Foreclosure in Washington State

[hadesh]

We bought my condo right at the top of the market with 2% down-payment and 98% loan. It is a beutiful condo at a convenient location.

We stayed in the condo for 2 years and some more. Unfortunately, some medical condition in my family dictated that we need a far bigger place that what the condo provides.

We moved out our condo about 10 months ago to a rented accomodation and rented our own condo. The rent covers a little more than 50% of the condo expenses such as mortgage + taxes + soc dues etc.

As of now we can afford mortgage + rented condo. This is because (a) our rented condo is really small with bad condition = cheap rent and (b) we do not buy anything on credit so no bing monthly paymens to meet. Right now the only loans that I have are mortgage + car repayment. It is a mid-range car and we have already paid off substantial amount.

My current worry right now is (a) Moving to a rented place that provides enough space for the medical condition (b) Sending my child to private school. Public school story is turning out of be real sad (c) My son (1st grade) is excelling in one particular sport and it appears that I will be spending about 500 dollars a month very soon, just to provide him with right coaching. (d) Some saving for our retirement. We are looking at large scale problems after retirement due to medical issues.

Clearly (a) + (b) + (c) + (d) cannot be satisfied if I am paying for the Mortgage. However, there is no demonstrated inability to pay as well because we are skimping on stuff (public school, cheap rent etc)

Additional information: like an idiot I refinanced one year back with BOA to lower my interest rate (changed my mortgage from 30 year fixed to 3 year ARM). I was hoping that I could sell my condo in an year. The interest rate is getting reset in 2012 and it appears that it is going to be much much higher that what we are paying right now. On the other hand Bush tax cuts are expiring in 2012, so we are going to be screwed if we wait too long.

So we got hold of a realtor and approached BOA for a short sale. Provided all the documents that they initially asked for. There is no further response for the last 3 weeks. Realtor claims that he is following up with BOA every week.

I mentioned the possibility of skipping a mortgage payment or two. Realtor said it will negatively affect my chances of a short sale approval.

I have decided to foreclose if BOA does not approve the short sale and realtor is not happy with that.

I am approaching a lawyer but if someone could add any information that they already have

1. Will skipping a paymen or two bring BOA to the table?

2. My mortgage agreement has that deed-trust-something-something clause. In this case does BOA have an option of judicial / non-judicial foreclosure or whehter BOA has to do non-judicial foreclosure. Obviously i am trying to avoid deficiency judgement.

3. Any other issue that comes to your mind.

ps: I do not give a xxxx about my credit score. We have not bought anything on credit other than my house and my car. We are not planning to change this style.

[Cat Damiano]

Hi hadesh,


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


The realtor is not happy because if the property is foreclosed, they will not get paid, which is not acting in the best interest of the client, you. The truth of the matter is that a short sale is very difficult to obtain as is a deed in lieu of foreclosure and by remaining current on the loan, you are showing that you can afford the mortgage payment and not showing a hardship. The bottom line is the lender is getting their money from you at this time so the loan is what they call a performing loan. In this case why would they accept a short sale when the home is not even at risk of foreclosure, in my opinion. A short sale or DIL is usually used as a last resort when there aren't any other options available.

What Is A Short Sale? Short Sale Information from Bank of America


You may want to check and see where exactly in the process you are with BofA.
https://shortsale.bankofamerica.com/index.cfm

[hadesh]

Thanx a lot for the link. Let me check with my realtor if he has received any login information. Would you know if BOA has an option to chose between judicial and non-judicial foreclosure? My contract has that 'bla!bla! trust bla!bla!' clause.

thanx in advance

[Cat Damiano]

In Washington, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process. It would depend on if the "power of sale" clause is in the deed of trust.

Judicial Foreclosure

The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, the property will be auctioned off to the highest bidder.

Non-Judicial Foreclosure

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".

Power of Sale Foreclosure Guidelines


If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:

1. The notice of sale must be transmitted both by regular mail and by certified mail, return receipt requested, to the borrower at their last known address, and by regular mail to the attorney of record for the borrower, if any, not less than thirty (30) days prior to the day of sale.
   
   The sheriff must publish a notice of the sale once a week, consecutively, for four (4) weeks, in any daily or weekly legal newspaper of of general circulation published in the county in which the property is located. Additionally, the sheriff must also post the notice in two public places, one of which must be the courthouse door, in the county where the sale is to take place for a period of not less than four weeks prior to the day of sale.
   
   Said notice must contain the time and place of the foreclosure sale, the names of the parties to the deed, the date of the deed, recording information, a property description, the terms of the sale, and the borrowers rights (or lack of) redemption.
2. The borrower has up to eleven (11) days before the sale stop the foreclosure process by paying the past due payments, plus expenses, including trustee and attorney fees.
3. The sale must be made by auction between 9:00 am in the morning and 4:00 am in the afternoon at the courthouse door on Friday unless Friday is a legal holiday and then the sale must be held on the next following regular business day. The sale may not be conducted less than 190 days from the date of default and the highest bidder will receive a certificate of sale.
   
   The sheriff may postpone the sale (not exceeding one (1) week next after the day appointed) by giving notice and by posting written notices of the adjournment under the notices of sale originally posted.

Unless redemption rights have been precluded, the borrower may, within eight (8) months after the date of the sale, redeem the property by paying the amount of the highest bid at the foreclosure, plus interest.
If the non-judicial foreclosure process is used by the lender, then it cannot sue for a deficiency judgment. On judicial foreclosure sales, the borrower can be sued for a deficiency, unless the property is found to be abandoned for six (6) months before the decree of foreclosure.


http://www.foreclosurelaw.org/Washin...losure_Law.htm

[COBALTBLUE]

If the non-judicial foreclosure process is used by the lender, then it cannot sue for a deficiency judgment.

If this is true this is pretty significant.

[Cat Damiano]

It would be, but that is why it is always a good rule of thumb to consult with an attorney to go over your mortgage documents just to be sure.

[hadesh]

Thanx, I will go thru my mortgage document and will post back what I read.

[hadesh]

Quick update: BOA called me end of April, took all my information and promised that BOA short sell department will contact me. (recap: I was hoping for pre-approval).

I finally had my wake up call after a month. Stopped paying the mortgage, now I am two months overdue.

I have also put my condo for short-sale.

I will update once there is any new development.

[Cat Damiano]

hadesh,


Thank you for the update, Good Luck with the short sale!

[hadesh]

Here is the status update. I had bought the condo for around 280k. BOA has agreed to accept 127k (145k gross), the current offer is 110k (123k gross). So there is a short-fall of about 17k.

The question is

(a) should I sign for a promissory note of 17 k over 10-15 years and negotiate to fix my credit report as paid (or whatever) or
(b) bite the bullet and let the bank foreclose.

As far as I understand in WA even in (b) BOA most likely will not be able to come after me for the short-fall amount. However, I am worried that my credit report will have more damage with (b) as compared to (a).

Any advice? Paying off 17 k in 15 years is about 1k an year and I do not see this as an issue. However, my friend says this might be a problem since the loan amount will keep on showing in my report till it is settled.

[Cat Damiano]

hadesh,


The hit to your credit will be similar either way, the big factor is have you secured another place to live already? If the answer is yes, then why worry, you will have an opportunity to work on rebuilding your credit in the future.

How foreclosure impacts your credit score - Apr. 22, 2010

[hadesh]

Thanks for the quick reply.

I have not secured another place I should have done that before I missed the payments However, I do not see this is a big problem since I am willing to pay one or two months deposit for a rented house and I suspect people will rent if I am willing to pay deposit.

So I guess I will just sit there and wait for the bank to foreclose. I dont think they will come after me for the balance payment.

[cgpjs]

Thanks for the quick reply.

I have not secured another place I should have done that before I missed the payments However, I do not see this is a big problem since I am willing to pay one or two months deposit for a rented house and I suspect people will rent if I am willing to pay deposit.

So I guess I will just sit there and wait for the bank to foreclose. I dont think they will come after me for the balance payment.

Did you ever ascertain whether there's a power of sale clause? If so, I would definitely walk, and even if not, I would probably walk.

[hadesh]

yes, there is a power of sale clause

[Cat Damiano]

hadesh,


That is good news for you!

[hadesh]

I guess I have been very lucky. Around the time that I stopped paying my loan, I transferred all my savings overseas, paid off my 2 loans on overseas properties etc. When BOA asked for my financial information I did not have much savings. BOA asked my financial information 3 times during the process and I received my bonus 15 days after their last demand for my bank statement. So I have about 50k (bonus) sitting in a different bank account. Can't wait to buy another home in an years time. (I have been told that if i come up with substantial deposit then my credit history is not a problem).

And I have a valid medical reason to demonstrate that I cannot live in the property.

[Cat Damiano]

It shouldn't be an issue, but honestly, with a bit more savings you could probably buy in all cash and not owe anyone.

[katwalker]

Cash is the way to go. I'm done with the mortgage business. Without one I can retire in my forties.

[hadesh]

Received my approval for short sale. BOA wanted my signature on another document, I signed it and delivered it to them. Waiting for final set of papers.

[hadesh]

Finally!

We have signed the paper and the whole thing is behind us.

We bought the code for 280k, it got sold for 125k.

At this point of time I am not sure what are the tax implications and whether BOA can come after us for the short fall but I will deal with it as/when/if it happens.

Thank you everyone for your pointers, on this thread and elsewhere on this site.

[Cat Damiano]

hadesh,


Congratulations! That is really great news, I am so happy for you! Best of luck to you moving forward!

[hadesh]

I decided to check my credit score today. Thinking of applying for new housing loan.

My equifax credit score is 635.

I have a Kohls credit card that I do not use at all. Equifax is suggesting that my credit history might be hurting because the account is not active and zero balance.

My mortgage is showing up as Balance 0 with comment "Account paid for less than full balance "

I think I will apply for a housing loan and see what reply I get

[Cat Damiano]

I decided to check my credit score today. Thinking of applying for new housing loan.

My equifax credit score is 635.

I have a Kohls credit card that I do not use at all. Equifax is suggesting that my credit history might be hurting because the account is not active and zero balance.

My mortgage is showing up as Balance 0 with comment "Account paid for less than full balance "

I think I will apply for a housing loan and see what reply I get

I am sorry, but we would be unable to refer you to any lenders, you can try locating the type of lender you want to speak with here;

HUD FHA Lender List

Home Affordable Refinance Lenders - Freddie Mac



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[hadesh]

In case anyone is curious....it has almost been 9 months and my credit score is now 674. I guess it helps since I have 4 credit cards but I pay 3 of them in full every month. I have no loan other than car loan.