Bank of America - Short sale with collectible Debt

[Chris Sorensen]

I have read with interest this thread and I am surprised that no one has mentioned Bankruptcy. I'm not taking a position, I'm actually just curious as to why this has not been considered an option for any type of DJ that may come.

Chris Sorensen
Founder, USA HELP, Inc.
www.freehmeownershiphelp.org

[tc4gold]

I did consider it but each individuals circumstances are different. For me bankruptcy would not have worked for too many reasons to go into here and perhaps others have thought of it too but for one reason or another cannot or should not do it.

Hopefully each person takes some legal advice on that option.

[Chris Sorensen]

What about Insolvency? IRC, Sec. 108.

[veryconfused]

I am just shocked reading this. We just signed on w/a realtor who does only short sales, who mentioned nothing about BoA pulling this on some ppl (or, everyone??). She said making it so that they cannot come after you after the sale is done is what they do in every case (actually she said minus one situation where the owner had a huge shortfall and significant assets?). This is in Michigan. 80/20 loan - first w/BoA second w/GMAC.

We've missed our first payment this past month at the advice of said realtor and a seperate attorney we met with, both who said they cannot get short sales through w/o at least one missed payment (lawyer said then stay 30 days late?). Now I'm feeling totally lost, w/this new info that this bank sounds horrible for short sales. ???

[Allan2]

I have read all your posts with much interest. Thank you for all the great advice.
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I had a 1st and 2nd mortgage in FL and completed a short sale. My situation is that the 1st mortgage has been resolved but the 2nd mortgage accepted a $4000.00 payment with the agreement that the remaining amount be charged-off. No choice but to take the offer or loose the sale. After months of no contact, I received a call yesterday from a BofA representative and without committing to a deal I was offered a settlement on my $18,000 balance. In the conversation I let her know I recently lost my job and was on unemployment. Option 1 is $62.63 a month is for 10 years and option 2 is $156.00 for 5 years with no interest. Is this a good deal? And since this is the 1^st offer, when I do try to negotiate a better deal, how should I proceed into the negotiation? I do not have the money for a large payoff. Any advice would be greatly appreciated.

[pookey]

Originally Posted by Chris Sorensen

What about Insolvency? IRC, Sec. 108.

We have two rental houses in the Short Sale process. Both have been re-financed and have Countrywide/BofA as the 1st and Greentree holding a Home Equity Loan (not a LOC). They are both in San Diego and are in upside down positions. One was a fix and flip and the other a place for our daughter and roomates while in college. But that was still in a hot market and we couldn't find any contractor to take on the fixer...long story, it took 1-1/2 years to get the fixer done with no rental income and a shady contractor who gutted it (we live 500 miles away) and spent $200,000 on it.

The biggest issue is with the "flip & flop" - it was the first house that got under contract. I paid $875,000 (100% financing) put the $200,000 into it then got caught in the declining market. Decided to rent it until the market turned. Meanwhile refinanced it and took out cash to pay down credit cards used for the remodel. Got a Option ARM and paid the minimum payment to reduce out of pocket expenditure while waiting for the right time to sell.

Our renter left in July and that was the final straw. It's been empty since then. We've lost one of 3 roommates in the other house because of the Short Sale and the others not only aren't paying that share, but demanded a reduction in rent due to the inconvenience of the showings, etc.

Now the principle balance is just under $947,000 with a Home Equity Loan balance of about $113,300. We have a contract on the house for $691,000 and 9 backup offers, but the highest is for $700,000. Greentree has indicated it will do the SS for 30% of the purchase price. Then suddenly the file was closed "due to insufficient offer amount."

Thanks to this forum I found the e-mail address for the President of BofA and wrote. Got a call from Laura Uribe in the escalation department who said their BPO appraisal came in at $950,000 and that they won't accept an offer for less than FMV as determined by their appraisal.

$950,000 is not a realistic price - in 2006 before we rented it we tried to sell it for months and the RE estimate was $995,000 (although we listed it higher). It's in an area of houses higher up that have wonderful views of the skyline and bay - and they go for more money because of it.

Ms. Uribe also said they would rather have the house than accept anything lower! Basically she was pleasant but unyielding.

The other issue we face is that we own a C-Corporation that we started 22 years ago which pays us our salaries. It's in a very small niche industry and I have no idea how it would be valued, but we've been told our shares could be at risk. We personally are insolvent with over $200,000 in credit card debt and no assets. All of our money was in these properties. We have a 2nd home in SD that is slightly underwater, and even our primary residence is flat to underwater. I've got two kids in college and have taken a hardship withdrawal from our 401(k) as well as it having lost 40% in value.

We make too much on paper - but in reality supporting 2 kids away at college and tuition (again, make too much to qualify for any financial assistance or tax breaks) and these houses and credit card payments we are no longer making ends meet.

I even found out that we can't do a Chapter 13 Bankruptcy because of how much our primary and 2nd houses are worth.

We've had perfect credit for 40 years. Never late, even with carrying all this credit card debt. Now our FICO has tanked to the low 500's due to not paying the rental house mortgages.

We've been working with an attorney to do the short sales because of our "too much income" issues, and have already paid $4,000 with another $2,000 contractually due at the conclusion. I brought up the RESPA/TIL issues as seen on this forum and the response was that it would mean another $1,000-$1,500 per property to add that to the contract.

Should I start to be the one on the phone to BoA constantly, telling them we're insolvent and bringing up the RESPA/TIL issues? Of course the attorney wants me to stay out of it and let them handle it in case I should say something that could be used against me.

I'm at a total loss and so very depressed. It seems like we may lose everything we've worked so hard for. I know we're not alone and better off possibly than a lot of people. But it still leaves my head reeling - any comments or suggestions would be very, very appreciated!

[scottp999]

FYI - Many of the people working short sales have just been re-organized and no longer do short sales.

This includes Richard Shults, Alisha Crenshaw, and many of the short sale analysts like James Pellegrino.

This really is horrible to do to people in the middle of a short sale process. Getting to the right people now is a giant puzzle that I can't figure out and the deal we are working on for 5 months may tank after already beening approved and needing a closing date extension.