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Underwater Washington State Condo

Discussion in 'Countrywide Home Loans - Tell Us Your Countrywide ' started by Hyperrichard, Jul 20, 2013.

  1. Hyperrichard

    Hyperrichard LoanSafe Member

    Thanks everyone, This is a great forum for us dealing with the foreclosue process in Washington State.
    Here is my story:
    Purchased a low end condo for my son (he could not qualify) in 2007 in the San Juan Islands for $125,000. Thought at the time that it was a pretty safe investment. Ha!
    It is listed as my 2nd home but was acturally purchased as a primary home for my son. He is listed on tile but not on the mortgages.
    Took out two loans, 1st for $100,000 and a 2nd Heloc, for $12,500 through Countrywide.
    Both loans were taken out at the same time for the sole purpose of purchase.
    My son agreed to make all payments and did so until the recession hit the market hard and work became scarce.
    We keep up on the mortgages but had to let the HOA dues fall into arrears (now over $5000) but resumed paying regular dues and some arrears) when son fianlly got a job.
    Subsequently, Bank of America acquirred the loans when all that went down, and then, two years later sold the first to Green Tree Financial, but held on to the Heloc.
    Currently the total owed on the 1st and Heloc is $106,000.
    On top of this, the condo complex has been so neglected and is so badly in need of repair that an assesment is in place dinging each owner with a $5000 assessment.
    The condo is now valued at less than $65,000 with a very, very low probability that anyone would buy any of the 4 units for sale including ours. There have been no offers and no lookers in more than two years... The last unit to sell in the 23 unit converted apartment complex went for $56,000 in a bank sale three years ago.

    So what to do with this POS Condo ?

    After reading many posts on this forum, Strategic Default seems the best way to go especially since Washingon is a non-recourse state.
    We have now stopped paying all mortgages and HOA dues and will go into default Aug. 1, 2013. We are taking all monies normally paid by my son, and putting the $$ away for furture use if needed.
    Other options such as refianace, Short-sale, DIL etc. have all been thoroughly explored and ruled out; as have all goverment programs.

    I am retired on small social security income supplemented by some retirement funds and other investments.

    Note: I think, after reading many posts, that it is highly unlikely that the bank will want this condo back at all, or at least for a very long time. Additionally, considering all the HOA problems, sale is also very unlikely.

    Here are some unreslolved questions I have and hope to get some answers from this great group.
    1. Since both mortgages were taken out at the same time for the sole purpose of purchase, do they both come under Washington State non-recourse laws?
    2. Since I am a California resident, is it likely that the HOA will come after me for the past dues/assessments, if and when, the bank forecloses. The HOA, at a recent meeting, has decided not to foreclose on any of the units in arrears. They are in bad shape with little reserves.

    I'm sure that there will be many more questions that will pop up and appreciate any input that anyone can give.
    Thanks very much,
  2. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    Welcome and thanks for joining the LoanSafe community.

    I'm very sorry to hear that your son lost his job and the property went downhill fast shortly after the purchase. No one could have predicted that the economy was going to crash almost immediately after he moved in..

    Yes, since the loan are purchase money they will fall under the non-recourse statutes. In Washington, almost every residential foreclosure is being foreclosed on using the non-judicial foreclosure process and going this route your loans will be considered non-recourse which the lender will not be able to pursue a deficiency judgement against you. Here is a great thread with this same discussion and members here who have went over the scenario with multiple WA attorneys.

    Finally accepting reality in WA

    Judicial Foreclosure = very rare

    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".

    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.


    Here is some information on the foreclosure timeline;


    Washington State Foreclosure Law
  3. Hyperrichard

    Hyperrichard LoanSafe Member

    Thanks Evan for your reply and all the info on this web site.

    This is a little off topic, but is related to some of the reasons for our strategic default decision.

    The upper condo complex my son lives in is so run down and in need of repair that a number of owners like us, are also not paying their HOA dues and are letting their units go into foreclosure.
    The siding used when this apartment building was converted into condos in 1999 was recalled, but the HOA decided against replacement (while the replacement siding was free, the labor was not.)
    Now it will cost $100,000 to repair the mold, meldew and warped boards thus incuring an assessment of $5000 per unit to be paid over 2 1/2 years.

    On top of the already high HOA dues, this brings the new monthly dues to $400 a month. (there are no amenities).

    This recall/defect was not disclosed to me when I purchaed this condo for my son, and I really feel we were misled.
    On top of this the HOA, while highly maintaining the lower condo units where most owners live, failed to maintain the upper condo grounds, stairs, railings, etc. thus making the units impossible to sell. I tried for two years with not one looker or offer. The last unit like ours to sell went for $56,000 in a bank sale three years ago.

    Our walk is due to begin August 1st and I have already been getting two calls a day from Green Tree. I do not anwser or reply to their calls and have blocked their number on my cell phone.

    Personally, I don't think Green Tree (1st mortgage $96,000) or B of A ( Holoc 12,500) (all purchase money) will want this condo at all or at least for a very long time.

    Two Questions:
    1: How long will the lenders take to finally foreclosure.... and is there any kind of timeline I can expect?
    2: If and when the bank (s) foreclose, will they have to assume the HOA arrears dues or will the HOA try to come after me.

    Thanks again to everyone on this forum who has given me insight into this sorry state of affairs. All I can do is try to make the best of it, lick my wounds, and move on.

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