Chase Short Sale in Southern California

[Fuzzy]

So I thought I would post my whole saga here because the information I have gotten on these boards has been very useful and reading other's stories has given me a good idea of what will be coming up next for us. Hopefully our information will help someone else.

House Information:
Bought townhouse in early 2007 for $399K
80/20 loans both with Chase - both loans are non-recourse, purchase money
Chase is still the servicer on both loans
Freddie Mac owns the first and Chase owns the second
House is currently worth around $250K

In November 2008 my husband and I realize that his company is not doing so well and our finances are pretty strapped. We take a look at our spending and find that the mortgage is taking the biggest chunk of our money, we cut back on everything else but nothing is really making a difference. We ask around and realize we can apply for a loan modification. December 2008 we send the first round of paperwork to Chase which is never received. I can't get anyone to tell me what I can do, I find these forums and then call HOPE.

After talking with the representative at HOPE we pull all our paperwork again and re-submit in end of December/early January. At this point we realize that husband will be losing his job sometime this year but we're not sure when. We get the numbers to call Chase and a timeline of 30 business days. I start calling Chase weekly in order to make sure nothing gets lost. It's a good thing I do because twice we are told to get more information by a specific date (tomorrow). March 2009 husband is told he has until the end of the month and my overtime is cut, good-bye income.

Husband finds a job in April but it comes with a pay cut and he also needs shoulder surgery, good-bye savings. 4 months after submitting we are denied a loan mod because we make enough to cover the first mortgage. Unfortunately, we don't seem to make enough to cover the first, second and HOA fees.

While waiting for the loan mod we talked about what would happen if we got denied. We figured that in order to break even we would need to gin about 12% a year on our house for 10 years. Using the information we got here we decided that we will either short sale or foreclose because the house isn't worth the stress and frustration and we want out. We debate between the foreclosure and short sale and we miss our first ayment April 2009. We decide to do the two processes in tandem and which ever ends first wins.

We put our house up for sale Memorial Day weekend for $239K and receive multiple offers. Get our paperwork together again and our wonderful Realtors send it to Chase. Realtors have to fax the information 4 times before it is all received. The timeframe we have from Chase is 30-60 days to assign a negotiator, 60-90 days to get approval, and then 30 days to close. We are hoping for a close date of September/October.

Negotiator is assigned at the end of July and they need updated financial information. Early August we get a broker price opinion from both mortgages. We have had two offers drop but we get more and have three that the bank is considering. Beginning of September the bank comes back and wants at least $249K. We send out a call for best and final offers and nab one at $252K. As of now we have sent the final paperwork to Chase and are waiting on a formal approval letter. Chase wants to know if we can bring any money to the table or are willing to sign a promissory note for the loss, no way, no how. I am still hopeful we will close sometime in November.

We finally got a notice of default filed with the county in early September. They have assigned our loans to a separate company who will be pursuing the foreclosure on Chase's behalf. Based on the minimum timeline for foreclosure we are looking at the end of the year. So to anyone who has read this novel I have a few questions:

We know we are covered with out tax liability for federal taxes but we still don't understand our liability with CA state taxes. We will be seeking legal/financial advice but does anyone have experience with this?

We are paying our bills and HOA fees on time but our taxes are due in December. We had an escrow account to pay the taxes but that doesn't have enough. Anyone have any advice about paying the taxes or not?

Does anyone have any experience with Chase foreclosures? Are they fairly speedy or do they take forever?

[Enough Already]

Hi Fuzzy,

Thanks for posting your story. I'm working on one with Chase right now too, and it's taking a long time. The time frames you noted above seem to be about right, so far.

I'm in FL, so I don't know much about CA laws, but I believe you do not need to pay the taxes in December. Don't take my word for it, but check out the Deed in Lieu of Foreclosure forum on this site, and try doing a key word search. I believe I've seen discussion of it there.

Good luck to you. Please post up dates as your short sale moves along.

[Fuzzy]

So I thought I'd update this thread with new information. We finally got our approval letters! Or at least our preliminary approval letters. The first has agreed to release $3000 to the second in exchange for the second mortgage holder releasing the lien against the property. (Which is interesting considering it is Chase working on behalf of Freddie working against Chase.)

The first preliminary approval letter looks good we just need to negotiate a longer closing date as they have a final date of this Friday. Why do they do things like this?

The second approval letter is the problem. It says that it will take the $3000 and release the lien but that we will still be responsible for the deficiency debt under state law. There is no way in hell I'm signing that piece of paper until they change the wording.

Our realtors are talking to them now to figure this out. We're still hopeful we will close before Thanksgiving. Or at least praying that this ends soon. Foreclosure starts to look better and better.

[HopingtoFind]

Originally Posted by Fuzzy

So I thought I'd update this thread with new information. We finally got our approval letters! Or at least our preliminary approval letters. The first has agreed to release $3000 to the second in exchange for the second mortgage holder releasing the lien against the property. (Which is interesting considering it is Chase working on behalf of Freddie working against Chase.)

The first preliminary approval letter looks good we just need to negotiate a longer closing date as they have a final date of this Friday. Why do they do things like this?

The second approval letter is the problem. It says that it will take the $3000 and release the lien but that we will still be responsible for the deficiency debt under state law. There is no way in hell I'm signing that piece of paper until they change the wording.

Our realtors are talking to them now to figure this out. We're still hopeful we will close before Thanksgiving. Or at least praying that this ends soon. Foreclosure starts to look better and better.

Sounds like you're on top of things with what you're doing. I wouldn't worry about closing date they put in, if they are approving it they will most likely change the date to accommodate closing date.

You're right not to accept the 2nd approval letter, especially considering you have non-recourse loans. Sometimes lenders could be prompted by offer of more money... buy yes I wouldn't agree to this unless they forgive debt and not pursue deficiency.

[Enough Already]

Hi Fuzzy,

Thanks for the update. Boy, your short sale approval came through very quickly! We've had our offer in since early July and we're still waiting on the approval from the first. I hope things will speed up soon (both of our mortgages are with Chase too).

With your loans being non recourse your realtor, or you should be able to convince them to change that wording.

Good luck. Please keep us posted.

EA

[Fuzzy]

Enough Already, we started the process at the end of May so be patient with it a little while longer. They seem to be picking up some speed on getting things done.

On my front it looks like things are at a stand still. The second won't change the language on the approval letter and they are telling our realtor that it will go to their collections and we can settle for 60%. The only thing I can think is that Chase is smoking crack. 60% of $75,000 is $45,000 and if we had that laying around then we wouldn't be in this position in the first place. It just makes me so frustrated. We offered to bring a few thousand to closing that we could scrape up and borrow from family. No deal, they won't budge.

At this point it looks like the short sale will fall through and we will just let the property go to foreclosure. I just wish I could talk to someone with common sense! They can take $3000 from the first plus our few thousand and let the short sale go through and then write off the rest of the balance or they can take no money after the foreclosure. But then again had they approved our loan modification in the first place to change the interest rates we would still be happily paying our mortgage and wouldn't have even considered foreclosure. Short term gain supercedes long term loss I guess.

[IRAKENJI]

Hi there. Our final loan mod came through but with a balloon payment of $297K so we decided to short sale our house instead. We listed the house last week and have 1 offer so far for $400K - we owe Chase about $645K. Our realtor will submit offers to Chase and we'll see what happens from there.

Questions:

1. While going through short sale - did you pay your mortgage?
2. Once you got an approval from Chase - did they give you a deadline to finish out the short sale process?

[Fuzzy]

IRAKENJI - I'm sorry to hear you are walking down this road as well.

We stopped paying our mortgage in April and then dithered about short sale or no short sale for a month and put our house up at the end of May. At this point I kind of wish we had just foreclosed but we're still hanging on. Although people have done it with paying the sense I get from Chase is that if you are paying your mortgage then they have no reason to work with you at all. But your situation may be different so I would talk with your realtor and get a sense of how they think it will play our.

It took us a really long time to get to the approval and they do have deadlines but based on talking with my realtor, those deadlines are fairly easy to get pushed out. Ours was about 15 days to close escrow which just isn't going to happen. I'm not really worried about it because now I know exactly what the bank is looking for if we need to do another go-round. Just realize that getting your case assigned to someone may take a few months.

If you are going to stop paying your mortgage, make sure you get a letter that indicates that your mortgage holder may only speak with your realtor and not you as that will save you a great deal of annoyance. Good luck!

[IRAKENJI]

Fuzzy.. Hi! You mentioned that you have not made mortgage payment since April - isn't that too long without making a payment that the house now has to go in foreclosure?

Wht take so long to get an answer from the lender? So, this going to be a long ride for us, eh? Did you ever get a notice on your door to vacate the house? -- I'm just curious.

How many offers did you have to submit to chase? We have 2 offers so far after it has been out for 4 days. Once offers are submitted, can you still send Chase of offers that are trickling in and if so, do these offers have to be supported with all the short sale paperwork?

Thanks and goodluck.

[Enough Already]

Fuzzy,

Are you sure your loans are non-recourse? If so, you should remind the bank of that fact and tell them that you're going to let the place go to foreclosure unless they remove the deficiency language from your short sale documents. If I had non-recourse loans there is no way I'd sign off on those terms.

They can't do anything to you after foreclosure with non-recourse loans (they have no recourse - it's a beautiful thing), but if you agree to a deficiency debt or "soft note" and sign off on the sale, you'll have opened yourself up to the possibility of more headaches and dealing with collections calls in the future.

Please keep us posted!

[Fuzzy]

IRAKENJI - yes we missed our first payment in April. So far the NOD was filed at the beginning of September. The earliest they could sell the house would be the end of the year. They don't file the NOD right away, we had about 3-4 months before they did.

As for short selling your house, unless you already have approval from the bank expect it to take about 6-7 months. We gave the bank the offer and two back-up offers. According to Chase's timeline it will take 60-90 days to assign a negotiator, 30-60 days to get an approval and 30 days to close escrow. This does not include any negotiating for terms...that can stretch the process out longer.

Enough Already - we did speak to a lawyer and our loans are non-recourse which is why we're essentially telling the second mortgage to shove it. They can take the money or they can get nothing. Unfortunately, what you and I see as common sense doesn't necessarily mean that the bank will agree.

As to where we are right now, I think the second is playing hardball and wanting more money from the first. We are waiting for the first mortgage to reply before we do anything else. At this point we have told the second mortgage that we are not signing the approval letter. Either they will agree to change the terms and we will continue with the short sale or we will go to foreclosure. Luckily the buyer is still willing to buy the house even with all the set backs.

[Enough Already]

Originally Posted by Fuzzy

...
Enough Already - we did speak to a lawyer and our loans are non-recourse which is why we're essentially telling the second mortgage to shove it. They can take the money or they can get nothing. Unfortunately, what you and I see as common sense doesn't necessarily mean that the bank will agree.

Hi Fuzzy,

It sounds like you've got things well under control there! Glad to hear it. The banks sure don't make any sense. Good luck with this, and please post updates.

[IRAKENJI]

Hi FUZZY! How are you? good, I hope. We received 6 offers on our house. My realtor suggested to send the highest offer to the lender and just note that back up offers are on hand - is that okay?

I would rather have the bank review the offers that we have so they know we have "actual" offers though we're sending in the best offer.

I hope that this will be somewhat a smooth process since we only have 1 loan and no HELOC.

Question:

We owe the bank $640K and don't plan on paying starting Nov 1. Once we stop making payments and reached the end of the short sale process (let say 4-5 months of non payment) - how are the "non-payment" monies collected or added to the money that is owed to the lender at the end of the short sale process?

Promissory notes are out of the question because I will refuse if they make me sign one.

Thanks and God Bless