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Wells Fargo/ASC Deed In Lieu of Foreclosure (Strategic) - Tips and My Story

Discussion in 'Stop Foreclosure and Tell Us Your Story' started by blended family manor, May 17, 2011.

  1. blended family manor

    blended family manor LoanSafe Member

    This forum was a great help for the past 10 months, so I wanted to share my story. Please excuse the length. I tried to shorten it since this was originally a blog post.

    For those people who say that the bank wants your property back, I’m here to tell you that I really doubt it. Wells Fargo has dragged their feet on this for 10 months. The bank, of course, hoped that my property would sell, but with issues with the HOA and a land lease contract that has not been renewed, there isn’t a single buyer (if they can even get approved) or investor willing to put their money into this mess.

    I’ve read plenty of articles, frustrated tirades, and desperate pleas for help from people trying to move forward with their lives after the market crash. For those wondering how to go about trying to get out of their house and through this ridiculously frustrating process, keep reading. I don’t have an attorney, so all correspondence has been from me directly with Wells Fargo/ASC. Keep in mind that I received the acceleration letter, had appraisers come to the property (My condo is now worth about $200K less than I owe.), had random people photographing the outside of my condo, and received countless phone calls and notices of delinquency. The steps below are tips based on what happened on my end of the process.

    1. Get organized. Create a folder to keep copies of the many letters and documents you will be submitting to the bank. This begins to get confusing very quickly since you will be sending multiple copies, with different dates or slightly different language throughout the process.

    2. Maintain Contact. Throughout the process, I called the bank every two weeks for an update. Expect phone calls every two days from the bank. Many times I would call and be told that my documents had not been received or that they needed something else re-sent. Get any names you can of people who are working on your file and be polite and clear in your requests for information. When calling the bank you will need to give your loan number, name, address, phone numbers, last 4 digits of your social, and the reasons for being delinquent (more on this in bullet #3). Even if you call multiple times that day, you will need to repeat this information. If the bank calls you, you will need to give this information. If you are transferred from one person to another, you will need to repeat this information. Deal with it. It’s their script, and they won’t deviate from it. I found the customer service reps courteous and understanding.

    3. Stop paying your mortgage. You have to be delinquent on your mortgage payments. Very delinquent. Wells Fargo will not consider a Deed in Lieu without the homeowner first trying to short-sell the house. In order to do this, you have to be approved for the Short-Sale program. You won’t considered for the Short-Sale program unless you are at least 90 days past due on your mortgage payment. I was basically advised, in not such plain words, to stop paying my mortgage.

    4. Prepare for your credit rating to plummet quickly. Once you are 90 days past due on your mortgage, things like interest rates will increase, credit card limits may decrease, and your ability to get new loans will go out the window. As an example, before this process began I was approved for a car loan at 3.5% interest. Three months later, when I finally was ready to buy a car the interest rate was 14.9%.

    5. Request a Short-Sale. Call the bank and let them know that you want to be considered for the Short-Sale program. They will ask you to send a financial worksheet and hardship letter. This Short-Sale application packet will also need to include previous 3 months bank statements and pay stubs, and most current tax filing. Your financial worksheet must show that you have a deficit at the end of the month, and the hardship letter must have specific reasons why you can no longer afford the mortgage. The documents you send are only good for 30 days. Even if it’s the banks lack of response that drags beyond 30 days, you essentially begin again every 30 day period. Here is a sample of my View attachment 667 .

    6. Contract with an experienced realtor. The realtor will need to list your home on the MLS for no less than 90 days before you can submit a request for a Deed in Lieu. My suggestion would be to list the property as soon as you miss your first payment to speed this process along to a snail’s pace, as opposed to a crippled snail’s pace. You’ll be asked to send proof of the listing, the contract with the realtor, comps, and other stuff that only the realtor can get. A good realtor is essential. My realtor also contacted the bank many times on my behalf, and usually was able to get more concrete information than I could.

    7. Request a Deed in Lieu of Foreclosure. Once 90 days has passed, you will need to call the bank and ask to be considered for the Deed in Lieu program. You then need to send a Deed in Lieu application packet. This packet will again include a hardship letter, financial worksheet; three months check stubs and bank statements, and prior year tax filing.

    8. Prepare to send documents multiple times. I had to send the entire packet at least two times before I received a denial letter from Wells Fargo. Why was I denied? Because there wasn’t enough of a deficit showing on my financial worksheet. Since my situation would be changing financially due to no longer having the tax breaks I had planned on for my tax filing, I filed my taxes and once I had a huge tax bill payable to the IRS and a change in my take-home pay, I re-applied for the Deed In Lieu program. Yes, I had to resubmit all the documents again, multiple times, before I received a response. By this point, you will probably have had your file sent to the foreclosure attorney and that process will have begun. I requested a Deed in Lieu in November, and received the denial in February. I re-applied in February, and received an approval letter in April.

    9. Ensure that there are no liens on the property. Ideally no 2nd mortgage either. I had neither. If you have a 2nd, my understanding is you can forget about the Deed in Lieu because the 2nd bank basically gets nothing out of the deal, and they must agree to the Short-Sale or Deed in Lieu.

    10. Stay Current on Your HOA and other bills. The approval of a Deed in Lieu is dependent on a clear title. The title is pulled multiple times. You must continue to keep your HOA dues paid and current during this entire process, and not have even the potential for a lien.

    Finally, the light at the end of a ten month saga. Exactly 30 days after getting the Deed in Lieu of Foreclosure approval letter, I received the executed paperwork. Today I received an email from the adjusted with Wells Fargo/ASC telling me that I just need to let them know when the property will be vacant and they will rekey. No walk-through. Probably because I was told that they don't offer "cash for keys" or any type of relocation assistance. The adjuster told me that they "trust" I will follow the terms of the DIL, which stated that I must vacate and leave the property "broom clean".

    This entire process may have been easier with an attorney. Regardless, I have no doubt that this is the best decision for my family. While the process is extremely discouraging, I would recommend desperate homeowners be patient and keep trying.
  2. Cat Damiano

    Cat Damiano Mortgage Wars

    Hi blended family manor,

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

    Thank you for coming back and posting your story as it will help other members going through the same.
  3. ctipto00

    ctipto00 LoanSafe Member

    Similar situation...

    We als have Wells Fargo...Our last pmt made was July 2010. We were just going to let the house go and at last minute after FC had been filed, I got in contact with a realtor. In Feb the short sale was approved and expires 5/28/2011 with few showings and no offers. This is where I have wondered what happens next. After reading your post, I think it helped a lot. Just to be clear...at this point I will ask about a DIL and it could still take several months? We have had a lot go on in our lives in the past few months, so a couple of extra monts to save would be helpful! In Feb we gave all the financials to them and had an appraisal...will we go through all of this again? Thanks for your help!
  4. blended family manor

    blended family manor LoanSafe Member

    Hi,
    Yes, it took about 3 months after submitting a request for a DIL that I got the approval letter. This approval letter is contingent on a clear title. Wells Fargo will do a title review to approve the DIL and then the attorney will do another title check before sending documents for you to sign. The documents you sign will need to be notarized and over-nighted back to the attorney. Technically they have 30 days from when you receive the DIL approval letter to get you the final documents for signature. I received these documents on the 30th day. You will need to keep your property listed while you are in the Deed In Lieu approval process. I'm actually really surprised you've only had to give your financials once! I have to do it every 30 days and was told that the documents are only valid for 30 days.

    Just as an update, I'm still waiting for the DIL to be recorded. The attorney has told me that they are waiting for a signature from the bank. I gave this Saturday as the last day I would occupy the property. Because they didn't offer me any cash to vacate, the negotiator said that I just needed to give them a final date of occupancy and then they would send someone out to change the locks. She didn't seem very concerned about the last day I occupy, so yes, I would assume you could get at least 6 more months out of this process to continue to save some money.
  5. zekka

    zekka LoanSafe Member

    My journey begins September 4, 2011. That is when my 90 days in the Short Sale program ends. Up until this point, my realtor has been the go between with me and Wells Fargo. She advised me to stay current on my mortgage and to tell the representative from Wells Fargo that I am a state employee and need to keep my credit in tact. All of the other information that I have been reading says that you must be delinquent. I will soon discover the truth because I am going to ask for a DIL on September 4, which is a Sunday. She also advised me that WF would be contacting me. I think I will be proactive and call them early Sunday morning.

    Any advice is appreciated. I will keep you posted.
  6. DIL_Wells

    DIL_Wells LoanSafe Member

    blended family manor - I sure hope you get on here again because your situation sounds exacatly like what I'm going through. The 10 steps you list make me laugh a bit because it hits so close to home. The only difference is the following email WF sent me yesterday:

    Based on my analysis of the seller's financial situation and per /PMI guidelines, you show the ability to participate towards the loss incurred from the Deed-in-Lieu. </SPAN></SPAN>​
    At this time I am requesting either:</SPAN></SPAN>
    1) An unsecured, non-interest bearing promissory note in the amount of </SPAN>$20,000.00</SPAN> payable at </SPAN>$111.11</SPAN> per month over </SPAN>180</SPAN> months</SPAN></SPAN>
    OR</SPAN></SPAN>
    2) A one-time cash payment at closing in the amount of </SPAN>$10,000.00</SPAN> </SPAN>
    Please discuss with the mortgagor(s) and confirm their acceptance by </SPAN>10/21/2011</SPAN> I must receive the response directly from the seller. </SPAN></SPAN>
    If you have any questions, feel free to contact me at any time.

    Did you ever receive anything like this? I'm not sure what it even means. Of course, they've yet to reply to any of my emails. Any thoughts?</SPAN></SPAN>
  7. atl-kar

    atl-kar LoanSafe Member

    DIL_Wells - my understanding is this is driven by the PMI company and not Wells Fargo - do you know who you have PMI through?
  8. DIL_Wells

    DIL_Wells LoanSafe Member

    I was searching all over in my loan documents for this information but just remembered that the PMI went away when I refinanced back in 2008. I figured it wasn't required anymore because the appraisal price came in high enough in comparison to my loan value. I'm not too sure that's how it works so does that make sense?
  9. atl-kar

    atl-kar LoanSafe Member

    That makes sense (if your LTV was below 80% at that time, I don't think you would need it) - but then the comment from Wells ("and per /PMI guidelines") doesn't make sense... because even there they are citing the PMI as a driver. I would go back to the negotiator and ask why they are going by PMI guidelines if you don't have PMI... Also, do you know if you qualify for a HAFA DIL?
  10. DIL_Wells

    DIL_Wells LoanSafe Member

    Good. That's what I thought as well. Problem is all of the sudden they are slow on returning my emails ever since they asked me to come up with some money. I asked some questions and haven't received a reply. I took a quick look at the HAFA and I'm guessing it doesn't apply to me. I bought my primary residence in 2009 and the DIL is for a house I bought in 2006. A lot of the government programs seem to be geared towards primary residences so that's my thought process on the HAFA without researching it too much yet.
  11. atl-kar

    atl-kar LoanSafe Member

    I have the same issue. Doing a DIL for a property I bought in 2004. Put that property up for sale in 2006. Moved in 2007. Never was able to sell the first property. Now there is some sort of problem with the deed (not sure what, thinking it is based on some rules that changed about how the property is described in a deed). Supposedly just waiting on the attorney to "fix" the deed. I am haven't heard much back from the negotiator, so it sounds like you are further along than I am.
  12. DIL_Wells

    DIL_Wells LoanSafe Member

    Yes, I feel like I'm finally nearing the end but now I'm starting to wonder if simply going the foreclosure route is the better option. I pursued the DIL because I thought it was the "right" way to approach this but now that they're starting to ask for money I'm having second thoughts. Being in Washington state, it seems I can foreclose, not pay anything and have the same/similar impacts to my credit score and taxes. I started contacting lawyers yesterday to try and figure this out. Are you in a non-recourse or recourse state?
  13. atl-kar

    atl-kar LoanSafe Member

    Georgia, which is a recourse state. :-(
  14. DIL_Wells

    DIL_Wells LoanSafe Member

    Bummer. Is that the reason for going the DIL route? I'm still trying to figure out how/why DIL would benefit me.
  15. atl-kar

    atl-kar LoanSafe Member

    Well, the full details are at:

    http://www.loansafe.org/forum/succe...32227-wells-fargo-dil-success.html#post356914

    It costs the bank money to do a foreclosure. A DIL needs to be cheaper/better for the bank than the alternatives. If it is cheaper/better for the bank to do the DIL than the foreclosure, you may be able to get some of the benefit... you need to make sure that doing the DIL is attractive to the bank in order for it to go through (or so I have been told).

    Do you mind sharing how much you owe and how much the BPO came in at? I owe $298, BPO came in at $305 - which doesn't leave enough revenue to cover the loan, hence it is short. I suspect WF would accept $260 net (after all commissions etc. is take off the price) as that is roughly 85% of the BPO. That leaves the loan "short" by $38k. I am hoping that is small enough (and that my hardship is convincing enough) that they just forgive the short, but am interested in knowing where people who have been asked to put up an unsecured promissory note sit in terms of how short...
  16. DIL_Wells

    DIL_Wells LoanSafe Member

    Your situation sound pretty similar to mine. I've jumped through all the same hoops. Faxed, emailed, called and then some. I know exactly what you're going through after reading the post you linked to above. I too am just past the title search portion. I have a lien (assessment placed by the city for road upgrades) that I knew would show up but they allowed me to continue the process and make it contingent on the DIL closing. As I stated previously, I'm no longer sure the DIL is right for me since I'm in Washington state. Because I've spent so much time thus far and feel like I'm nearing the end of the DIL process, I'm going to ride it out and see what the final DIL contract looks like before I decide what to do. This is not for my primary residence and due to a number of factors (tough to rent, death of father, uncertain job situation) I think I have a pretty convincing hardship.

    I owe $140K. I was never told what the BPO value came in at but it had to be within 10% of the list price so the lowest the BPO could have been is $110K.

    Have you began communicating with the negotiator yet? I just started with mine last week. That's when I was informed of the lien on my title ($3,700 so not to worried about that) and then she gave me the scare with the 20K Promissory / 10K One-time payment BS per PMI guidlines. Glad I got that one figured out but she still hasn't emailed me back and it's been over 72 hours now. At least I was able to contact my assigned loan specialist and she agreed that I don't have PMI and the negotiator is wrong.
  17. atl-kar

    atl-kar LoanSafe Member

    On 9/13, I was transitioned from a loan mortgage adjuster to a negotiator. On 9/16 the negotiator engaged their attorney to address some issue with the deed. It was supposed to take 30 days. I just received another update from the negotiator saying that there were no updates and she is going to follow up with the attorney again. Tomorrow is 6-weeks, so I am getting kind-of-nervous... especially if I go through all of this and they come with some request that I help fund the DIL.

    Was your list price $121? I know the list price can't be more than 110% of the BPO.
  18. DIL_Wells

    DIL_Wells LoanSafe Member

    Wells Fargo finally replied to my emails after I finished my post above. The negotiator still isn't giving me a straight answer on the payment she requested per PMI guidelines. I've asked her twice now but she's pretty good at responding to parts that require a simple yes or no answer.

    Yes, that was my list price.
  19. cube monkey

    cube monkey LoanSafe Member

    Title work has been ordered.

    My request for DIL was just referred to a WF loan processor. After providing some updated information (bank statements, pay stubs....) she ordered the title work. The file hasn't been referred to a negotiator yet, and as far as I know, no appraisal has been performed (although the processor did request documentation as to how long the Condo has been listed at its current price, as the price was been reduced from the initial listing agreement that I provided). Should I be optimistic?

    I asked for a DIL right off the bat. I haven't asked for a short sale. I'm current on my payments, but after reading some of the posts, I think it's best to stop paying. It's kinda scary to take the plunge as I do live in a recourse state (NY).

    Title should come back clean, except for a line of credit with a zero balance. The processor said the negotiator would advise me regarding closing the line because I don't want to pay a penalty to close it early if the DIL doesn't happen.
  20. crazyeyes

    crazyeyes LoanSafe Member

    Wells Fargo Deed In Lieu

    After trying to modify our loan twice with WF over a three period, we stopped paying in August 2011.

    In August 2012, we received a letter from WF offering $20,000 if we would deed our home back to the bank. We said that sounded good. We live in Florida where it takes 2 to 4 years to foreclose on a house so the bank is obviously looking at saving attorney's fees and getting the house back in good condition.

    After a couple of months, the bank wrote up the title work and Fedexed it to us and started calling every day. We reviewed the documents and nothing was mentioned about the $20k compensation. We called and asked the bank. They said, don't worry about it.
    The letter we sent from you is good enough. If you do not deed the house back to the bank immediately we will proceed with foreclosure.

    I spoke to an attorney last week and he laughed when he heard what the bank said. He advised me not to sign anything. I faxed him the documents and am waiting for his response.

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