Home Loans and Support

1/1/10--We walk in Arizona

Discussion in 'Stop Foreclosure and Tell Us Your Story' started by Woody, Nov 14, 2009.

  1. Woody

    Woody LoanSafe Member


    This site has been tremendously helpful for my wife and I in our decision to walk away from our house. It really is great (perhaps great isn't the right word; let's go with comforting) to know that there are so many others out there going through what we're going through and have lived to tell the tale. Thanks to all who have posted, especially Catcus777 and Dog. I'd like to keep an update (for those interested) in our story.

    We bought our beautiful house in 2007, at the very top of this bubble (the 'good' news is that we sold really high as well) for $470,000. As of today, it's valued at between 295,000 and 300,000, with no end in sight. We have a 80/20 loan with the 80 being a 5 year ARM at 5.8%. It's not set to change until 2012, but honestly, we just can't keep this up. Our 20 fluctuates with what the FED says, so it's been great this past year when they've kept it at 0 to .25% because we're at 4.25%. A side note: the entire process for buying this house was deeply flawed to begin with. When we went to sign, our lender had different numbers; turned out he repeatedly lied to my face when I was talking about the numbers. We thought that perhaps it was the final (of many) 'signs' that perhaps we shouldn't buy this house. But buy it we did, and somewhere God is saying, "You schmucks, how many more signs did you need?" We didn't put anything down, either, so nothing lost there. Our monthly payment for both is $2500, which we have not missed, but the stress has taken its toll on our family (two young ones). We can keep the payments, but as the sad story goes, we'll be lucky to break even in 15 years. We have decided to just chalk it up to life's little lesson and walk. As with several others, we don't want to refi, don't want a mod, just want to end this debt-go-round we're on. We will be meeting with a lawyer just to have him (or her!) go over our papers and make sure all is in order. We are nervous about the future, but I'm excited as well. If all goes well, we will start January 1, 2010, and drag it out until June/July. My wife wants us out before the foreclosure signs go up! We'll be able to rent a house for $1500-1700 that has everything we have, but without the monthly worry. That alone will save us anywhere from 800 to 1000 bucks a month we can use towards our credit cards. We will honor those debts ($23,000), and if all goes well, we'll have them paid off by this summer, move out, and start all over again. We are sad about leaving our house as we do love it and the neighborhood, but we're just tired of the worry. NOTHING will change in the future with regards to our income, but the mortgage will only increase. We make enough ($120,000) that we shouldn't be living paycheck to paycheck, but that's exactly where we are. Constantly using credit cards, using our overdraft protection...you know the drill. We haven't had to choose which bills to pay, but we haven't had any left for fun....dance lessons, going to the zoo, date nights....and that's just for us, let alone stuff for the kids! I don't think these are extravagant expenses, and I'll be damned if I'm going to continue this charade. Kids see stress, and mommy and daddy are stressed!

    So, any words of wisdom before we walk? By the way, I will be changing our bank since we have automatic withdrawal, and I'll also have the stop calling letter (I forget the legal name) as well. We'll drop our land line and only use a cell. One question: should we be upfront with the lenders or just completely ignore them until the end? Again, we don't want the house; nothing short of forgiving the $160,000 we're underwater and changing the payments will do it. And we all know that ain't happening.

    Carpe Diem. We all make mistakes; it's just knowing when to admit it and move on.

    1 person likes this.
  2. rookie

    rookie LoanSafe Member

    Sorry woody. It's not the end of the world. To be honest with u, I wouldn't be in such a hurry to move out of the house. You may have several months before the banks kick you out. My wife's uncle had a little over a year to stay there payment and rent FREE! I would strongly suggest you stay there to the end.

    You could save up a lot of cash!

    If it's any comfort to you, just remember this: Your not alone in this mess!

    Good luck!
  3. caldwell02

    caldwell02 LoanSafe Member

    I would agree with rookie. You are responsible for the house until they foreclose and/or sell it. I'd stay for awhile and save some money. Either way your credit will be trashed. You might want to call them to see if they would agree to a short sale.
  4. Mandy

    Mandy LoanSafe Member

    That is what I am doing......... It is their fault that they do not want to help and it is not our fault that the economy is in such mess. I have bee trying to get a mod since Feb 2009, I got one in Oct. for a payment that would go up $700 a month? If I am having trouble now, what will happen next...... Oh boy!!!
  5. BadBobMo

    BadBobMo LoanSafe Member

    If you have a 2nd you might need BK-7 they will sell that note and you will have to deal w/collections. Check w/someone up on BK-Law
    Also if it where me and I have made the choice to walk the 1st thing would be is state that to your lender and let them know you only stay is they writedown your note -160k, never know where might lead to.
    Good Luck
    It's All Greed
  6. caldwell02

    caldwell02 LoanSafe Member

    What an interesting idea BadBob. That puts the power in the homeowner's court now doesn't it?
  7. Woody

    Woody LoanSafe Member

    Thanks to your posts. My wife and I are considering moving our walk starting on December 1. I'm of the 'let's-get-it-over-with mode, but she's worried about the tax consequences. She wants to know if the banks can withhold the tax forms for filing if we don't pay. Hadn't thought of that, but I know we can download them, so I don't see how they can prevent that. Badbob, that's why I'll be talking to a lawyer to see my options. But I agree with what a few others have said: let them know upfront my intentions to get this over with as soon as possible. While it would be great to stay rent free for 9 months (or so), we have both agreed that the sooner we end this the better. One other question: Let's say we get to June/July, and they haven't formally forclosed or sent the house to auction. We don't want to stay anymore at that point---what are our options? Can we just mail them the key, or are we still on the hook until they sell the house? I guess it comes down to when exactly is the house no longer ours?

    Thanks for any feedback.
  8. bloominga

    bloominga Banned

    Rookie, thanks for the signature line------http://www.greentreeservicingsucks.info/

    I had no idea that this site existed. In a couple of months I may have an attorney that would be very interested in a class action suit against Green Tree.

    I just started my quest for a loan mod a couple of months ago and thought all the stuff I had read about them was exaggerated a little. Well........it's not. Obviously there are more than a couple of people that know all about their tactics.

    Rick Daugherty in Atlanta has attempted to pull us into his den of thieves by 'playing' nice guy. Each time I talked to him his story is different. You don't even have to talk to different people in different departments. When you tell lie after lie it becomes hard to remember what lies you told the day before to cover yourself. He's very arrogant.

    I started a thread here on loansafe and will post my progress here. Someone needs to nail them down and stop the way they do business.
  9. Woody

    Woody LoanSafe Member

    Well, it looks like the wife and I will be doing this a month sooner. So, starting 12/1/09, we'll stop paying our mortgage. We meet with a lawyer this Monday to go over everything to make sure it looks good.

    Wish us luck!
  10. AZOwner

    AZOwner LoanSafe Member

    Woody -- funny, we have a friend named Woody! :)

    We stopped paying September 1 (Goodyear). September 7 I sent my bank a letter basically saying:

    Love to continue doing business with you. Here are my terms, because there is no way in 13 years my home will regain 53% of it's value.
    1. Forgive my first and second -- totally
    2. Give me a 30 year fixed mortgage, at current market value, plus 10 grand (hey, I didn't want to be unreasonable)
    3. Fix my credit

    AZ is a non-recourse state. If this is your primary residence. You walk away when they come to the door, after auction, and say, "Mr. Woody? We have sold your home, you should vacate the premisis in 2 weeks, and we'll hand you a check for your troubles."

    They can post a notice of foreclosure on your garage or window or front door. You can rip it down. You're not legally required to humiliate yourself in front of your neighbors -- or keep the sign up for that matter.

    We are packing -- regardless if my conditions are met on a silver platter -- I am staying here until I receive notification that my home has been sold at auction, and I am stashing every penny of what would have been my mortgage payment. I will find a home, in my area, in 2 weeks and be moved, unless they do deliver what I ask, and then I will sign after legal review (hee they won't deliver). Pack, live lightly after you receive your date, and be ready to go.

    I saw an attorney, and recommend it. The process is cut and dry in AZ, thankfully. the biggest question is how long will it take them to auction your home. they are still postponing auction past their original 90 day legal window from what I am seeing. So, 90 days past due, 30 days to record foreclosure, 90 days after that to first possible auction -- but more likely 5 months after recording of foreclosure before auction.

    I am telling you, driving the ship and controlling your own destiny, and having the freedom to do so in AZ, is complete freedom.
  11. LexieMustang

    LexieMustang LoanSafe Member

    Hi Woody! Just know that you're not alone in walking. Keep us posted on your situation.
  12. Woody

    Woody LoanSafe Member

    Lexie...I will keep you posted. Are you in AZ?

    AZowner...thanks for the info. One question: my wife and I plan on stashing our $2500 mortgage payment and pay down our credit card bills. We would like to physically leave the house in July--even if we don't have to. If the house hasn't been auctioned yet, can we still leave, mail them the keys, and be done with it? When is the house legally not my worry any more?
  13. AZOwner

    AZOwner LoanSafe Member

    You can ask the bank for Deed in Leiu of Keys -- where you simply sign over the home to the bank. Although, historically, banks aren't doing this in this crisis. You don't know if you don't ask. You can also ask your attorney about a quit claim deed to sign the house over -- but I think that's the same deal.

    After all of the reading here, and watching my friends and family go through this, you will own the home until they auction it. The timing cycle I posed, in my post above, is a best case scenario -- some here have had zero communication with their banks for months. The bank may ask you to short sell -- this is a stall tactic and allows strangers to walk through your home while the bank continues to jerk your chain.

    If you leave the property -- and even while you stay -- you are legally responsible, personally, for the property, the property insurance (the bank will get insurance on the property if you don't maintain it that will cost you big time), HOA. If someone breaks in the home, after you leave, and trashes it, you will be held responsible for it. If you leave the house, make sure you have vacant property insurance.

    There is very little you can do to force the bank to take the property back on your timeline, that I am aware of -- and if you find out differently, please share it here. If you leave in July, I would recommend that you continue to make the home appear lived in until auction.
  14. kjenkins7

    kjenkins7 LoanSafe Member

    AZOwner and Woody,

    I would suggest you stay as long as possible for sake of some credit damage recourse. Meaning (and i am not a lawyer) but have heard you get less credit damage if you stay work with the bank for a short sale and then pass over the property vs sitting there and letting it slide into a foreclosure which could be more damaging to the credit. For example 5 years of bad credit vs 10 years (forclosure). I just would take the time while not paying to consult with the lawyer the LEAST amount of impact to your FICO score. Meanwhile like you said you live rent free, pay off debt and get yourself in position to leave in the summer as you and your wife desire. Also in the background be keeping your eye on a rental that you would like (most sit for 2-3 months anyways) and negotiate that rent down so when you slide over you get a good deal. Just make sure you have your bases covered, especially credit wise. If you have older cars now is the time to get new ones, or lower mileage, any big ticket items you would prob need credit help on before your FICO goes down. Once you get everything your set for 4-5 years to take a low FICO score b.c you have everything you need. Then its just a waiting game (of wich i am sure FICO will re-evaluate there standards since 1 out of 20 people are losing there homes now not to mention they ding ya even for a modification anymore) and your set.
  15. KFish

    KFish LoanSafe Member

    Hey Woody
    I just posted a thread as well...under the deed in lieu of foreclosure thread. We stopped making payments this month. The difference is our properties in AZ are investment properties.

    I agree with AZOwner...definately talk to an attorney in AZ if you can afford to. I did and I now feel much better about our decision. I think you will find the laws in AZ are among the best for people in your situation.

    You will get lots of good advice here....I really think this site saved my sanity at times! There is a lot of good support from people that know exactly what you are going through. Good luck with your journey. keep us all posted on the process!
  16. LexieMustang

    LexieMustang LoanSafe Member

    I'm actually in Georgia, but it's interesting to see others going down this same path. I think these threads help other people decide that sometimes, it's just not worth it to stick it out.
  17. KFish

    KFish LoanSafe Member

    Woody...I wanted to respond to a question you asked in another post...you asked if you still get a 1099 (tax on forgiven debt) when you walk away. The answer is usually yes. My attorney told me that the bank will either go after us for the deficiency (which they cant because AZ is a non deficiency state...so depends on which state you are in) OR they will 1099 us for the forgiven debt. THey cannot do both.

    From what I read, and have been told also by people in the industry..very few banks are actually taking the time (and more importantly to them, the money) to file deficiency action suits. I guess its a case by case basis...and even then, its a wait and see thing. I have read posts here that also say they never got a 1099 for the forgiven debt...not sure how to explain that...maybe someone else can?
  18. Woody

    Woody LoanSafe Member

    Thanks for all the posts...

    AZowner: I love the letter you sent. I was actually thinking the same thing because truth be told we don't want to leave. But, I refuse to stay in a house 160,000 under when we put no money down. I'm assuming the bank hasn't answered yet, have they? I would like to stay as long as possible, but my wife (and I) don't want to still live here with a huge for sale/foreclosure sign in the front yard. We're lucky in that we will be able to save our monthly payments, so if it stretches into 9 months or so (and looks like it can), we're looking at 22,500 in the bank. I do feel good about our decision; it does feel as though I'm in control. I keep reading other posts about the hassle and run-around everyone who has applied for a mod or refi are getting. I just don't understand why the banks are making it so difficult.

    I've already looked at rentals, and they really are a dime a dozen here in the East Valley. Thanks for letting me know how easy it is. We meet with a lawyer on Monday; I'll ask him about a Quit Claim. And the nice part is, I could care less about my FICA. Who cares? I'm just tired of worrying about how this number defines me, regardless of everything else.

    Kfish---thanks for the info on the 1099. I'm in Arizona, so I know it's a non-recourse state. But how do the taxes play out on that? How does that process work?

  19. KFish

    KFish LoanSafe Member

    The bank will send you and the IRS a form 1099, which will have the amount of the forgiven debt. You will get it the January after the year of your foreclosure sale. So you wont be dealing with it for your 2009 taxes...probably 2010...or maybe even 2011 depending on how long it takes the bank to deal with it.

    You will have to pay taxes on the amount of debt that was forgiven, just like it was income. I would talk to your tax guy..he should be able to give you an idea of what you are facing.
  20. Woody

    Woody LoanSafe Member

    Kfish...thanks for the information. So do they tax me on the entire amount of the loan (470,000) since I'll be going into foreclosure? Yikes...any idea how much could that be?

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