Short Sale/Sacramento CA/ Need help & Suggestion. Please help

[saczig]

Hi Friends,
I need your help and suggestion on this.

I have brought my home in peak 2005 market for $380k and currently it is $180k (Sacramento, CA).

To buy this home I took loan from one of the credit union (based in Marlborough, MA), I have took 2 loans, the break down is 80% primary loan, 15% secondary loan( Shows as Equity in my monthly statements) and 5% down payment.
After that, I have never taken any equity and used my home as primary residence and used pay monthly mortgage on time.

This February-2009, I and stopped paying the mortgage and kept for home on short sale. After few months there are 2 offers and we presented to credit union.

The credit union has sent me back letter to sign. A note that I will pay the remaining deficiency amount after the short sale and only then they will proceed with the short sale.

After consulting the lawyer, I have decided not to sign the note for remaining deficiency amount.

It seam they (credit union) had some management meeting and final decision has taken and they have decided that their bank is not relieving any member from the deficiency balance.

Now the credit union is saying only option here is to go foreclosure and they are saying they will attach the note at the end of the foreclosure process.

Can they really do this?

Any suggestion on this will really help me and please let me know my options.

Thank You

[nal67]

Somehow you need to convince them that they will be way better off doing a short sale versus foreclosure. They may have done a BPO or appraisal that shows that your purchase price would be the same or less than if they did a foreclosure? If not, you could try to present a distress value appraisal that shows your offer is higher than if the property went into foreclosure. This is even more compelling if you can show property values are still declining because the value now might be higher than the value down the road after the foreclosure process.

You are in California so you might want to bring up the state regulations that protect you from a deficiency judgement if they were to foreclose as they may not realize that. If all else fails, you might offer to take a small note in exchange for a settlement. You could negotiate a personal note with an extended payment period and zero interest. Just make sure it is something that you know you can pay. I have heard of settlements for $5k or $10K in a personal note.

[saczig]

Thank for your quick reply.
I want to do the short sale in best interest of everybody. If somehow the amount note amount is more that I can afford and I decide to go for foreclosure, which is my last option.

Do you think bank can come after me for deficiency of amount, is there a way they can tie note to my income/wages?
What usually happens after the foreclosure? How does bank tries to get money from you and based on what?

I took both loans from the same credit union to purchase the home.

[saczig]

Hi Friends,

I would like to update my situation and wanted to know your suggestion. Please help me in this.

The credit union has today replied back to me saying that they are disapproving my short sale.

We have reviewed the offer for the short sale this morning and unfortunately we were not able to approve it. The committee has determined that at this time there is no hardship for the member, he is still working and actually making the same amount of money as when he qualified for the loan. Also his unwillingness to pay on these loans is something that we take into consideration especially when all other bills showing on the credit report are current. The only way that we will approve his short sale is if he can come up with $40,000 out of pocket that we can secure prior to approval. They have provided statements showing $14,000 in a retirement account & if he can prove hardship to them then he can withdraw from it. They have not made payments on the home in 6 months due to the fact that he refuses to until he knows the status of his job & that's about $18,000 that he has not paid credit union even though his income has remained the same. It is clear that $40,000 is the only amount that we would accept to move forward with this short sale.

What are my options here?

Please let me know some options.

Thank You

[faith]

Originally Posted by saczig

Hi Friends,
I need your help and suggestion on this.

I have brought my home in peak 2005 market for $380k and currently it is $180k (Sacramento, CA).

To buy this home I took loan from one of the credit union (based in Marlborough, MA), I have took 2 loans, the break down is 80% primary loan, 15% secondary loan( Shows as Equity in my monthly statements) and 5% down payment.
After that, I have never taken any equity and used my home as primary residence and used pay monthly mortgage on time.

This February-2009, I and stopped paying the mortgage and kept for home on short sale. After few months there are 2 offers and we presented to credit union.

The credit union has sent me back letter to sign. A note that I will pay the remaining deficiency amount after the short sale and only then they will proceed with the short sale.

After consulting the lawyer, I have decided not to sign the note for remaining deficiency amount.

It seam they (credit union) had some management meeting and final decision has taken and they have decided that their bank is not relieving any member from the deficiency balance.

Now the credit union is saying only option here is to go foreclosure and they are saying they will attach the note at the end of the foreclosure process.

Can they really do this?

Any suggestion on this will really help me and please let me know my options.

Thank You

Hello and welcome to this forum,

The links below talks about CA Section 580b which states that your lender can not pursue any deficiency judgment against you for Purchase money mortgage and never refinance and a primary residence; how to negotiate with your lender, Short Sale Outposts and many other important informations that may help in your situation.

Please take time to read it.

http://www.loansafe.org/forum/deed-lieu-foreclosure-do-you-need-help-walk-away/14521-those-worrying-about-who-will-rent-us-now.html

http://www.loansafe.org/forum/deed-lieu-foreclosure-do-you-need-help-walk-away/15145-ga-upside-down-thinking-about-walking.html

http://www.loansafe.org/forum/short-sale-outpost/14207-national-city-short-sale-help.html

http://www.loansafe.org/forum/short-sale-outpost/


Thank you and God bless.

The info above is for your information only.

[saczig]

Hi Friends,
I monitor my credit history regularly and lately I saw new transaction posted by my credit union on my credit history.

	Business Name:		CREDIT UNION
	Account Status:		BANK ADJUSTMENT / DEED IN LIEU / BANK LIQUIDATION

Do you know, what does it mean about this account status.

What are my options, moving forward.

[faith]

Originally Posted by saczig

Hi Friends,
I monitor my credit history regularly and lately I saw new transaction posted by my credit union on my credit history.



Do you know, what does it mean about this account status.

What are my options, moving forward.

Saczig,
When banks report to the credit bureaus "bank adjustment, deed in lieu, bank liquidation" for a property that is being considered in foreclosure process, your bank is also evaluating your home as a candidate for a "deed in lieu of foreclosure". This statement is actually better then having "Foreclosure" shown on your credit report. A deed in lieu can lower your credit score up to 250 points. It can remain on your credit report for 7 years.

If you want to keep your home you can request for a loan modification or ask your lender offer you a forbearance program. You have to havevthe income to pay the current mortgage plus the amount necessary to cure the deficiency to be able to do this.

If you have a purchase money mortgage and never refinanced, you can tell your lender that you are protected under CA Section 580b meaning they can not pursue you for any deficiency judgment. Have you tried to negotiate a short sale to settle to pay the balance owed at 10% to 15%, payable in 15 or 30 years with no interest?

Or you can do a deed in lieu, basically giving the keys to the lender. A Deed in lieu of Foreclosure is when the homeowner signs over the deed/title to their property to your bank in an attempt to limit the lenders losses in pursuing a lengthy and very expensive foreclosure process. The borrower is giving the bank back the asset their loan is secured in with no hassles.
>>
A Deed in Lieu is an option to avoid foreclosure. A deed in lieu of foreclosure actually offers numerous benefits to both borrower and lender. The primary and most important advantage to the borrower is that it immediately releases them from most or all the indebtedness involved with the loan and default. A second advantage to the borrower is they avoid the proceeding and public knowledge of a foreclosure. Also, the borrower can often get better terms by going with a deed in lieu of foreclosure, than if they have a formal foreclosure.

The main advantage to the lender is a major reduction in the time and costs it takes to proceed with a non-judicial foreclosure and there can be other advantages to the lender if the borrower ends up filing for bankruptcy afterwards.

A Deed in Lieu of Foreclosure is a quick way out of a head-ache situation and because it could limit their credit damage vs. Foreclosure The bank may prefer the Deed in Lieu because it can save them money vs. the full foreclosure process. The banks are only concerned with saving themselves money

After the bank accepts the Deed in Lieu and sold the house, if the sale of the property does not meet the loan balance, the mortgagor could be held liable for the difference unless negotiated to be 'held harmless' before signing over the deed to the bank. (i.e. "I'll sign over the deed and save you foreclosure costs, but only if you agree to hold me harmless if you don't recover the full loan amount"). Sometimes that works, sometimes it doesn't.


Information given is not a legal advice but your information only.

God bless and take care.>

[saczig]

Hi,
I have update from my side.

So bank has approved my short sale and they said they will release me from obligation to pay any remaining balance and "forgiveness of debt" will be reported to IRS. 1099-C will be sent.

Can you please help me to understand, how much usually means in terms of taxes? Or what are the consequences of this?

I am requesting letter for bank (so that they will not follow for any amount) and make correction to my credit history.

Is there anything else, I should be aware of off?

[saczig]

I am paying bank additional amount at closing, so that they will not follow on judgment/deficiency on loans and I am also requesting to remove the late marks on my credit report for 90 and 120 days.

They have already added “Bank Adjustment/Deed in Lieu/ Bank Liquidation” to my credit report but I am thinking to request to remove that and add - “Paid Settlement - Paid in Full for less than the Balance Due."

Can you please let me know, which is better in regards to my credit history -
“Bank Adjustment/Deed in Lieu/ Bank Liquidation” or - “Paid Settlement - Paid in Full for less than the Balance due."
Thank You,

[faith]

Originally Posted by saczig

I am paying bank additional amount at closing, so that they will not follow on judgment/deficiency on loans and I am also requesting to remove the late marks on my credit report for 90 and 120 days.

They have already added “Bank Adjustment/Deed in Lieu/ Bank Liquidation” to my credit report but I am thinking to request to remove that and add - “Paid Settlement - Paid in Full for less than the Balance Due."

Can you please let me know, which is better in regards to my credit history -
“Bank Adjustment/Deed in Lieu/ Bank Liquidation” or - “Paid Settlement - Paid in Full for less than the Balance due."
Thank You,

Saczig,
Make sure you get in writing from your bank that they will not pursue any deficiency judgment against you. Do not sign the escrow papers until it is stated in the escrow papers that they have accepted and approved the Short Sale and released you from any obligations from any deficiency that is owed. I will also asked them to remove Bank adjustment/Deed in Lieu/Bank Liquldation and put Paid Settlement paid in less than full balance which is better than the first one.

Here's the link for IRS Debt Forgiveness.

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

Hope this helps

[saczig]

Hi Friends,

I would like to give update from my side.

The bank has approved the short sale and it stayed in escrow for long time (almost 1 1/2 month) and it got final closed last weekend.

So, I paid $5000.00 from my pocket to close this.

I am glad that everything closed and even though i do not own the American dream of having home.

I am happy to take out big burden out.