cancel
Showing results for 
Search instead for 
Did you mean: 

Deed in Lieu of Foreclosure & Bush's 2007 Act

tag
techgirl
Frequent Contributor

Re: Deed in Lieu of Foreclosure & Bush's 2007 Act

Matt,
 
I have no intention of filing bankruptcy. I also fully intend on seeking the advice of Attorney, Real Estate Agent and CPA. I may end up with a short sell, if possible.
 
 
 
 
I am basically in these people's position - I have been working hard on my credit and my scores have gone up, but it is a daily struggle. I don't see the market coming back until well after 2010. By then, it may take me decades to recover from. I have 45 years old and have 11 years left of work before my retirement date. I am upside down in my mortgatge and have no savings. I have $18,000 in credit card debt. My student loans are kicking in: Private loans 2 at $6,000 at 10% interest rate plus 3 federal student loans two at $26,000 and one at $18,000 at about 6%.  I have two home loans one at 346,000+ at 7.5% fixed and $114,000+ at 10.75 ARM getting ready to reset. I have only one car loan at $11,000 with a 6.9% interest rate. My husband and I carpool, so we only owe one car so that I can save on insurance. We both have steady jobs and will be able to recover from this in approx 2-3 years. Until then, if we go through with this, we will be able to save money to put down on a smaller house/loan. Our home payments are $3,400+/month not including all the utilities, HOA fees, etc. that go along with that. Read the scenarios - they match mine quite a bit... I have never foreclosed on a home, I have never had late payments on my mortgage, I have never had anything repossessed and I have never declared bankruptcy. I have always believed the way of Dave Ramsey until today. What would you do?
 
Thank you for your thoughts on this matter -this is a big step and not to be taken lightly so I appreciate all of the realistic feedback.
05/12: approx 680 across the board
04/08 EQ: 730 TU: 748 EX: 718
03/08: EQ: 713 TU: ? EX: ?
12/07: EQ: 689 TU: 711 EX: 721
Message 11 of 20
Anonymous
Not applicable

Re: Deed in Lieu of Foreclosure & Bush's 2007 Act

If you can pay for the home, which you say you can, you should not voluntarily go into foreclosure.  The bank will likely sue you for the difference between what you owe and what they sell the house for so you will end up paying anyway.  Foreclosure does not alleviate your responsibility to pay what you owe, it will only take your home from you.
 
I reaaly do not think that you should be using foreclosure as a tool to avoid a market decline.  Foreclosure happens when you can't afford to pay your bills, it is not a strategy to avoid an investment loss.  Just my opion, but I am struggleing with what you are proposing.
Message 12 of 20
techgirl
Frequent Contributor

Re: Deed in Lieu of Foreclosure & Bush's 2007 Act

What are your thoughts on a short sell?
05/12: approx 680 across the board
04/08 EQ: 730 TU: 748 EX: 718
03/08: EQ: 713 TU: ? EX: ?
12/07: EQ: 689 TU: 711 EX: 721
Message 13 of 20
DallasLoanGuy
Super Contributor

Re: Deed in Lieu of Foreclosure & Bush's 2007 Act



izoid wrote:
If you can pay for the home, which you say you can, you should not voluntarily go into foreclosure.  The bank will likely sue you for the difference between what you owe and what they sell the house for so you will end up paying anyway.  Foreclosure does not alleviate your responsibility to pay what you owe, it will only take your home from you.
 
I reaaly do not think that you should be using foreclosure as a tool to avoid a market decline.  Foreclosure happens when you can't afford to pay your bills, it is not a strategy to avoid an investment loss.  Just my opion, but I am struggleing with what you are proposing.


This is exactly why Fannie Mae recently announced that they would penalize(no mortgage for you) folks with past foreclosures 5yrs and up to 7yrs for some. I don't know the criteria, but it has been discussed that the voluntary foreclosure crowd deserves a longer penalty
 than folks who foreclosed due to job loss, ect.
So, basically, regardless you will hurt your credit.
 
I will follow this with great interest.
 
Retired Lender
Message 14 of 20
techgirl
Frequent Contributor

Re: Deed in Lieu of Foreclosure & Bush's 2007 Act

I just found this for Arizona law:
 
Deficiency:
An Arizona deed of trust permits the real estate that is the collateral for a loan to be sold at a foreclosure sale by a trustee. The proceeds of the sale will be paid to the lender, or the lender can take title to the property and cancel out the debt in exchange for the deed, called a credit bid. Under a new Arizona law, a lender may not bring a subsequent deficiency suit against a person who lost a property that is 2.5 acres or less at a foreclosure, provided the property was a single one-family or a single two-family dwelling. This is so even if the high bid at foreclosure was less than the balance due on the loan. In foreclosures against other types of property, a deficiency is limited to the difference between the balance owed and the fair market value of the property, and then only if the suit is brought within 90 days of the power of sale foreclosure
 
What exactly is this saying?
 
Do you know where I can find that article from Fannie Mae? The more information I can get my hands on the better.
 
Thanks everyone for your input - it is all constructive and I value your opinions.
05/12: approx 680 across the board
04/08 EQ: 730 TU: 748 EX: 718
03/08: EQ: 713 TU: ? EX: ?
12/07: EQ: 689 TU: 711 EX: 721
Message 15 of 20
DallasLoanGuy
Super Contributor

Re: Deed in Lieu of Foreclosure & Bush's 2007 Act

techgirl
 
you should seek info from a real estate attorney and not rely on an internet discussion board for validation of you walking away from your mortgage. certainly, no REAL professional would advise you to do it. and the consumers here are most certainly not real estate professionals.....
 
Retired Lender
Message 16 of 20
techgirl
Frequent Contributor

Re: Deed in Lieu of Foreclosure & Bush's 2007 Act

Okay, thanks - I am lining up an appt with a RE attorney today hopefully for sometime next week.
 
Thanks again for your input - you guys and wipe this off of the system if you would like.
 
I have just learned so much from this site.
05/12: approx 680 across the board
04/08 EQ: 730 TU: 748 EX: 718
03/08: EQ: 713 TU: ? EX: ?
12/07: EQ: 689 TU: 711 EX: 721
Message 17 of 20
phxphun
New Contributor

Re: Deed in Lieu of Foreclosure & Bush's 2007 Act


@ShanetheMortgageMan wrote:
....the only way to get away from your current home and into a less expensive home is if you can buy a new home while qualifying with your current mortgage as well... or do a deed in lieu/short sale and then buy in 3 years (since deed in lieu/short sale would be considered a foreclosure to a new mortgage lender and they need 3 years from a foreclosure).  Not really any way to avoid the damage on your credit, however a deed in lieu or short sale would keep things to a minimal by only having a foreclosure listed on the credit rather than you sending "jingle mail" and having months of late payments and then a foreclosure.  Keep in mind the debt forgiveness portion of the act only applies to acquisition indebtness, refinance mortgages that were solely for better rate/term (no cash out), or cash out refinance mortgages that were used solely to do home improvement (better have cancelled checks/receipts to prove that).

Hi ShanetheMortgageMan,

 

I was surprised to see you say the Short Sale would be treated the same as a Foreclosure. 

 

I'm currently in Short Sale negotiation with my loan servicer (Carrington).  The Short Sale has a buyer making an offer above the home's fair market value.  The servicer has refused to approve the Short Sale unless I come up with another $4K toward my indebtedness.  I plan to come up with the money to pay this if the servicer agrees to two contingencies (they say they will):

1) All remaining indebtedness is forgiven

2) The sale is not reported as a Foreclosure

Note; I was not late on payments until after I went into negotiation with the servicer and they told me I must be late to negotiate.  So now I'm 3 months late.

 

Based on your comments, now I'm not sure if paying the $4k  would really make any difference at all and I might be better off to just let it go into Foreclosure.   My thoughts regarding the contingencies above are now:

 

1) All remaining indebtedness is forgiven -  I'm in Arizona, so based on what I've read in multiple posts here, I'm not sure they would be able to pursue a 'subsequent deficiency suit' regardless, even without this contingency.

2) The sale is not reported as a Foreclosure - Based on your comments, would the Short Sale impact my credit score the same as if I had just let it go to Foreclosure (and thereby save me the $4k)? 

 

Any thoughts are greatly appreciated.

 

 

Message 18 of 20
Anonymous
Not applicable

Re: Deed in Lieu of Foreclosure & Bush's 2007 Act

there are some differences, but generally it is not going tobe much difference.  Also, since you have now it seems hit 90 days late and are approaching 120,  it is considered for all intents and purposes a foreclosure for waiting period to re-purchase.  Some banks go by 90 days past due and some go 120 days as the amount of time, but they look at severe delinquencies as a foreclosure.  With the lates, you are probably not going to get much worse credit score either way since you are going to end up with either settled for less than owed or foreclosed upon. 

Message 19 of 20
ShanetheMortgageMan
Super Contributor

Re: Deed in Lieu of Foreclosure & Bush's 2007 Act

Not sure about what impact a short sale vs. foreclosure has on ones credit score - although like mickie pointed out, since you are late on the mortgage when the short sale happened, as far as qualifying for a new mortgage, it will be considered the same as a foreclosure.

Free Mortgage Advice & Pre-Approvals (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002
Located in Southern California and lending in all 50 states
Message 20 of 20
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.