy.

[Cat Damiano]

I completely understand. You may be able to contact a real estate attorney to clarify as well. They may be able to answer the question with a call.

[gettinout]

At what point in the foreclosure process do you know whether or not your lender is pursuing a non-judicial foreclosure.

Well I suppose the lender can change their mind at any point and initiate a law suit to go the judicial route, but I'd say, and this is just me speculating, that once your lender sends your file to a trustee (rather than a law firm), it's a good bet they'll go non-judicial. There's no way of knowing when this happens (we found out b/c our lawyer knows somebody at Northwest Trustee who confirmed they have our file.

Certainly, once they send you a notice of trustee sale, they're indicating their intention to go the non-judicial route. They could always cancel and switch I think but it's unlikely.

Like you, I was initially worried about whether they'd go judicial or non-judicial, but what ended up being the real thorn in my side was the HOA. My point is, whatever you think the thorniest part of the process will be, it could very well be something else entirely. Just keep your eyes peeled. I must think a hundred times a day, if only I'd been so careful in buying the condo in the first place, I'd never have gotten myself into this mess.

[Hondo]

Talking with a lawyer tomorrow. I'll post an update with any new info I find out.

[Hondo]

Talked to a real estate lawyer today, and he basically confirmed what we've already learned here.

-The lender could sue for a deficiency, but wont. Same for the PMI company.
-There's no point in communicating with the bank.
-They have the option to pursue a Judicial foreclosure all the way up to the trustee sale.
-Another reason they don't often pursue a judicial foreclosure is because even when they win the case the borrower could file for bankruptcy, and they'd still end up with nothing.

The only negative take away I have from the meeting is that he said in his experience condos take longer to foreclose, because the lender has less incentive to take them back. He said that we could very possibly be into 2013 before the trustee sale could take place. This would of course mean that the tax relief act would be expired and we would have to pay taxes on the debt forgiveness.
Oh well.

My first missed payment will be this Friday, July 1.

[gettinout]

This would of course mean that the tax relief act would be expired and we would have to pay taxes on the debt forgiveness.

This is actually a question that is not settled in my opinion. For a single residential loan that that goes through a non-judicial foreclosure and is, therefore, non-recourse, the IRS says there is no cancellation of debt:

Home Foreclosure and Debt Cancellation

"A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral.That is, the lender cannot pursue you personally in case of default.Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income."

That said, there are others with a different interpretation on this topic and even if I'm right, that might not stop the lender from sending a 1099C. If that happens to me, I plan to write to the lender informing them of their error. When I file my taxes that year, I do not plan to declare the 'income' and if the IRS comes-a-callin', I will point them to their own website.

I've posted in many of the forums where I could find discussions on this topic. Some of these posts have additional links to varying interpretations, if you search on my posts (or mortgage forgiveness debt relief act), you could find these other threads fairly easy.

[Hondo]

From the same page-

3. I lost my home through foreclosure. Are there tax consequences?

There are two possible consequences you must consider:

• Taxable cancellation of debt income.(Note: As stated above, cancellation of debt income is not taxable in the case of non-recourse loans.)

Sounds pretty straight forward to me. Thanks for bringing that to my attention, it takes a lot of the worry out of the situation.

[SunkenCondo]

Hello all. I have been going over many situations here. We are looking at walking away from a WA condo that is under by $55k. Many people say they can "afford" the payments but it is a sink hole for money. I havent seen anyone really discuss their worries about the lender "seeing" or finding out their net worth. In addition to the WA condo rental (under my wife's former name), we have our primary residence in CA (both our names on deed) and another CA rental (my name only). If we walk from her condo, will B of A be smart enough to see that there are other loans under her name (and mine since I am her husband)? All three are w/ Bof A. What about savings/retirement/taxable brokerage accts? Anyone else worried about the lender using this as a means to go after a judicial foreclosure and sue for $$?? I look forward to anyones response! Thanks!

[Hondo]

No longer a "possible" walker, I missed my first payment on the first. It's only been six days, so no phone calls or letters yet, but I'm sure they'll be coming in soon. Thanks to everyone on this site for all the help. I'll keep everyone updated as the process goes along.

[izzle]

Welcome to the "club"....

In case you are interested. I am walking in Washington too.

My Walk, Vancouver WA, Provident Funding 1st, BOA 2nd

I have tried to keep things up to date on my thread....

[thomaspaine]

Hello all. I have been going over many situations here. We are looking at walking away from a WA condo that is under by $55k. Many people say they can "afford" the payments but it is a sink hole for money. I havent seen anyone really discuss their worries about the lender "seeing" or finding out their net worth. In addition to the WA condo rental (under my wife's former name), we have our primary residence in CA (both our names on deed) and another CA rental (my name only). If we walk from her condo, will B of A be smart enough to see that there are other loans under her name (and mine since I am her husband)? All three are w/ Bof A. What about savings/retirement/taxable brokerage accts? Anyone else worried about the lender using this as a means to go after a judicial foreclosure and sue for $$?? I look forward to anyones response! Thanks!

SunkenCondo -

Your credit report does not list assets - only liabilities and a limited subset of public information about you. You can easily see this if you pull your own file. I verified this on my own credit reports. The credit bureaus do attempt to guess at your income - but that may or may not be correct. I know people that make a ton of money and drive old hondas, and new grads with nominal jobs that have leased new Audis.

If you bank with the same institution that services your loan you may want to move your money to another institution. You should also look at your loan docs to see if there is a concept of cross collateral if there is see an Attorney - NOW.

The other info the loan service may have is the assets you used when you applied for the loan - but they do not magically know of other assets you gained if it is not in their institution. There are legal means they can use to get this information - most of which would end up with them filing a complaint in court and you receiving a summons. This again them money and time - there needs to be a motivating reason to dig deeper and you go back to the assets that the servicer is already aware of, and more than likely in relation loan in question IE did you list it as an asset whey you got the loan?

Retirement accounts are generally exempt from collection. Savings and investment accounts are generally not treated as an exempt asset - but you really need to talk to a local attorney or CPA for confirmation for your own case.

You mention that the property is in WA - I know in the King County area you can look up deeds of trust, notices of trustee sales, etc online and there are many examples of a NoTS being filed where there is the appearance of multiple assets - IE they notices were sent to multiple addresses, or a company received the NoTS etc. As you are probably aware in WA they have three options - Trustee Sale (cheap and fast - no deficiency allowed. You can read RCW 61.24) Judicial Foreclosure (costs time and money) or Sue on the note (Again costs time and money). To add to it the Servicers are judged by the efficiency in which they foreclose - especially with Fannie or Freddie guaranteed loans - so time is of the essence. They will actually get paid less if it takes too long. (TIME is MONEY) . In the state of WA the law is written in such away that lenders prefer to use the non-judicial foreclose unless the believe you have a lot of liquid assets. BTW - real estate is NOT a liquid asset - what would the lender get if the pursued the other homes? Yet another foreclosure? This is just another REO for them..... And finally if they due pursue you and get a deficiency judgment what they have is a unsecured - you can potentially address with bankruptcy, settlement - etc. So after all that time in court, the money spent, the lender has a home with a 1 year right of redemption (In WA w/judicial FC) so they cannot sell it, have to pay the taxes and utilities on it, and they may still not get a dime other than what it sells for.......

And remember - there is nothing more expensive than cheap legal advice. Seek out an Attorney to help you properly gauge your risk - since you are in CA you may have to do it over the phone as state laws can be wildly different, and an Attorney in CA may not have any idea of the laws in WA.

[Hondo]

*undate*

7/1/2011 -First missed payment
7/14/2011 -First phone call from bank
- they seem to be calling everyday around 7pm
7/21/2011 - now getting two calls a day.
- haven't answered any of them.

[Hondo]

*update

7/1/2011 -First missed payment
7/14/2011 -First phone call from bank
- they seem to be calling everyday around 7pm
7/21/2011 - now getting two calls a day.
- haven't answered any of them.
8/03/2011 Just passed month one and the calls have mysteriously stopped.

[Hondo]

*update

7/1/2011 -First missed payment
7/14/2011 -First phone call from bank
- they seem to be calling everyday around 7pm
7/21/2011 - now getting two calls a day.
- haven't answered any of them.
8/03/2011 Just passed month one and the calls have mysteriously stopped.

9/10/11- Received first letter from BofA requesting a meeting to discuss a possible loan modification...yeah right. I guess I have to call by a certain date to be eligible and I need to be prepared with my monthly pre-tax income to ease the process.

[cgpjs]

9/10/11- Received first letter from BofA requesting a meeting to discuss a possible loan modification...yeah right. I guess I have to call by a certain date to be eligible and I need to be prepared with my monthly pre-tax income to ease the process.

This might be the letter they are now required to send, per the Foreclosure Fairness Act which took effect 7/22/11, before they can issue NOD. If you're wanting to stay in your home without paying, this buys you extra time.

[Hondo]

08/18/2011- received a letter today from BofA stating that our new servicer will be green tree servicing llc starting at the beginning of next month. Has anyone dealt with these guys?

[underwaterinWAstate]

08/18/2011- received a letter today from BofA stating that our new servicer will be green tree servicing llc starting at the beginning of next month. Has anyone dealt with these guys?

Green Tree is the absolute bottom feeder of all servicers. Just type Green Tree in the search box and you will see. They call me after day one of a missed payment even though it's not late until after the 15th.
they are the reason we feel so stuck on our house. If we only had a first we would have walked years ago. But due to our 80/20 we are SOL!

[llbreaze1]

08/18/2011- received a letter today from BofA stating that our new servicer will be green tree servicing llc starting at the beginning of next month. Has anyone dealt with these guys?

I received the same letter from BofA - Greentree will be the servicer effective 09/01. I'm 90 days late on my 1st with BofA and posted a poll thread here: Who has had BofA 1st transferred to Green Tree?

[Hondo]

8/22/2011- received notice of intent to accelerate.

-It feels like we're moving right along. Although I wouldn't mind staying here mortgage free for up to the full year (July,2012), getting this over with and moving on sounds good too.

[Cathy34]

Hi Hondo,

I'm in Maryland, but on the same timeline as you. July 1 was our first missed payment. We have BofA, still. According to Sailordude's possible timeline, you are right on track. I, too, was expecting my NOI by today because the 17th of August was how it worked out with the timeline (the timeline is based on the fastest possible track). So far, no NOI, but it could still be coming.

Thanks for keeping the updates coming.

[sw wa bill]

Hi Hondo and everyone
I too started my "walk away" the first of May just a month earlier. Still no NOD. I was a Jumbo Loan so not under the rule of the fannie or freddie. I sent a letter to B of A requesting all contact be in written form. I do by USPS receive late payment notices but nothing else. Under water by more than 180k. At 56 I'd be dead before I got close to even breaking even. I'm now just saving the 4400 monthly payment. I am also walking away from more than 350K in my initial investment in 07. Loan started with local bank then to Countrywide and now B of A. Real estate appraiser says my value is less than half of original appraisal. Sale attempt at 60 % of original value brought not one customer.

[Hondo]

Started receiving calls from green tree, after I blocked their number they started calling my inlaws......Those bastards.

[Hondo]

Had someone from Greentree knock on my door today, I didn't answer. They left a flyer saying that we urgently needed to contact them.

[Hondo]

Got a letter from Green tree, who is servicing my loan now, stating that they want proof of home insurance, and that we need to provide it within 45 days. If we don't they'll get their own insurance which we'll be responsible for paying for. Is this normal? And should I respond? We still have insurance, So that's not a problem, it's just that I'd like to continue in not communicating with them. Should I break my silence for this, and can they really pursue me for their insurance.

[stephanies]

SW WA bill - when did you get your Notice of Intent? And have your received your NOD yet? We are interested in seeing if B of A is following the new foreclosure process laws of washington state, which is suppose to include a "meet and Greet' letter before the NOD. Thanks!

[thomaspaine]

Got a letter from Green tree, who is servicing my loan now, stating that they want proof of home insurance, and that we need to provide it within 45 days. If we don't they'll get their own insurance which we'll be responsible for paying for. Is this normal? And should I respond? We still have insurance, So that's not a problem, it's just that I'd like to continue in not communicating with them. Should I break my silence for this, and can they really pursue me for their insurance.

It is my understanding that they will just add this amount onto the unpaid balance of the loan - which would then be wiped out in the FC event (for a first). I am not sure what would happen if a lender in the second position were to try this - since, in WA state, a second loan would become unsecured debt after the first loan forecloses.

[Hondo]

*update

10-13-2011- Notice of default delivered.

It looks like it's moving right along. I was really hoping to stay in the home until June or July, but at this rate I could be out by march. Oh well. Almost time to start packing.

[Hondo]

What the heck? Last week I receive the NOD, but then today I received a "WA Notice of Pre-Foreclosure Options" letter. It states that my right as a homeowner gives me 30 days to respond to the letter, and then 60 days to meet with my lender before an NOD may be issued. It also says that if I don't respond within 30 days A notice of default would be issued. Shouldn't I have received this over a month ago? I wonder if I should respond to the letter just get a few more months out of them.....hmmmm.

[OverandDone]

Was your NOD certified mail?

[Hondo]

Was your NOD certified mail?

Yes it was. USPS........

[OverandDone]

Yes it was. USPS........

Just sounds like they don't even know what they are doing you know?

[confusedinseattle]

Just sounds like they don't even know what they are doing you know?

They don't! Saw this and had to laugh a little. I'm a little over three weeks out from my sale date and last week I came home to a very large overnight express FedEx box from my mortgage servicer. Inside was a loan modification offer packet (with horrible terms... not that I wanted one anyways) asking me to sign and send in with financials right away (um... no thanks). BUT the best part was that the deadline to return it was September 1st. The date I received said package? October 12th.....

I'm guessing they spent about $30 to overnight me that box with outdated documents.... just couldn't make this stuff up if we tried!

Hang in there fellow Washington walkers!
ConfusedinSeattle