Foreclosure in California>Question Details

Heather, Home Owner in California

I am behind 11 months on my mortage due to slow bussness, I was denied a loan mod with BOFA 3 times already, the loan balance is 800K what should I do

Asked by Heather, California Mon Apr 11, 2011

I am behind 11 moths on my mortage due to slow business, I was denied a loan modification with BOFA 3 times, I still want to stay in my house and work the loan, the balance is 800K. What is the loan/ income ration that they want to see? i still have an income of $4000 net. I received a letter of intent a few months ago....what are my options? Short sale or keep trying to get a loan mod?

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Contact "Melissa Zavala" at She's the best in the biz and will give it to you straight. Well wort a phone call. A short sale will generally impact your credit for about 2 years and I've seen it even less depending on the lender.

You'll live with a foreclosure for about 4 years with most conventional lenders and you don't even want to consider a stratigic. Most lenders if they know you did one won't even talk to you.
0 votes Thank Flag Link Tue Aug 28, 2012
Let it go to auction, approach the investor who buys it and state you will be intersted in renting to own for a tad higher than market, most are willing to help.
0 votes Thank Flag Link Mon Aug 27, 2012
I would Find a Short sale Investor before you Sign up with a Realtor, the Realtor is not the only party Qualified to do a Short sale, It just has to be listed with an Agent.
I Was reading all the Documentation on the National Board of Realtors and the CDPE? A Certified Distressed Property Expert is not recognized by them. All it means is that they have a Manual and spent a few hours in a classroom going over what should happen in a Short sale.
There are a large number of companies out there that do better jobs at Short sales than Most Realtors, Most realtors close 10 to 20% of short sales tried, where Private Investors close 78 to 92% of all deals.
Find your Investor first then tell the Realtor how the Deal goes not the other way around, Remember a Cash Investor at the Start in better than waiting for the maybe it will sale.
A short sale allows you to qualify for a home loan in as little as 24 months not the 7 to 10yrs. if the Foreclosure goes to the auction. If the Foreclosure process starts it does not put a 7 to 10 yr ding on your Credit, that only happens when the auction is over, remember the house is yours and you can sell it until you don't own it any longer.
Oh by the way, if you have a foreclosure on you credit you can buy a house the next day by using Owner Financing or Lease Option. Most Realtors only Deal with A type Buyers so I don't know if anyone is going to tell you these options.
Private Lenders only need a 520 credit for long term loans and Short term loans you don't need Credit.
Have you tried to Sell your house "Owner Financing With Large Down payment" (A Realtor is not needed for this type of Transaction, maybe just a Title Company)
Use the Large Down to make up the Back payments, and Create a New Loan Document that pays your existing Loan, plus you have the Option to get the House back if the new Buyer Defaults in the Future.
Good Luck, if you need real help let me know.
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0 votes Thank Flag Link Tue May 24, 2011
I read all of the answers to this question and did not notice any mention of "a ding on your credit" with a short sale. If you are looking at short sales because you think they will not effect your credit think again. They will have an impact on your credit, but not as hard of a hit as if you went into a foreclosure.
0 votes Thank Flag Link Mon May 23, 2011
Personally, I think the whole loan modification program is a total sham. Obama was touting 4 million loan mod's when he rolled out with his illustrious program. Surprise! Less than 400k have been, for the most part, unsuccessfully completed as almost 50 percent end up re defaulting within 6 months anyway.

But that's an argument for another day and it doesn't help you with your problem. You've had some good advice from a lot of very competent professionals. However, you really have to make a choice. First could you keep the home and comfortably continue making the payments once the LM allowances start re adjusting and your payments start inching up once again?

Are you still gainfully employed and is your job relatively secure? How far underwater is your home? How does it compare to the rest of the neighborhood? Is your home still in good condition. Could you rent it out enough to cover the existing mortgage and go rent something yourself? These are but a few very pertinent questions you need to start asking yourself and I'm sure there's many more.

Lastly, if you really reflect on just how practical and prudent it will be to ride out the storm and wait for property values and the economy to start rebounding again it could take years or, depending on your age, a lifetime. If you have the staying power then go for it. If not you may want to consider taking the advice that so many others have offered up and look into a short sale.

But please don'd allow yourself to fall victim to a foreclosure. It will mess up your credit for years and make your life miserable. If you think you were frustrated with the LM procedures you ain't seen nothin yet. You may be better off just cutting your losses and moving on. But if you should decide to go with a short sale just make real sure you're dealing with a pro who knows how to get the job done.
0 votes Thank Flag Link Tue Apr 12, 2011
I would suggest a short sale. Why would you want to keep overpaying on a house that is worth less than you owe? If you want to build equity in your life and get a fresh start, you will need to clean the slate.

We are a professional short sale service and would be happy to explain the process to you. Please call us directly to discuss your specific situation. Our services are FREE to homeowners. We look forward to hearing from you.

Eli Givoni, Director
Short Sale Department, LLC
Serving all 50 states

MARS Disclosure for General Commercial Communications
Short Sale Department, LLC is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit.
0 votes Thank Flag Link Tue Apr 12, 2011
Bank of America is very frustrating for homeowners to work with...see my recent Trulia blog post on the subject of a loan modification with BofA. You need to be able to put 31% of your gross income towards your housing payment (PITIA) and show consistent income that will continue into the future. At the current time, It is very difficult for non W2 earners to qualify for a loan modification and, contrary to urban legend, there are very few, if any examples of modifications that include a principal reduction. If you have already been denied three times, it might be time to evaluate a short sale.
0 votes Thank Flag Link Mon Apr 11, 2011
I would seek out a Short sale Investor to purchase your home, I would do this before letting an agent control the short sale. 9 to 12% success is what you can expect from a Realtor, most Short sale Investors have a success rate of about 87% if the Realtor stays out of the way. We have 3rd party negotiators which makes for a smooth transaction. Just remember a Short sale is between the Owner, the Buyer and the Bank , not the Realtor
0 votes Thank Flag Link Mon Apr 11, 2011
Check with you local housing authority to see if there are any programs available to underemployed or unemployed homeowners to assist them with paying their mortgage payment. Next try the HAMP program or HAFA Federal programs to see if you qualify for a mod. If all of the above fails then try to short sell the home or rent it if you can to help cover the mortgage payments until your work picks up.

Good luck,

0 votes Thank Flag Link Mon Apr 11, 2011
I am sorry to hear that.Bank of america is tough to wk with i have to say.I would suggest selling your property as a short sale.with the income you just mentioned whats your debt ratio compared to your monthly payt thats what the bank look for.they will NOT reduce your principal balance by 300k or even more to be able to qualify you with your income.your best option is sell and try to downsize if you can.
Sorry again

Madeleine Semaan
First Team Real Estate
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0 votes Thank Flag Link Mon Apr 11, 2011

It's a tough spot to be in, I know.
The thing about a loan mod is that they're going to want to see steady income. That's where most business owners and self employed people have a hard time getting a modification approved. With a $4,000 per month income on an $800,000 loan balance they're probably having a difficult time justifying the payment to their investor.

If you want to get a modification approved it seems like you'll need more income. Have you considered renting out a room or two?

Short of renting a room your only option may be a short sale. Please remember that a short sale is not the best option for everyone. You should have someone look at your overall situation and help you decide if it truly is your BEST option. When I say someone... I mean a Realtor who successfully performs many short sales, a CPA, and possibly an attorney.

I'm sorry you're going through these difficulties. I hope you find your best through it.
0 votes Thank Flag Link Mon Apr 11, 2011
Heather -

First , let me say if you have been denied three times, you should be able to find out why they are denying you. Commonly, if your mortgage represents more that 31%, you will most likely be denied because banks only want to modify a note that is durable. My first suggestion is to find out the reason why you have been denied and then talk with a HUD approved housing counselor to see if there is any way to change that approval.

Second, currently there is a "forgiveness" mode for recourse on senior lien holders in the state of California that protect the borrower from deficiency judgements. Sometimes, modifying the loan now makes what was a non-recourse note now a recourse note which allows the creditor to pursue any deficiency. The only way to be sure of your specific risk for deficiency is to speak with an attorney and have them review your note.

Finally, before you decide on pursuing another loan modification or short sale, please make sure you consult with an attorney, a tax professional, and an agent who is experienced with short sales in your area. You want to make sure you understand the ramifications (if any) of any decision. Every situation is specific to the individual, future goals and their lender. Advising on the forum with minimum information could be misleading.

For HUD counseling call (888) 995-4673

Good luck!
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0 votes Thank Flag Link Mon Apr 11, 2011
At this point, BofA has pretty much told you no three times, which means that you won't be able to keep your home. You should ask them if you (and your loan) qualify for the government's HAFA short sale program.

Now, you should just plan to make a graceful transition to another living situation. I would suggest looking for a competent Realtor who knows how to conduct a successful short sale.

If you need more assistance, I'd be delighted to help you.

Best regards,

Bart Marchioni, Real Estate Consultant
Certified Pre-Foreclosure and Short Sale Specialist (CPFS, CSSS)

Intero Real Estate Services
(408) 266-3100
0 votes Thank Flag Link Mon Apr 11, 2011
Consult an attorney, BofA sometimes has no rhyme or reason as to how they handle their clients who fall behind. I had clients in a similar situation a while back. I haven't had the listing in over a year and my clients haven't paid on their mortgage since the middle of 2009. They were denied a Loan Mod and told BofA that they wanted to short sale the property. BofA asked for Deed in Lieu of Foreclosure. Long story short, my former clients are VERY behind on their mortgage but still own their home and are STILL trying to work out a Loan Mod with BofA.
0 votes Thank Flag Link Mon Apr 11, 2011
Getting a loan mod is very hard and the average loan modification is a $500 reduction in monthly payment. I would look into talking with a short sale Realtor and a Real Estate attorney along with your tax accountant. It never hurts to talk out the best direction to go.
0 votes Thank Flag Link Mon Apr 11, 2011
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