I'm so stressed :o(

[onedaysoon]

I have a house that I had built, it was in a construction loan. The bank wanted it off their books, but they would not refi. They said due to lack of proof of income; I am self employed. Funny thing is it was the same income they approved me for in the first place.
Anyway, they called the whole loan due. Keep in mind I NEVER missed one payment. But, they didn't care, they wanted it off their books. I was getting letters to pay the full $260,000. Sure, I just take it out of my pocket . I was trying not to ruin my perfect credit, but I realized they had no desire to help, even though I always payed on time. So, I stopped paying, because I did not havew money to throw down the drain on a house I had no chance in the world on keeping.

Last week I received the Notice of Default. The worst part is I looked at my credit report and it shows the lates, my credit is ruined and it is not my fault. The funny thing is, this loan NEVER showed up on my credit report, not even as a spect of dust. I had a small hope that I might get lucky and it would continue to not show. But, I guess they are more than happy to send the info to the credit agency when you are late, but not when you pay ontime.

My stress is mostly because I have some debt on 2 cards at 0% interest, until June or July of this year. I am really scared at what is going to happen, if I can't transfer my balances to another 0% card. I cannot afford to pay interest. This stupid house is going to create a domino effect and ruin my life.

I don't know what I can do to prevent it from effecting everything else.

I have not EVER been late on anything, except for this house. Please tell me there is a way to save my credit?

I thought about seeing if they would take a DIL, but I guess that will ruin it just as bad as a forclosure. Though it would get it rid of it sooner. Do they accept DIL after you receive the NOD? I ask last year, before the NOD and the lady said they probably would accept a DIL if I gave them $5000 .
I thought about trying to short sale, but I only have about 2 month and I don't think the tenants will be very cooperative with letting people in. None the less, I work in R.E. and the banks are not very cooperative with short sales.

I am sorry this ended up so long. Thank you for reading!

If you could help me, I would appreciate it more than you know!

This house is not my primary residence. It was suppose to be until all this. My loan is through a credit union.

[onedaysoon]

P.S. I am in California

[The Professor]

A couple of questions:

1. What is your estimate of the current value of the property?
2. What is the current loan balance?
3. Is there only one loan on the property?

Daniel

[onedaysoon]

1. Current value of the property $2.00 , kidding
I haven't compted it, but maybe $140,000.
2. The current loan balance is $260,000
3. Yes, it is the only loan.


Thank you!

[The Professor]

CCP Section 580b might put you in the drivers seat (brings to mind one of those old Hertz commercials). While I guess you could argue that it was a purchase money loan, board by board, and brick by brick, I don't think there is even a reason to go there. You lender will resort to a non-judicial foreclosure in all likelihood. Given the law as it relates to this process under CCP Section 580d, I think you will be fine. Below is a quote I borrowed from a website that outlines the purpose of this Section.

Daniel

The simplest and most far-reaching aspect of the Anti –Deficiency Laws is CCP 580d. It provides that, if a lender forecloses upon a mortgage or a deed of trust, via a non-judicial foreclosure, it cannot recover a deficiency judgment. The rule could hardly be simpler; if a lender wants a deficiency judgment, it must foreclose judicially.

There are some very limited exceptions to this rule. As with CCP 580b, the lender may sue the borrower for fraud in persuading the lender to make the loan in the first instance. Further, the lender may sue the borrower for “waste” for damaging the collateral. Romo v. Stewart Title of California (1995) 35 Cal. App. 4th 1609. In both cases, however, the lender cannot sue, if it makes a full-credit bid at the non-judicial foreclosure sale. If it makes a full-credit bid, the lender is considered fully paid, so it cannot sue under any other theories. Kolodge v. Boyd (2001) 88 Cal. App. 4th 349.

[onedaysoon]

Originally Posted by Professor Shays

CCP Section 580b might put you in the drivers seat (brings to mind one of those old Hertz commercials). While I guess you could argue that it was a purchase money loan, board by board, and brick by brick, I don't think there is even a reason to go there. You lender will resort to a non-judicial foreclosure in all likelihood. Given the law as it relates to this process under CCP Section 580d, I think you will be fine. Below is a quote I borrowed from a website that outlines the purpose of this Section.

Daniel

The simplest and most far-reaching aspect of the Anti –Deficiency Laws is CCP 580d. It provides that, if a lender forecloses upon a mortgage or a deed of trust, via a non-judicial foreclosure, it cannot recover a deficiency judgment. The rule could hardly be simpler; if a lender wants a deficiency judgment, it must foreclose judicially.

There are some very limited exceptions to this rule. As with CCP 580b, the lender may sue the borrower for fraud in persuading the lender to make the loan in the first instance. Further, the lender may sue the borrower for “waste” for damaging the collateral. Romo v. Stewart Title of California (1995) 35 Cal. App. 4th 1609. In both cases, however, the lender cannot sue, if it makes a full-credit bid at the non-judicial foreclosure sale. If it makes a full-credit bid, the lender is considered fully paid, so it cannot sue under any other theories. Kolodge v. Boyd (2001) 88 Cal. App. 4th 349.

So, basically I shouldn't have to worry about them coming after me, but my credit will still be ruined?

Hypothetically, if I gave a DIL or short sale would them not coming after me still apply?

The insurance on the property expires in March, so I almost need to do something with it soon, cause I can't afford to pay for insurance. I know they are backed up. The credit union it is with was taken over by the government last year, due to all the debt from the bad loans..

[The Professor]

I wouldn't worry about the insurance (other than liability). The lender will get it in place and add it to your loan balance once they get the cancellation notice due to non-payment......