Littion Loan / HSBC short sale

[SoCal Stu]

Hello everyone. I currently live in southern California and I am faced with a dilemma. I bought my first house in Dec. 2005 for $302k and now it is worth less than $200k I thought that I would be smart and buy the house with a first of $256k and a second for $46k to avoid PMI. I figured that I could refinance the first which is an adjustable after the two year mark. But who new that the market was going to fall flat on its face. My work is in the construction field so my income has dropped and in Dec of 2007 the first has adjusted up $600 a month. I have been successful on making payments until now. I haven’t missed on but I am sending them in late. In the next few months I feel that I wont have the cash to make the payment and my regular misc payments as well. My first is with Litton loan and my second is with HSBC. Both loans were used for primary purchase. I have sent in my loan modification paper work but both loan companies keep giving me the run around.

Should I stop trying to make the payments and go with a short sale or should I just go into foreclosure? I am almost positive that Litton loan wont be any help with the short sale. Has anybody had any luck with Litton loan or HSBC?

Should I not make the property tax payments that are due as well?

[The Professor]

Stu:

If you view my previous posts on this issue you will learn that if your situation qualifies for the non-recourse protection provided by California Code of Civil Procedure Section 580b, then it best to look at this from a business like perspective. Viewed in that manner, and assuming your property valuation and loan balances are as represented, choosing to allow the foreclosure to go forward may make sense. Look at your "ownership" interest to be the same as the holder of a third loan on the property would have. That is the obligations of the first loan and second loan must be satisfied in their entirety before a dime rolls in your direction.

Best to do the research yourself here on this forum. Look at the questions that have been asked and answered. In them you will find the solution you are after. December 10th rolls around fairly soon (the due date for the first installment of real estate taxes). The go or no go decision should decide the issue about paying them.

Take care,

Daniel

P.S. I'm teaching up here in Seattle this weekend. It is a distant world from the housing bust we are seeing in California, but something tells me they will be feeling the pain here to in the not to distant future.

[SoCal Stu]

Thanks for your info Daniel. This site has a great deal of info.

One other question, I have sent Litton Loan who owns the first a hardship letter, should I send one to HSBC as well even though it is the second and it is a fixed rate loan? Do the two companies talk to each other?

Both loans were used for primary purchase but in three years they have been sold three times. Now the two loans that were owned buy one company are owned buy too separate companies. What a pain in the but.

On Dec. 1^st I have chosen to stop paying my loans. Has everyone been doing this on their own or have you used companies like You Walk Away?

[The Professor]

There will be little, if any, communication between your lenders, except in those rare circumstances involving a negotiated short sale. Their interests are actually not aligned. The first loan is in a much better position and in situations like yours where the unpaid balance on the first loan is larger than the present property value, the likely conclusion is the first will simply foreclose and eliminate both your interest in the property and the interest of the second loan.

I guess in all of this I wouldn't be at all positive that a workout will happen with the joint cooperation of both lenders. Yours is the classic example of why modifications don't improve the situation relating to the home being underwater. Modifications under these circumstances seem to just extend the time it takes to reach the final conclusion (foreclosure). After all, who wants to continue to pay an amount that exceeds the fair rental value of the property, with the result being the vessel sinks into deeper water with each passing month.

Daniel

[SoCal Stu]

I'm on month # 3 and I haven’t made a payment. Litton Loan has been sending letters at least twice a month besides the payment info. The just now sent me a letter saying that they could not help me in a loan mod. But then a day latter another company just sent me a letter saying that they could give me a loan mod and that they were in business with Litton Loan. What a scam. I just received a letter today from Litton and it said that I am 64 days past due and that they will now accelerate my loan to a foreclosure process.

HSBC has turned my account over to a collection agency and now they are hounding me. They actually sent me a letter asking me to pay off the complete balance.

At this point there is no real turn around. I have committed to walking away. It is in my best business interests to walk. We have started to pack up but are continuing to live in the home. I have started a file on all of the mail I get from each company. I have the home phone still hooked up and we never use it. In fact the only people that call on it are Litton Loan and HSBC. They each call a few times a day and only leave one message on the phone per week. I do call them back to keep an open line of communication with them and always have the same answer “Sorry but I have no money to make the payment at this time"

More to come!

[kymburley]

Originally Posted by Professor Shays

P.S. I'm teaching up here in Seattle this weekend. It is a distant world from the housing bust we are seeing in California, but something tells me they will be feeling the pain here to in the not to distant future.

I live across the Sound from Seattle and the housing market here is bad. My house has been on the market over a year with only 2 offers, from the same couple. My unemployment (was laid off last January with no hope of work in sight) just ran out and I just called Litton to see if I can get a loan modification. They said we don't qualify. I dropped the price of my house from $494,000 in May 2006 when on the market to $350,000 now. It's rough around here right now.

[kymburley]

Originally Posted by SoCal Stu

One other question, I have sent Litton Loan who owns the first a hardship letter, should I send one to HSBC as well even though it is the second and it is a fixed rate loan? Do the two companies talk to each other?

Hi - We just went down this road with Litton on 1st and HSBC on 2nd in January. We owe $405k and the sales price was $375k. Take out realtor fees, etc the 1st would be satisfied in full and the 2nd was about $53k short. We live in Washington State, if that matters. Also, Litton and HSBC service our loans, they are both owned by Fieldstone.

HSBC did not ask for a hardship letter, but they were making judgement calls based off of old information (tax documents from previous years), so I sent them the hardship letter anyway. The two companies do NOT talk to each other. They seem to not care that the other exists.

Originally Posted by SoCal Stu

Both loans were used for primary purchase but in three years they have been sold three times. Now the two loans that were owned buy one company are owned buy too separate companies. What a pain in the but.

Are you sure the loans were sold? In my case just the servicing was sold, just found this out this morning. We purchased in 2005, so you would have though I would have known.

[kymburley]

Originally Posted by SoCal Stu

I just received a letter today from Litton and it said that I am 64 days past due and that they will now accelerate my loan to a foreclosure process.

HSBC has turned my account over to a collection agency and now they are hounding me. They actually sent me a letter asking me to pay off the complete balance.

At this point there is no real turn around. I have committed to walking away. It is in my best business interests to walk. We have started to pack up but are continuing to live in the home. I have started a file on all of the mail I get from each company. I have the home phone still hooked up and we never use it. In fact the only people that call on it are Litton Loan and HSBC. They each call a few times a day and only leave one message on the phone per week. I do call them back to keep an open line of communication with them and always have the same answer “Sorry but I have no money to make the payment at this time"

More to come!

We are currently 38 days late. HSBC sent ours to a collection agency too. My husband is currently deployed and I was beside myself all weekend trying to figure out why. The letter said they wanted a check for $77257. Due to husband being in military we can't go bankrupt, because the military always finds out. If they were to find out his career would be over and I'm unemployed, so we'd basically be ********.

I called HSBC this morning to find out why and it was the collection agency who answered. They told me I had to pay 2 months and then HSBC would take the loan back. They also said the reason my loan is there is so I can get a loan restructure which I don't qualify for or a loan modification which is only good for 6 months.

If I thought I could walk away and not have to file bankruptcy I would do it in a second. It's just too much pressure from the military (or from husband...)...

[SoCal Stu]

Originally Posted by kymburley

Are you sure the loans were sold? In my case just the servicing was sold, just found this out this morning. We purchased in 2005, so you would have though I would have known.

I thought that Fieldstone had sold them but I guess that Litton, HSBC, and Fieldstone are all in bed together.

[SoCal Stu]

Originally Posted by kymburley

We are currently 38 days late. HSBC sent ours to a collection agency too.
.

38 days is just too short of a time to be sent to collections.

[SoCal Stu]

You know what is real funny is that Fieldstone is sending all kinds of crap in the mail saying that they can mod my loan. If they are partners with Litton Loan then why did Litton tell me that they couldn’t mod my loan? It’s one big game and every one of the players is lost and can’t communicate with each other. If more lenders were willing to work with the home owners then we wouldn’t have such a bad home crisis right now.

On that note I just received in the mail a certified letter from Litton regarding the “Deed of trust/ mortgage” default letter. They say that I will default in 45 days and then Litton will accelerate the maturity of the note and go into foreclosure. After that they say foreclosure will take approximately 120 days.

[heidi79]

SoCal Stu, I'm so surprised to see that Litton has not offered you a loan mod. On this forum, there are many litton people that have been able to work out a modification. I have a family member here in Miami who litton even gave a principal reduction to. You should communicate and see what you can do.

[kymburley]

Originally Posted by SoCal Stu

38 days is just too short of a time to be sent to collections.

Yep, that's what I thought too, but...

In May 2006 when we had the misfortune of being in foreclosure due to a long layoff, we were about 70 days late when the house went into foreclosure and a court date was already set for October 2006. I thought you had to be 90 days late, but I guess not.

[kymburley]

Originally Posted by heidi79

SoCal Stu, I'm so surprised to see that Litton has not offered you a loan mod. On this forum, there are many litton people that have been able to work out a modification. I have a family member here in Miami who litton even gave a principal reduction to. You should communicate and see what you can do.

I had a lady from HOPE do a conference call with me and Litton's executive response team on Monday. Litton said they changed the loan modification guidelines because too many people were getting them. We qualified last fall, but now we do not. Nothing has changed since then in our economic situation.