Option one and Deed In Lieu

[The Knight]

I am a contractor and three of the companies that I did work for last year, declared bankruptcy in December of 2007, 2 went into chapter 11 and one into chapter 7. I lost a huge amount of money in billings that just evaporated into thin air. Knowing that I will not be able to maintain my mortgage payments I put the house on the market in March to be sold as for sale by owner, since there was not enough equity to pay a Realtor.

The property went into pre-foreclosure in June but we got into a forbearance agreement with the Option One/AHMSI after 7 phone calls and speaking to almost a dozen reps in India, calling their attorney’s who were local and paying Option one $3500 just to be able to stay in the house long enough to find other contracts and now the next payment is due on 8/15.

Last month I found a buyer (and had an offer) for my property who was willing to assume my assumable mortgage (as indicted on my TILA and Note) I wrote to Option One asking for the procedure for the assumption. I got a letter two weeks later telling me that they will not allow the assumption. They did not even ask any information about who is assuming it or anything else. So the buyer walked away and is now is in contract to buy another property.

I just got a new long term contract but it is in CA and I have to be there in two weeks. I can not afford to pay Option one $2500 per month and pay rent and move my family to CA at the same time.

I won’t be averse to a short sale but the time frame is tight and I won’t be averse to even a deed in lieu but I am told that lenders rarely approve a deed in lieu. I believe that Option One have violated the TILA and are also in breach of contract. I guess I could bring suite against them in court and that way they can not foreclose and that might pressure them into accepting a short sale or a deed in lieu vs. a foreclosure.

Does anyone here know if Option One/AHMSI is more responsive to a deed in lieu vs. a foreclosure. I welcome any input here.

[Arnie1269]

I don't have an answer for you as I am working with indymac.

But I feel your pain. My husband had a remodling business that went under last may for similar reasons and he's had trouble getting work ever since.

I am no expert .. but what we decided to do was move so we could get our kids settled in a new school district before the school year starts and so we could qualify for a rental before our credit is so bad no one will rent to us.

We listed the house with a realtor at 85% of the first mortgage as that's what my realtor says is the least a lender will accept.

If you get an offer even if its below the amount owed after realtors fees the bank may approve it .... and if they don't ,,, most of them will consider a deed in lieu if it's been listed for 90 days and you've gotten no offers.

Either way having it listed with a realtor makes sense as they can assist with the short sale and show the house after you move out.

I would try to get a realtor who has lots of experince with short sales... my 2 cents.

[The Professor]

I respectfully disagree about the willingness of lenders to accept a deed in lieu. In my 35+ years of experience working the transactional side of real estate. I've only been involved in a couple situations where the lender was willing to accept a deed in lieu, and insisted in conjunction with the transaction title insurance to insure that there were no intervening liens between their mortgage and the date the deed in lieu was recorded.

Lenders are concerned with the possibility that the borrower will later attempt to set aside the transfer claiming lack of consideration or some sort of claim that they were unduly influenced into conveying the property. The safer route and one that is customarily utilized is to simply complete the foreclosure. That action eliminates junior liens and does not leave the lender open to spurious borrower claims.

Daniel

[Arnie1269]

Yes. the professor is right.

I am dealing with indymac and got a particularly nice person to be straight with me once and she said in the five years she's been in loss mitigation there she's only known of 2 times when indymac allowed deeds in lieu.

She said she went an internal seminar once where they explained to all of the employees why its a less financially desirable outcome for the servicer, something about the way they get compensated or their agreements with the investors....

I wasn't meaning to suggest that a deed in lieu was a definite possibility. However, I think some lenders are more willing to consider it than others.

I think a short sale is the best bet in the situation posted here. Even if the net to the mortgage holder is zero for the HELOC and 60-80% on the first, based on my internet unscientific research in some markets the banks are still wiling to accept that little on a short sale to get it overwith and avoid forclosure proceedings.

[The Knight]

Finally got my documents reviewed by my attorney. I do have a case of at the very least breach of contract and quite possibly a TILA violation. We have secured a Realtor that handles short sales and fortunately the value is not too much lower than the loan amount so we have a good shot at selling it. Now I have to muscle OOMC/AHMSI to accepting and cooperating with the short sale rather than going the foreclosure route. I have my QWR ready and am getting a BPO from the Realtor within a day or two and I will be submitting my request for the short sale to them via a number of phone numbers and contacts I have found on this forum.

The basic idea here is to force them into accepting a short sale vs. having to fight it out in court. In the mean time I am preparing documents to file a suit in court with an injunction against them to prevent the foreclosure.

I am trying to file the motions my self vs. getting an attorney to do it since it costs plenty just to file, so if any one has any one has any experience in this matter please advise.

[The Knight]

OK finally got all my ducks in a row. We are going for the Short sale. I just faxed over all my documents which included my hardship letter, a copy of the QWR, two months bank statements, a BPO which I had done on my house, the Realtor's listing agreement and authorization for OOMC/AHMSI to deal with the Realtor to Jean Drake and Jim Davis as well as emailed one Bob Dubrish asking for them to go along with a short sale In the letter I mentioned that I really don't want a legal battle but I will give them one if they want to play hardball considering they have Breach of contract and possible TILA Violation they may have to contend with. I also emailed copies to to the Christine Sullivan VP of Public Relations.

I also got the Realtor a free course on how to short sell the property in 9 days and get a lot of offers quickly. I figure if we get a decent offer in their hands quickly They will be more likely to accept it.

Let's hope it works.

[Moe Bedard]

Knight,

Good Luck!!

[TXHomeowner]

Good luck, Knight! Keep us posted on how it goes!

-TX

[The Knight]

Today I got a notice of foreclosure from OOMC/AHMSI Attorneys in RI the Law offices of Nicholas Barrett (the Foreclosure Factory, as most lawyers in RI know them). I called the attorney on the case and basically told her about what is going on and put her on notice that there is a pending Lawsuit and an injunction to prevent the foreclosure.

I called Jeanne Drake's office today and left her a message asking her to call me back. this afternoon, I got a call, from John Torres (john.torres@oomc.com) in the loss mitigation department. He said that Jeanne Drake told him to call me. He told me that the foreclosure will be put on hold pending the short sale for at least 60 days, and that he will contact the Realtor and let him know what they will need in terms of a sales figure to make the short sale happen.

So for now we are not great but we are good. Next step is trying to get the late payment reports on my credit removed while I was paying on the repayment plan on time. That will be another battle.

In the mean time we have has six showings, two are interested. We'll see how this goes.

Thanks to everyone on this forum for sharing the info they have posted, it was a great help.

[elpjohnson]

Knight...

Good luck with the short sale....I am pulling for you!

[The Knight]

OK we are moving Forward. Last Thursday I got a email from Mr. John Torres asking for some more financial documentation which I got it over to him by the next morning. I also got an email from their attorneys office confirming that the foreclosure has been put on hold till further notice. Apparently Mr. Torres Made good on his word. I also spoke to the Realtor and he did in fact get a fax from Mr. Torres. and he has been in communication with the Realtor.

We listed the property at 90% of Market value and we had eleven showings over the weekend and two are coming back for a second look. The Realtor feels that we may have an offer within the next couple of days. Let's hope so.

Thank you everyone for your support.

[The Knight]

More good news...

Today I got a call from Mr. John Torres. He told me that they have everything they need and he has spoken to my Realtor and everything is a go as soon as we have an acceptable offer they will order the appraisal and we can move to the closing stage of the sale. He also said that the Realtor seemed confident he could get an offer on the property as early as next week.

Man.... I certainly hope so. I cant wait for this to be over. I know I am not making anything on this deal but at least my nerves will be at ease.