Short sale in Ca but lender just paid taxes???

[emb00]

Ok after months of lurking on the site for tips I decided to post my story. Purchased my condo in June 06 after making a nice little profit from my 1^st condo (brought thru naca program). Only wanted to keep the property for about 2 years then sell and move on to something bigger, hey why not it worked for me with my 1^st condo. Well as we all know the market started to go south and come 2008 when it’s time for me to sell I couldn’t. Here are the fact about the loan.

Purchased-6-6-06 (that should have been a sign that things were not going to turn out great)
Location -Southern California
Price- $365,000
Loan- Both purchase money 1^st citimortgage 305,750
2^nd Chase $60,000 heloc (never used line of credit only paid minimum)
Loan type- both loans are interest only 1^st is 5 yr rate 6.37%
2^nd is 10 yr rate changes about 5.0% to 6.5%

I decided that I could not keep the property so I contacted the law offices of James Griswold in September and started the audit, they did find violations. I also put it up for short sale in October listed it for 269k. We got 2 offers the first week it was on the market and they have been submitted to the lender. This week they did the BPO. I’m trying to be optimistic that things will work out but I have some doubts. I was looking at my statement from citimortgage and they paid my property taxes. I do not have a escrow account and the taxes are delinquent since 2007. Why did they pay the property taxes and what does the mean for me in the short sale process, will they try to collect the taxes they paid on the property? It was almost 8k.

[elpjohnson]

emb00.....

Welcome to the forum and thanks so much for joining.... I am happy to hear you did the audit though, that's what got me my loan modification.....

Anyway....you are not alone, we are here for you.

[emb00]

Actually my lender had the bright idea to force an impound account while I'm trying to short sale, how dumb is that. The letter states that my "new" monthly payment is going from $1624 to $2826 starting 1-1-09. I don’t know why they decided to do this at this point and I’m not sure if the pending short sale had any influence on them making this decision. Oh well I can not afford to pay the new or old amount for the mortgage.

[The Professor]

The line between lender and loan servicer gets blurred. The loan servicer handles the relatively routine processes like collecting payments, monitoring reports relating to such things at the payment of insurance premiums and taxes, etc. There is likely a policy that actually based on a contractual provision in your loan documentation that provides the basis for insisting on the establishment of an impound account and its funding through an increase in your monthly payments when the loan goes into default.

They are following institutional policy in insisting on an impound account. While you are correct suggesting that this is simply another nail in this coffin we call homeownership, curing the loan's default in the traditional sense means paying back payments of principal, interest, taxes and insurance (PITI).

Good luck on the short sale.

Daniel

[emb00]

Thanks for the reply Daniel. Maybe you can answer another question for me I am getting calls from Chase who has the 2^nd mortgage and this person is leaving messages and not a recording like the calls I get from my Citimortgage. It has been the same person calling I guess she has been assigned my file. I’ve spoken to her once only to give the numbers to my lawyer office and realtor but she also told me that Chase may not go along with the short sale and I will be liable for the amount of the loan after the short sale or foreclosure. I told her if they choose that route I will file bankruptcy, but she said that the 2^nd mortgage could not be discharged through bankruptcy. This is a purchase money loan, although a heloc I’ve never drew any money from it. I know it is their job to try and recover all money from the loan. But I am starting to become concerned with the possibility of dealing with creditors if they decide to sell the debt to a collection agency or come after me. The loan amount is 60k so it’s not a small amount. Can they garnish my wages or put a lien on my bank accounts?

She also felt obligated to let me know that I’ll probably receive a 1099 which doesn’t bother me because I know that I am protected until 2009 from the mortgage debt forgiveness act.

[The Professor]

In order to garnish your wages with very limited exception that is not applicable to your circumstances, the creditor must first obtain a judgment against you. That requires their filing a civil complaint. Steps from there are that you would file a response (answer to complaint) and that there be a trial. I guess my point in all of this is you could delay the ultimate issuance of a judgment for a year or two with ease.

The subject debt through bankruptcy is potentially dischargeable in a chapter 7 (the issue is really one of a potential claim that the loan was obtained through fraud), or "arrangements" can be made through a chapter 13 for its payment (usually partial repayment based upon a wage earner plan).

Bottom line in all of this is don't believe the information provided by those working to collect a debt.

Daniel

[Scott]

Prof Shays- wouldn't the 2nd loan in this case also fall under the "purchase money" rule and therefore Chase couldn't come after them for deficiency judgment?

[The Professor]

If we assume that the second was purchase money (something I feel uncomfortable doing considering simply because the way the facts were stated, although you certainly could construe them to indicate that it was a purchase money second), then your conclusion would be correct.