Would like some input on my N. Cal situation

**NCali** · 07-09-2012, 08:38 PM

Hi All,

I am seriously thinking of walking away from my loan, beginning with Augusts payment and very much would like some thoughts on my situation:

Fundamentals:

Home in Vallejo Northern California
Bought in 2001 for 280k with both first and 2nd loans

Refi'ed 1st time in 2003 to a 30 yr fixed, 290k loan at approx 5.8%

Refi'ed again (current Loan) in 2/2004 for 300K at 5.42%. House may be worth 200K.

Currently owe 258K, and payments are $1988 per month, which include: $1688 - principle and interest, $204 - County Tax, $96 -Insurance

This 30 yr loan is with PHH sold by USAA. I have all my other accounts with USAA including auto loans, credits card, IRA, etc

And I also have an Equity Loan against the home, with USAA, with a balance of 20K. The original loan amount was 30K and the 10K was mostly spent on home improvements and debt consolidation.

I also have an auto debt of 13k and credit card debt of 18K.

I'm am employed and have been able to afford my payments, although with not much left over for savings/retirement.

My primary reasons for walking are that my home worth will not be high enough again, to where I can sell and move to a better/larger home. And I would like to get my kids into a better school system. In other words, I COULD stay and be in OK shape, but feel trapped in that this would be where I'd live out my life. This home was to be temporary while my three kids were young.

My primary questions are -

Since I'm not looking to renegotiate the loan, but just "move on", does this plan seem feasible overall? From reading the forums, I don't see many pitfalls.

Should I also stop paying the Equity Loan payments? And, if so, should I stop the 2nd loan first and then the primary loan payments after, as has been suggested? Or stop paying the 1st mortgage and then maybe the 2nd a little later. Given the equity loan is with USAA, with my other accounts, I think I'd like to "test the waters" first with PHH.

And, since I don't likely qualify for any relief, should I submit the HARP paperwork?

I don't fully understand the "recourse vs., non-recourse" and how it applies to my situation, and would appreciate some insight here, as well.

How about tax and insurance? Should I continue to pay during the whole process? I'm assuming so.

Thank you very much in advance, and if I'm missing important details - please let me know.

**jakelabry** · 07-10-2012, 05:50 AM

Just one detail I can think of - USAA will come after you with a vengeance. They do not mess around.

**NCali** · 07-10-2012, 11:40 AM

Thanks for the reply! I have read this about USAA on these forums.

The 1st is PHH but there still seems to be the USAA relationship and I access my account PHH mortgage info on USAA's site. But interestingly, I receive a letter a few week ago stating that USAA was separating this perceived relationship with PHH, to avoid this very confusion. With this in mind, I think I'll probably stop paying the PHH 1st and see how (or if) USAA reacts. My other thought is that USAA at some point would see the equity loan as unsecured and tell me to pay up, or start paying high-risk loan interest rates.

Does this seem correct, and has anyone else defaulted with PHH and had a USAA 2nd? It would be very helpful to know how it worked out.

**Pejutah** · 07-18-2012, 02:10 PM

Hi NCali,
I feel your pain around Vallejo. I started this whole ordeal last October...and just this week received NOD. I can totally sympathize with all of your feelings around the town/schools/having to spend the rest of your life here when that was never the intention...and the crime....agh!
There are a couple other good threads here on the site by folks that have left/are leaving Vallejo.
Check 'em out if you haven't already done so.
UnderwaterVallejo has a thread, as does WalkAwayMareIsland. Mine is Away we go from the Valley Joe to walk or not to walk..yet.
Obviously, I walked.
The difference between your loans and my own, is that since you refinanced, I believe (and someone can check me on this, but I'm pretty darned sure) they are recourse loans. TomEason, and some of the other truly wonderful moderator types would have a better grasp of all that, would know FAR more than I do. I certainly would not want to guide you incorrectly.
When I started it all, I consulted with an attorney versed in this sort of thing, and a tax guy. For my peace of mind, it was well worth the money...but I know a lot of folks on here just go for it without any kind of consultation and they seem to make out just fine.
in the end, you must take care of yourself.

**NorCalStroller** · 07-31-2012, 06:23 AM

Wow! We're in the same sorta place - we're north of Sacramento in Yuba County. Bought in 2007 for 279K, first with USAA (serviced by PHH) and second with USAA. I think we owe about 254K now. Value - per the USAA "What's my home worth" calculator on USAA.com - 109K.

All of our accounts have been with USAA (car loans, IRAs, insurance, credit cards, plus a secondary checking account) and we got that same letter from USAA about PHH now doing all the stuff. BUT when I stopped auto-pay last month and asked for a mail-in book, the address on the mail-in thing is still for USAA. Weird.

Here's what we've done so far:

For the past two years, we've been regularly requesting an interest rate reduction and they have steadfastly refused to do anything. Oh, wait. They did shave a quarter of a percent off the second loan, lowering my monthly payment by almost eleven dollars a month! This took fifteen hours of my time and approximately one month of calls.

Two weeks ago, I cancelled all USAA insurance policies and got insurance through GEICO (cheaper for the cars, too!!) House insurance is now through Travelers. I checked my escrow account and it has enough to cover the Dec property tax payment so I'm not worried about that.

USAA got all worried about us cancelling insurance - my husband has been with them for more than 20 years and his father has been with USAA for more than 40. In each conversation when we were asked why we were changing to GEICO, we told them, "You are screwing us on this interest rate. You spend millions in TV and radio and print advertisements now, but you won't do a damn thing to actually help an existing member who is active duty military. We don't want to do business with you." (have you noticed the uptick in USAA TV commercials???)

I'm moving our IRAs over to Vanguard (near as I can tell, they have the lowest rates and are even cheaper than USAA on trades and fees) later this week.

We even refinanced our car that was through USAA over to Navy Federal Credit Union - and we got a cheaper rate, plus $250 for refinancing with them!! I was an existing Navy Fed member and thus for "referring" my husband to them for the refinance of the car, he got $250 and I got $25.

Also, he has orders to North Dakota for October. I'm going to stay here to finish up work obligations (I do freelance contract stuff) and let the children finish the school year, plus avoid one ND winter!

I'm stopping paying this month. I hope to stretch this out to next June and then we'll be off to North Dakota. Now that California has this new "no foreclosure if you're working on a modification" law coming into effect in January, I think we'll be able to do this.

Lastly, in one last ditch effort to get them to do something, I was on the phone with a USAA mortgage rep and when I explained our numbers, she said foreclosure was our smartest option. Yes. She said that to me on the phone.

Keep posting as you travel on your walk and I'll do the same!!

**walkinaway** · 08-04-2012, 07:33 PM

Would seriously love to hear What USAA is going to do, they are unreasonable to bank with so not paying my HELOC with them is really gonna tick them off And if they sue me ill file banko and tell em to have a nice day

**NorCalStroller** · 08-05-2012, 06:23 PM

We missed both 1st & 2nd mortgage payments for the first time ever this month. On Friday, my husband got an email indicating they hadn't received our payment yet.

Also on Friday, we went to Reno and played craps & blackjack & slots, drank beer, ate great food, and spent a blissful weekend using a chunk of our old mortgage payment. (note: I do not recommend this particular activity on a regular basis.... next month, we began cash stashing!)

**Movin' On Up** · 08-09-2012, 10:37 PM

Originally Posted by NorCalStroller

We missed both 1st & 2nd mortgage payments for the first time ever this month. On Friday, my husband got an email indicating they hadn't received our payment yet.

Also on Friday, we went to Reno and played craps & blackjack & slots, drank beer, ate great food, and spent a blissful weekend using a chunk of our old mortgage payment. (note: I do not recommend this particular activity on a regular basis.... next month, we began cash stashing!)

Sounds like a great way to celebrate your decision! It sounds like you have a good plan and I wish you luck!