WA Former Primary Residence Financial Default

[strategic_foreclosure]

Hi forum, I've been searching for the last few evenings trying to find my scenario, wondering if anyone has experience with our plight. I'm looking for advice on a specific situation we're in.

I built a home on a vacant lot with cash and money from the extension of a second mortgage on our primary home. Upon completion, we were able to create a single 80% loan on the home with a local bank rolling the 2nd Mortgage on our primary home and other debt (credit cards etc. mostly built up to build the home) into the loan. We also received ~$8000 cash out of the "refinance".

So we had two "80%" loans on two homes. We lived in the home I built for less than ~1 year then moved out - no renters. Based on changes to our financial situation, we have been trying to sell the home we don't live in for almost a year at less than the amount of the 80% loan (we have a little cash). We need to start considering defaulting on the loan and I want advice as to what recourse the bank has as the property value has diminished in 2 years to put us under water probably $40k.

To summarize:
We have a deed of trust against a home we built (WA single family Fannie Mae/Freddie Mac Uniform Instrument)
The loan closing instructions state - Loan Purpose: Refinance (there is not a sales price since it was a new home), Loan type: Conventional, Amortization: Fixed Rate, The deed of trust is form 3048 (is that meaningful?). We are ignorant as to what to do. Our loan is with a local (NW) bank - not a credit union.

My Question:
What is the bank recourse? In Washington State I've been told they can only go after the home but that may not be the case on a loan termed "refinance"? What key things should I be looking for in our loan docs? Will collectors call and harass my kids? Can they take our primary residence or other things we own (i.e. a car loan was rolled into the original)? Anyone else I can talk with 1:1 who is doing this (or similar) in WA?

I have found a local attorney to look at docs but - if I can save the money because there are some obvious things I can find - I would like to avoid the cost of a consultation (i.e. we're screwed because of the type of loan we have - prepare to have wages garnished if you do this).

Thank you in advance.

Strategic_Foreclosure

[Cat Damiano]

Hi strategic_foreclosure,


Welcome to the forum and thank you for joining...........


A consultation with a foreclosure attorney should normally be free, but even if it were a couple hundred, that would at least be able to give you peace of mind.

There is some good information given in other members threads regarding strategic default in Washington here;

Joining the club: Strategic default in Seattle, WA.

Strategic default in Washington

My Walk, Vancouver WA, Provident Funding 1st, BOA 2nd

[Jeffrey L. Shurtliff]

I will tell you this, if Freddie or Fannie can see you are walking away strategically you will be hunted and taken to court for a deficiency. Then if you want to buy a home later you will not be able to finance using Fannie or Freddie as a investor for at least 7 years. FHA is lifetime.

[UNDERinLV]

"hunted"....hahahaha....Jeff, you are so dramatic. Your disdain of strategic defaulters has been well documented. Why don't you butt out of this. Unlike some people who can't afford their homes, a strategic defaulter might have enough cash to buy any house he/she wants without financing. So your scare tactics are just the manifestation of juvenile thinking. I live in a city full of defaulters and I have yet to hear of one being pursued by Fannie or Freddie. Really. I mean...really. And SD know the risks associated with this financial move...

Jeff, why don't you get a second or third job, save your own home, and leave us SD to ourselves?

[Jeffrey L. Shurtliff]

"hunted"....hahahaha....Jeff, you are so dramatic. Your disdain of strategic defaulters has been well documented. Why don't you butt out of this. Unlike some people who can't afford their homes, a strategic defaulter might have enough cash to buy any house he/she wants without financing. So your scare tactics are just the manifestation of juvenile thinking. I live in a city full of defaulters and I have yet to hear of one being pursued by Fannie or Freddie. Really. I mean...really. And SD know the risks associated with this financial move...

Jeff, why don't you get a second or third job, save your own home, and leave us SD to ourselves?

Very well stated for someone who is taking advantage of the system. Good luck on your next fraudulent adventure.