My wife and I bought a condo in California in March 2006 for $356,000 on an 80/20 loan (281K 1st with Wells Fargo/75K with Citibank). In the end of 2008 my wife and I had reduced hours at work and went for a loan modification. After dealing with the bank for six months the stress proved too much for my wife and we separated. I continued on with the Loan Mod and was told by Wells Fargo that on Jan 2010 I would begin my trial payment, which was $1,000 less a month than I was currently paying. This was great news until I made my last payment in March and the bank told me the investor denied my Loan Modification. Apparently I didnít show affordability to make the payment since the investor was only willing to give me a 30 year loan at 5.5% interest. Since I already had a 5.75% rate this change resulted in my payment only going down $20 a month (so glad I waited 16 months for that). I asked why they would approve me for such an outrageous trial payment when there was no way to get even close to that. They of course gave me a bunch of excuses.
Anyways, after getting the run around on my Loan Mod the bank finally recommended that I go with a short sale. I immediately listed my property in early April and was sent the HAFA paperwork. Since I had sent my pay stubs and other documents to Wells Fargo more than ten times I called up and asked if I really needed to fill this new packet out. The customer service rep told me not to worry about sending in the package until I had an official offer since there is nothing that can be done until that time anyways. I continued to wait and finally got an offer in the middle of August. As we got started in Escrow I asked the bank about the HAFA rules and was told I did not qualify for the program since I did not send in the documents in April. I told the customer service Rep and her supervisor that I was advised to not send the documents. The supervisor said I was misinformed and unfortunately once you are denied for HAFA it is FINAL. I asked if he could listen to the call and verify that I wasnít lying and he reiterated that even if I was given wrong information by the Customer Service Rep I was still ineligible to HAFA and nothing would change it. To top things off my buyer just walked on me, and I have a sale date of 11/16/10 with no other interested buyers in sight. On the bright side, Citibank settled my 2nd for 5K when I got the offer so now I only have Wells Fargo to deal with. I am now at a crossroads and am debating whether I should just ask for a Deed in lieu of Foreclosure or let the house go on 11/16/10 (I am going to keep trying to short sale it until then).
My concern about a Deed in Lieu is the Deficiency judgment, credit implications, and ability to buy another house in the future. Iíve looked everywhere and cannot really pin down what the credit hit is for a Deed in Lieu is compared to a Short Sale. Many people say they are the same once you have a 120 day delinquency hit while others say a Deed in lieu is way worse. Iím also wondering if I will have to worry about a Deficiency judgment on the Deed in lieu, which is not an issue if I just let it foreclose since I live in California (non-recourse). Also, I would hate to just completely abandon the short sale effort since I am eligible to buy another house sooner if I go that route. My questions to the forum are the following:
- Has anyone out there dealt with Wells Fargo on a Deed in Lieu? If yes, how long does it typically take them to look at a Deed in Lieu (my concern is I have a sale date of 11/16/10)?
- Does anyone know what wording the bureaus use to report the Deed in Lieu? I am wondering if I am just better off staying in the house and getting a foreclosure?
- Does anyone know if I can do a Deed in Lieu at the same time as a short sale, or do I shave to choose one route or the other with my bank?
- Are Deed In Lieuís covered under the same Non-Deficiency judgments as Foreclosures and Short Sales in Cali?
- Besides filing for BK are there any other ways I can delay the sale date to try and get another buyer?
I appreciate any help.