Foreclosure University

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Foreclosure

Collections from Foreclosure

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Question:  We foreclosed on our home in California in 2010,it also had a equity line of credit that has a third party now calling trying to collect. What options do we have if any?

 

Answer:

Well the best option is to settle with them. Offer them a small payoff amount. I’d start at 10% of the loan amount. Your biggest challenge, as with all homeowners, is that banks automatically assume you don’t know what you are talking about. So in most cases it’s hard to negotiate a settlement with them. You are almost always better off having a 3rd party individual, like an attorney, talk to them. Be sure to let them know you are prepared to file bankruptcy because your attorney advised it. They get nothing if you go that route so many times they are inclined to accept any offer you throw at them that is reasonable.

“Deed in Lieu” foreclosure… Can they file a judgment?

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Question:  I gave my home (wyoming) “deed in lieu” back to the bank in may of 2011 and they have done nothing with it… there is water and mold damage to the home now. home worth approx 185000,loan 200000 principle,approx 40000 in damages. the city has been doing on the home since jan 2011 and have been told they will turn me over to collections if i don’t pay?? i am curious if there is a chance the bank just walks away from it and if so am i still responsible for upkeep? thanks

In Florida. Purchased another home. Foreclosing on 1st home.

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Question:  In Florida. Lots of stuff going on and now the MI says today they need a take it or leave it answer with no negotiation by close of business Friday. Son no longer lives in house that has mortgage insurance on it that the lender has accepted a short sale contract on and forwarded to the MI. He has purchased another house and just stopped making payments on the other in September. The MI says that they want 42000 over ten years 0% interest starting 2/12 or they will foreclose. (Doesn’t the lender do that?) He has some cash but has a baby due at Christmas that requires 20000 out of pocket at least, assuming no emegencies, because of crappy insurance. He made less this year than last but more last year than in 2009. The short sale contract and the appraisal are 89000 and the mortgage is in the high 150s give or take a few thousand. Not sure what the least expensive thing is to do but 42k is a lot more than he will have in the bank after the baby comes and no one wants to pay an extra $350 a month for 10 years to compensate them for a mutually bad investment. I am thinking ask the lender to do a deed in lieu so there is no deficiency and then file a 982 I think it’s called to get around that. If they don’t take the deed in lieu, then file for bankruptcy to get out of the deficiency but since I have little experience with this I need some advice that may help resolve this better than my solutions.

Answer:  – The least expensive thing to do is file bankruptcy. It will cost him $1500 and he can start over from scratch. A lot of lenders, when you tell them you are going to file, will work with you to find a solution. A better option might be to get an attorney or good real estate agent / short sale negotiator to help you push the short sale through with a full satisfaction meaning they can’t ask for any money to be paid back. The loan would be paid in full. Your son would receive a 1099 which would be negated with form 982 as mentioned. Don’t let the bank push you around… unfortunately they deal with homeowners a lot differently than an attorney or 3rd party negotiator because they automatically assume the homeowner doesn’t know what they are doing.

Line of credit in first position. What happens after a foreclosure by the second lender (in California)?

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Question:  This question is about a line of credit in first position and what happens after a foreclosure by the second lender(in California). The loans are in an unusual order. I provided a second loan for an owner of a rental house (meaning I am a lender, somewhat like a bank). The owner/borrower already had a Wells Fargo line of credit secured by that rental house. Since the homeowner (now the previous owner) failed to make payments to me I caused the foreclosure and am the present owner. I want to ask “What happens with regard to the line of credit?”. The LOC is for $75,000 which is slightly more than the current value of the house. For that reason I think Wells Fargo will not want to foreclose on me. Will Wells Fargo in fact pursue me at all rather than the original borrower? If so, will they want instant repayment? If I can’t repay immediately how will Wells Fargo determine the rate of interest and repayment schedule?

Number for Foreclosure help

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Question:  I got a letter from the bank saying that my house is up for auction. What can i do so the i won’t lose my house? I need a number where I could get help.

 

Answer:

Plan A, if you are in a position to begin making your payments again, plus an additional amount until you are caught up, is to contact Loss Mitigation Department (never collections), and ask to arrange a forebearance agreement. You will be asked to supply financial information to prove you have the earnings to support your new arrangement. This is the path of least resistance, and easiest on your credit.

Plan B is to ask the lender to take the total you are behind, and restructure your loan, so you are current, with slightly higher payments and a new term, whether it be 30 years or 15, etc. This is only if Plan A is not an option. Other lenders might be interested if you have enough equity, but be very, very cautious about the new interest rate.

Plan C is to sell the property retail, pay off your loan, use whatever overage is left to start over with a much lower budget (even renting) until you’re in a stronger financial/credit position.

Plan D is to seek protection under the bankruptcy act. Call several bankruptcy attorneys and pick their brains, as much as they’ll let you, without coming into the office. With each one you talk to, you’ll get more knowledgeable (stronger). If you decide on filing BK, pick the attorney who inspired the most confidence, was nicest with his/her time, and is the most reasonable in price and terms of payment.

Plan E is to deal with any of those people sending you cards and letters. Although they may be nice and/or honest people, they’re in this to make money, and it has to come from your property. Many of them want to take title to your property, let you rent for a year, and offer it back to you at a higher price at the end of the year. A tiny fraction of people in your position wind up keeping their property at the end of the year. Although most of these investors are honest, many don’t know what they’re doing, so consult a professional who will look out for your interests.

Investment properties – foreclosed and received a 1099 C

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Question:  We had 2 investment properties – 1 foreclosed in 2009 and we just got a 1099 C for the second (which was part of the 80/20 purchase money. We also got a 1099 C for the second on the second property that foreclosed in March of 2010 again purchase money. How do we report this? Is this income? If so and we owe a crazy amount to the IRS what can we do when we have little reserve?

Answer:  – This is reported as income on your taxes. Your accountant will help you through all this. In many cases, you can claim insolvent which means your liabilities exceed your assets or if it was a personal residence because of the new laws you won’t have to pay taxes on this amount. Have your accountant help you with all this, it makes it much easier.