I live in CA and have 3 properties. My principal home is on the verge of foreclosure 3 months behind. I have a 1st and 2nd . To my misfortune, I hired a Realtor who is apathetic and neglectful. I just lost a buyer due to Lenders not accepting Buyers offer offer ..equivalent to a 45K loss to the Lenders.The Buyer has walked away. I told my Realtor, who against my agreement undervalue and listed the home by less $75 of fair market value and now went back to MLS and increase price by $75K per Lender's request and BPO assessment: " Isn't the negotiation premise to negotiate from HIGH TO LOW? I am in disbelief and most disappointed with your negotiation abilities and marketing strategy"
I have accepted my loss of $100K down-payment. I am in disbelief at the Lenders refusal to accept a $45K loss. I am sickened by Realtors negligent and sloppy job. I feel hopeless and most depressed.
My questions are:
1) Does Lenders Refusal to accept current fair market value solid offer constitutes bad faith practice? If so, can this be an acceptable defense in foreclosure proceedings?
2) According to my Realtor, she claims that it is in my best interest to pursue a short sale VS. foreclosure. According to this Realtor, because I have 2 other properties the banks will simply file liens on these properties, my car, bank accounts, and my personal belongings. Is this true?
I look forward to your courteous reply.
Warm Regards,
Marie
Comments:
Hi Marie,
California is largely a non-recourse state - meaning they can't come after you for a judgement. Purchase money loans are always non-recourse. Refi's are non-recourse as long as the lender doesn't take you to court to foreclose (this is very rare, they usually file a notice of defaul which indicates "non-judicial" foreclosure in which case they have no-recourse after the sale).
One note of caution. If you have a 1st and a 2nd mortgage, and the first forecloses it will wipe out the 2nds security in the property - but not their right to seek a judgement against you in the future. Lots of folks think they are walking away scott free right now - but if the 2nd didn't foreclose don't be surprised if a debt collector comes calling at some point down the road. Better to stop paying the 2nd and force them to foreclose before getting behind on the 1st. Though they still may not, in which case you'll have to decide whether to let the first foreclose or keep making the payments. Either way the 2nd will remain a potential time bomb.
Sean,
Thank you for this valuable information. I have been unable to convince 1st Mort gage Lien Holder to accept any offer below their requested price. I have called the 2nd Mortgage Lien Holder to request their assistance and was informed that there was nothing they could do to force 1st Lien Holder to accept Short Sale offer.
How do I convince these 2 Lien Holders to accept short sale?
Please note that 2nd Lien Holder Loan was used as purchase money and has necer been re-financed.
By the way, I am not walking away as you comment : "Lots of folks think they are walking away scott free right now .." I put down $100K down-payment and have paid 3 years of int erst, property taxes, insurance, and maintenance....over 200K loss!
Given my circumstances with 1st Lien Holder refusing to agree to short sale , I am facing foreclosure . How can I avoid , prevent, or remedy 2nd Lien Holder's right to seek a judgment against me in the future? Should I file for bankruptcy or chapter 11?
Unfortunately, I am currently ill and on disability (long-term). I am so financially burden and pragmatically will not be able to repay a potential judgment of 2nd lien before I die.
Please advise,
Marie
Since the 2nd was a purchase money loan they should be barred from seeking a deficiency under California Code of Civil Procedure 580b. Note that I'm just an investor and not an attorney - I'd recommend checking with one before you make any decisions.
Marie -
Who are the lenders? Was the first Purchase Money, too? It appears the 1st would rather complete a short sale, esp with your situation - something doesnt seem right - How close is the offer to market value? Did the lender send an appraiser or Realtor out to complete a BPO?
BOB
Hi Bob,
The 1st and 2nd loan were purchase money. I obtained these loans through a Mortgage Broker simultaneously and also paid 100K Cash money from my own personal funds.
I agree with you that "something does not seem right ".
The offer difference to market value was about 100K 2 months ago! However, as property values continue to decline I believe the current difference is about 75K.
Yes, the Bank sent a Realtor for BPO ..and it was after this Realtor's assessment that the Bank decided, based upon this Realtor report, that the property is worth more money and have absolutely refused Short Sale offer.
I am at a lost on what I should do. I am unable to speak to Bank directly and my Realtor has been unsuccessful convincing 1st Lien Holder to agree to a short sale. It is a hopeless situation in which I have lost any type of input/ decision (s )making.
Your suggestions, opinions, and advice are greatly appreciate and welcome.
Marie
Hi Bob,
The 1st Lien Holder is GMAC and 2nd Indymac.
Both loans, 1st and 2nd were obtained simultaneously by my Mortgage Broker for purchasing funds. Neither loan have ever been re-financed. I paid 100K down-payment from my own funds.
I agree with you that "something doesn't seem right ". The difference between offer and market value is about 75K. The 1st Lien Holder, GMAC, sent an out of area Realtor who, upon opening the door to her, complained that she only gets $35.00 flat fee payment to conduct BPO. Furthermore, she advised me not to be too hopeful that GMAC and Indymac Bank would ever agree to a short sale. She emphatically stated that where there are 2 Lien Holders...Short Sales are accepted only 20% of the time.
I feel so stressed and hopeless with this situation in which I have no control for decision making and or at least input directly to Lender, GMAC.
I am unable to speak directly to GMAC..my messages, e-mails, and faxes have been ignored for the last 7 months!
My Realtor has been unsuccessful convincing GMAC to accept short offer.
Your opinions, comments, and advice are welcome and greatly appreciated.
Marie
Marie -
First, I would like to apologize for such a delayed response. I had not seen this post until now. If you would like to contact me directly, send an e-mail to bob@inspiragroup.com or call my office at (949) 600-5404.
The art of a short sale is that it needs to be "win-win" for all parties. Even with that it is sometimes challenging to get the short sales done. The banks are slammed and are very difficult to work with, however, they can and should be done. It requires constant pushing and persistance. We have been very successful in negotiating short sales. If the property is $75,000 below the market, then I can see the bank not wanting to take the property back. If their loss is less then it would cost to foreclose and resell they should take the short sale.
You say your Realtor is "apathetic and neglectful" is ... - "negligent and sloppy job" and priced your home low "against my agreement" - These are pretty serious items if they are all true. Have you spoken with the Broker? Unfortunalely, sometimes things need to be escalated - that is what we do on short sales. We keep pushing and pushing.
How much is your home worth in the market today? If you call or e-mail, I can possibly work with your Realtor and yourself to assist. We get paid 25% to negotiate the short sale. It seems she has nothing to loose - The bank should have let you know what it would take to do a short sale - Maybe they are right and a higher offer is needed and the Realtor would need to find another qualified buyuer. We typically list homes at a higher price then agressively drop the price until we get offers.
BOB
Me and my husband are divorced,my husband moved out and bought another house,whilst i was granted temporary exclusive use of the home--(The house still had both our names on the loan) now that i cant pay the mortgae,i have asked my husband to hlp out and he refuses--he says that he is not responsible--even though his name is still on the loan.
i have moved out into a smaller affordable house---now that we are almost 3 months behind on our payments--I am afaid as to what will happen please advise...
Anonymous.
Just waiting to see what happens probably isn't the best approach. Since the house is now vacant, I'd suggest calling the lender to see if they would be willing to take a "deed-in-lieu" of foreclosure. If they won't accept that, and depending on how far along the foreclosure is, you should pursue a short sale.
Also - everyone - if you are going to lose your home there is little reason (except possibly emotional) to leave your house. By staying you can save some money towards a rental, and when the bank does show up they will usually pay you to move and leave the house clean.
Sean -
I agree that homeowners can stay in the home and benefit. However, I believe most homeowers move out because they do not know their rights.
Also, with the example above with Anonymous, they could complete a Short Sale. The Realtor would handle the sale and negotiation with the lender. This is a better solution then a Foreclosure and Deed-in-Lieu in my opinion. The credit will be less damaged and they can have the opportunity to purchase again in 2 years vs 4 yrs with Deed-in-lieu and 5 years with Foreclosure.
Have a great day.
BOB
Good points Bob, thanks!
I lived in California.
My 1st question: Both my 1st & 2nd are with the same lender. If that lender filed a default and foreclosed filing, how many days left do I have to move out? They filed the foreclosed on 8/6/08.
My 2nd question: Would that wipe out both loan or the 2nd heloc will hunt me in the future? I am planning to file a Bankruptcy, should/can I add the 2nd heloc on to the filing?
Thank you
1. If the default was filed on 8/6/08, you likely have around 5 months before you will have to move (average time from notice of default to auction being held is 145 days in CA - but you'll have a little time after the auction as well).
2. Assuming they filed the notice of default on your 1st mortgage then the 2nd mortgage will have its security interest in the property wiped out by the foreclosure, but they will still have every right to pursue you for the entire balance -- UNLESS it was a purchase money loan. Given that it is a HELOC you are likely out of luck. Note that this is why we recommend trying to do a short sale. Given your default was just filed you have plenty of time, and with both loans from the same lender you have a pretty good shot of having it approved. Assuming you have no other debt this would help you avoid bankruptcy, and would allow you to buy a home again in as little as two years based on current Freddie guidelines (and 2 years from now may be a very good time to buy as apposed to 2 years ago).
Hope that helps.
Thank you for the replied. One more question concerning #2.
2. When I purchased the home, I open 2nd heloc to qualified for 20% down. 80/10/10. Then, in several months, I paid it off. A year later, I use it to payoff the remodeling of the house. I tried several months to sell the house and failed. Now, the 2nd heloc is in default, I can't afford to pay it.
This is my 2nd house, would any of this affect my 1st house?
Thank you
Yes. The 2nd may have a claim against equity in your first house. I'd recommend talking with an experienced bankruptcy AND foreclosure attorney. Too many moving parts to give you reasonable advice over the web, and to be clear, I am not an attorney. Can you afford the first mortgage, insurance and taxes on the 2nd house? If so you might want to consider just stopping payment on the 2nd mortgage, forcing them to foreclose and give up their right to a deficiency judgement against you. They would then either have to pay the 1st or let it foreclose again eliminating their chance at a deficiency. Overall I'd still work my tail off to get a short sale done if I were you.
Well, I've default at the same time
- 2nd house - 1st mortgage & heloc
- 2nd house - property tax
I'm still ontime on my 1st house payments. Insurance on both house are still on time. I have empty out my 1st house heloc, and it is "closed" by lender because of house value has dropped. I'm just making monthly payments on it.
For short sales - do I need to pay off any other debts before qualify? ie...property tax?
Bankruptcy: I have others debts, too much to handle right now, my only choice is BK.
BK is never your only choice, but if you are overwhelmed by debt beyond the houses it may be worth considering. Even in that situation a short sale is still better than letting them foreclose, but probably not considerably. A short sale does not necessarily require that you pay anything, especiallly if your debts exceed your assets and it sounds like they do. You will need a great Realtor to handle short sales of this nature, make sure you find someone VERY experienced with short sales. Also might ask if they have experience with short sales in bankruptcy (it is possible - requires both the lenders and the courts approval). As per my earlier suggestion, it is also time to start shopping for a good attorney, well versed in both foreclosure and bankruptcy. The timing and order of things might make a difference.
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