PLEASE, help us....

[pjd123]

Good evening fellow struggling homeowners...
This is my first post. HOMECOMINGS FIN (GMAC?) has our loan. I'm worried we made a huge mistake. We can no longer afford our payment (interest only) of $2800/mo. We owe approx $420K - upside down about $80K. I talked to HOMECOMINGS early in October, they said if we aren't in foreclosure, they wont discuss modification. We knew we couldn't afford it anyway, so as of Jan 1, 2009, we will be in foreclosure (Made a partial payment in Oct). My 'mistake' concern is this: I'm in California. In a panic, I paid a mediator (in Florida... what was I thinking..) $1200 to work on our behalf. She said to stop paying so we would be in foreclosure and then they would talk to her. She said she knew she could get a portion of the debt forgiven as well as a rate reduction. We've given her ALL of our personal information - SS#'s, bank account records, paystubs, you name it. Homecomings required that we have a notarized "AUTHORIZATION" for her to be able to speak on our behalf, which we did. I spoke to HOMECOMINGS again today - they said they have record of her calling on 12/12/08 to see if we were in foreclosure yet but haven't gotten any paperwork from her. She has never returned a single one of my phone calls and rarely answers my e-mails. I think I may have been scammed but don't really know at this point - her last e-mail said she was 'filing a claim electronically with HOMECOMINGS'. In the meantime, today HOMECOMINGS said they don't do ANY type of 'debt forgiveness' and even if they did modifiy our rate it wouldnt be more than about 1% and we would still have to prove we could afford the $2800/mo. HELLO - if we could, we wouldn't be 9 days from foreclosure. I don't know if she was just trying to scare me into paying or if they really don't do debt forgiveness. The HOMECOMINGS rep also said we will go into forclosure on 1/1/9 and it will take about 4 months in California for our home to be auctioned off. I don't know what to do. I don't know what my responsibilities are regarding taxes, homeowners insurance, etc. Someone in Florida has all of our personal information...Its looking like we are loosing our home. I've spent the last 60 days pacing my nights away, as I'm sure many of you have. I'm trying to just put it all in God's hands and let the chips fall where they may.

***, can you, or anyone, tell me what to do about taxes and home owners insurance? Has anyone here had debt forgiveness from HOMECOMINGS?

God bless everyone on this sight. I pray for peace and miracles.

pj

[The Professor]

pjd123:

Welcome to this forum. I spend a lot of time here, providing people like you with what I'll characterize as sage advice that I suspect you will find considerably more valuable than what you received with the $1,200 you expended. That is because of (1) the fact that there is no cost (except perhaps what you pay in tax dollars to support teachers in our State's college system), and/or (2) that my guess is given that I started in the foreclosure business in 1973, I have considerably more experience than your person in Florida.

The best place to start is for you to answer a few questions. This will enable me to better identify your options. You may have answered these questions in your posting above, but I'm going to ask them because I need direct answers. The questions are:

1. At the time your purchased the subject property did you intend to occupy it as your primary residence?
2. What is your estimate of the current fair market value of the property?
3. For each loan on the property, identify the lender, the current loan balance, and whether the loan was created at the time you purchased the property, or later as the result of a refinance or additional borrowing.
4. Do you have a homeowner's association that assesses dues?

Daniel

[pjd123]

Hello Professor Shays,

Sorry for my late reply, I couldn't seem to get back to this original post. I will do my best to answer your questions.

1. Yes, we bought the home in 2002 with every intention of staying here for the rest of our lives.
2. The estimated current value is about $350K, we owe $420
3. We refied twice - I don't have all the info now, but the last one was with Homecomings in 2005. Money used to pay off debt, etc.
4. There is NO homeowners association.

Again, we are going into forclosure on 1/1/9. We live in Rocklin CA. I mention that because I thought I read somewhere in one of your posts that you are in the foothills area. Anyway, anything you can do to advise us is greatly appreciated. We are preparing ourselves for sending the keys to them once we know the auction date.

Thanks again for your patience and reply.

God Bless,

PJ

[The Professor]

Seems like I'm in Rocklin every day teaching, or passing by it on HWY 80 as I head from home to my office at the Roseville Gateway Campus. I'm still a bit confused so I'm going to provide you with the facts as I understand them. They are as follows:

Your residence in Rocklin is in foreclosure. There is presently a single loan on the property in favor of Homecomings Financial (GMAC). The unpaid balance is approximately $420K. Your estimate of the fair market value is $350K. I cannot tell from the facts as you've outlined them whether or not a foreclosure has been started. The date you've provided (1/9/09) is a bit confusing in terms of how you've expressed it. "Going into foreclosure" usually means the initiation of the foreclosure process through the recordation of a notice of default. But some might construe it to mean when the actual foreclosure sale is scheduled to take place. Please clarify what you mean. If you need to confirm the status of the foreclosure sale, you can go online to the following link and find if the notice of default has been recorded:
Recorded Search by Year

Good news, irrespective of where you are in the foreclosure process, is your lender will undoubtedly follow the non-judicial foreclosure path which effectively means that you won't be personally liable for any deficiency after they complete the foreclosure. Bad news of course is it will have a negative impact on your credit but I suspect you are already feeling the effects of that.

Once you tell me where you are in the foreclosure process, we can talk about a move out strategy that will provide the most benefit to you.

Take care,

Daniel

[pjd123]

Good afternoon Professor,

Thank you so much for your reply. Sounds like we're practically neighbors! Sorry I was unclear - we made a partical payment in October and nothing since, so on 1/1/9 we will be over 90 days late, which, according to the rep at Homecomings is the date they can start the foreclosure process. So we're technically not in foreclosure just yet... a few more days. She said we probably have about 4 months before the actual auction date, but I don't want to wait and leave in the middle of the night like a criminal. I would prefer to give them the keys before that point. Anyway, whatever advice you have is greatly appreciated.

Thank you againn, Professor.

pjs123

[pjd123]

PS: Thank you for the link - I don't see our names listed there......

[The Professor]

Let me begin by letting you know that the criminal thing to do would be to leave the home before the foreclosure sale is completed. Your neighbors and friends want you to stay there as long as possible and so does your lender. The reason is quite simple. As people move out and leave empty homes behind there is a real possibility that the home could be vandalized. Your lender doesn't want that, and in theory it could expose you to liability for what we characterize as waste. So be that hero and stay as long as possible.

As a matter of fact, the lender may reward you after the foreclosure has been completed with an offer of "keys for cash." That is, in order to avoid filing an eviction action and paying the costs (attorney fees, court costs, etc.), the lender will probably approach you with a cash offer and pay you after you move out and leave the property in good condition. I'm guessing you could probably get a couple of thousand dollars. So you live there for somewhere around four (4) months after they record the notice of default (actually a minimum of three months and 21 days under California Civil Code Section 2924b), plus probably another month while the "keys for cash" deal is worked out.

That gives you until mid-May to find a place to live. While that time is passing you can put aside the money you will need to move into a savings account since you won't be paying rent. Not a bad exit strategy.

Daniel

[pjd123]

Thats good to know, Thank you. We will stay as long as possible. Is there anything you can tell me about tax liability?

pjd123

[The Professor]

One thing I can safely tell you is the tax side of this issue is a can of worms and suggest that:

1. You read the following thread:
Anyone actually get a DIL from Wells these days?

2. Hire a competent tax advisor.

Daniel

[pjd123]

Thank you again. I got something from my CPA today - she does my taxes and I discussed this with her a few days ago. She sent me a copy of something right from the IRS website - 'Home Foreclosure and Debt Cancellation'. Its a little confusing to me but my understanding is that under the Debt Forgivenss Act, good through 2009, if you are 'insolvent', meaning if your total debt, mortgage, credit cards, car payment, etc, total more than your assets (house CURRENT VALUE, cars, furniture, tv, computers, pretty much everything you own) you are not responsible for the forgiveness amount. Please correct me if I've misunderstood what I'm reading.

Thanks again for all of your posts, they are extremely infomative. We will be seeking counsel from an attorney just to be sure.

pjd123

[pjd123]

Dear Professor Shays,

I was reading in one of your posts something about having openings in your foreclosure class..... I'm guessing at Sierra or Gateway? I was unable to find the course but am VERY interested. Can you give me details?

Thanks so much,

pjd123

[The Professor]

Sierra's RE82, Real Estate Foreclosures; Debtors' Rights, Creditors' Remedies. When I brought the course through the Curriculum Committee in 2003, members thought I was nuts. Needless to say, I wasn't. Two years ago I did the same with a course titled Fraud Examination. Given what's happening on Wall Street, I'm thinking that course will enjoy high enrollments (it's full for spring).

Daniel

[pjd123]

Thank you for the info - you sure have made some acurate predictions.

pjd1234

[pjd123]

Good morning,

I have another question, if you have time. As I mentioned before, the Homecomings rep told us we are eligible for foreclosure on 1/1/9 - but we do have someone working on getting us a modification. I don't see the modification being enough to help us stay here unless they did a debt forgiveness as well, which we know they wont. In an earlier reply, you shared with me the time frame of about mid-May as far as having to move out. All that to get to my question... If they think we are interested in a modification, is there a change that they wont file the foreclosure yet, meaning we may be able to stay here even longer? Just wondering if that's a common scenario? As you recommended, we are going to stay here as long as possible for 2 reasons, first, it benefits us financially and second, our home won't be vacant and vulnerable to vandalism.

Thanks again for sharing your knowledge.

pjd123

[pjd123]

Oops.... typo..... I meant, "is there a CHANCE that they wont file the foreclosure yet

[sotaboy6]

It's been awhile since I have posted here, but we have been trying to go through with the short sale. GMAC has our first loan (80%) and USAA has the 2nd (20%). GMAC finally has accepted the terms of the short sale, but USAA came back with a counter offer which I cannot meet. I currently owe a little over $55K with them and GMAC is willing to give them $3K to release the lien, but they want $7500 leaving me to pay the $4500, which is impossible for us to come up with, hence the reason of getting rid of the property. We already moved into our new house (renting) in October and it was the only place that was willing to take us with my credit being ruined due to this process and it didn't come at a cheap monthly because of my bad credit. USAA not only wants to me to come up with $4500, but they told me that after they release the lien, they will come after me for the deficiency, $47,500. I'm not really sure where to go from this point. I would like to do the short sale, but I can't come up with that kind of money and even if I do, I'll have to file bankruptcy to have that wiped out and I'm really worried that if we chose to go through with the foreclosure, that GMAC will file a Judicial foreclosure. It just seems to be our luck that would happen. Does anyone here know what GMAC's policy is on a foreclosure?

[pjd123]

Hello sotaboy6,

I'm sure someone here will be able to give you sound advice. I don't know enough about any of this to give advice. We only have a 1st which is with Homecomings aka GMAC. All I can tell you is that they, like many other companies aren't easy to deal with. Are you in California?

Best of luck to you and your family.

[sotaboy6]

Yes, we're in California. GMAC has been difficult to deal with, but I have been blessed with a great realtor. I am looking forward to any advise you all may have. Also, is it legal for the lender to come after me for the deficiency balance after they release the lien? I thought that we would be covered under California code 580b or is that only for foreclosures?

[pjd123]

Professor Shays has been wonderful in answering questions all over this sight.... he has a GREAT amount of knowledge in this area. From what I've learned here, and from speaking to my tax consultant, we've decided that the best thing for us is to just let it go into foreclosure. We considered a short sale as well, but we felt the headache wasn't worth the difference in the outcome. Our credit is going to take a big hit either way and we honestly just cant afford to stay here. So for us, the best option is to try and save as much as possible during the foreclosure process and get on with a fresh start. Isn't it frustration that the lender is willing to take a short sell, but not from us, the current home owners? gzzzzzzzzzz

Good luck

[The Professor]

Yes. Interesting times we are facing. Lenders will do just about anything to avoid booking a loss (or having to recognize a loss). So, I'd go along with this modification attempt and even though it isn't realistic, stretch out our decision making process as long as possible.

Daniel

Originally Posted by pjd123

Good morning,

I have another question, if you have time. As I mentioned before, the Homecomings rep told us we are eligible for foreclosure on 1/1/9 - but we do have someone working on getting us a modification. I don't see the modification being enough to help us stay here unless they did a debt forgiveness as well, which we know they wont. In an earlier reply, you shared with me the time frame of about mid-May as far as having to move out. All that to get to my question... If they think we are interested in a modification, is there a change that they wont file the foreclosure yet, meaning we may be able to stay here even longer? Just wondering if that's a common scenario? As you recommended, we are going to stay here as long as possible for 2 reasons, first, it benefits us financially and second, our home won't be vacant and vulnerable to vandalism.

Thanks again for sharing your knowledge.

pjd123

[The Professor]

sotaboy6:

Can you open a new thread with the information provided below along with the following:

1. Short sale price (consideration).
2. Complete loan info on existing loans including unpaid balances, and whether these loans were created at the time you purchased the property.
3. State where the property is located.
4. Was the property purchased as your primary residence?

Thanks,

Daniel

Originally Posted by sotaboy6

It's been awhile since I have posted here, but we have been trying to go through with the short sale. GMAC has our first loan (80%) and USAA has the 2nd (20%). GMAC finally has accepted the terms of the short sale, but USAA came back with a counter offer which I cannot meet. I currently owe a little over $55K with them and GMAC is willing to give them $3K to release the lien, but they want $7500 leaving me to pay the $4500, which is impossible for us to come up with, hence the reason of getting rid of the property. We already moved into our new house (renting) in October and it was the only place that was willing to take us with my credit being ruined due to this process and it didn't come at a cheap monthly because of my bad credit. USAA not only wants to me to come up with $4500, but they told me that after they release the lien, they will come after me for the deficiency, $47,500. I'm not really sure where to go from this point. I would like to do the short sale, but I can't come up with that kind of money and even if I do, I'll have to file bankruptcy to have that wiped out and I'm really worried that if we chose to go through with the foreclosure, that GMAC will file a Judicial foreclosure. It just seems to be our luck that would happen. Does anyone here know what GMAC's policy is on a foreclosure?

[pjd123]

Thank you Professor - Happy New Year to you and everyone here at loansafe.org.

pjd123

[The Professor]

You too. Thankfully I just finished up my grading for the fall semester and can sit back and relax until the 12th when a new semester starts again....

[pjd123]

Well, enjoy the break!.... but I'm sure the rest of us here will keep you busy in the meantime.... lol

[pjd123]

Happy New Year Professor!

I've been jumping around this sight, reading as much as my brain can take, trying to learn as much as possible. Another question, as I think I'm confusing myself

We originally purchased our home for $300k with every intent to stay here for many years. We refied twice, now owing $420k - about 30K for improvements. When we last refied in 2005 we knew we were spreading ourselves thin but at the time we still had $170k in equity, and figured if we couldn't handle the payment, we would just sell, take our equity and downsize.... yea right. My concern/confusion/question is this. I think I understand correctly that its the $120K (minus the $30K for improvements) difference between the original purchase price and the new loan amount that we may have to count as income. My tax person (who I really do trust...been doing our taxes for years) said that we will be insolvent because we don't have assets of that amount, and even if we DID, we have a 1 time $500K equity allowance? (I'm sure I'm not wording that right....) Do you know anything about this? Again, I'm not sure I am explaining my questions correctly, but though it was worth asking.

Thanks again.....

pjd123