Foreclosure in 91709>Question Details

Rick, Other/Just Looking in Los Angeles, CA

Currently in bankruptcy chapter 7 and behind on our mortgage.

Asked by Rick, Los Angeles, CA Wed Dec 24, 2008

My wife and I recently had to file chapter 7 due to overwhelming credit card debt and on many out of state properties that renters never paid on. We fell into foreclosure on our current home in California that was with Greenpoint and just recently transferred to Countrywide. We called Countrywide and there is a stay on the foreclosure at this time. We have a first for $1.2m and a second for $249k which total in payments approx $8k a month. After years of investing, I went back to work in Feb 2008 and took a major cut in pay and currently making around $11k a month. We had our home on the market for many months and did not sell. I realize my situation may sound odd due to my income for this economy, but I have tried to avoid my situation. I would prefer to modify our loans but need advise. Thanks

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One option is to short sale your home. A Short Sale is the sale of a house in which the proceeds fall short of what the owner still owes on the house. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments. By accepting a short sale, the lender and owner can avoid foreclosure which can be a lengthy process and expensive for the Bank. The seller need not be in default -- to have stopped making mortgage payments -- before a lender will consider a short sale. A lender may consider a short sale if the seller is current but the value has fallen. The seller may have over-encumbered, owe more than the home is worth, so a discounted price might bring the price in line with market value, not below it.


A lender is not going to agree to a short sale unless the seller has no equity and is unable to repay the difference between your sales price and the existing loans. Sellers need to provide a hardship letter to the lender. Sellers may also owe taxes on the amount of debt that is forgiven.

There are an increasing number of short sales in our market. Many of these homes are attractively priced and the sellers are motivated to avoid foreclosure. Buyers should be aware that this can be a lengthy process which requires a lot of patience and may not end in success. There is no guarantee that the bank will accept an offer, even if it is at or above list price.

Hire an Agent with Short Sale Experience

It is critical that you are represented by your own agent in buying any property but particularly in buying a short sale or foreclosure. You need an experienced short sale agent. Your agent can find out who is on title, whether a foreclosure notice has been filed and how much is owed to the lender(s). This is important because it will help you to determine how much to offer. Keep in mind that the contracts you ultimately sign and what you are asked to agree to in terms of time frames for inspections and contingency removal may be different than in a ”normal” transaction. It is important that your agent be conversant in the contracts and addendums and in the process of negotiating a short sale purchase.

If there are two loans, it may be more challenging to get an offer accepted. The first mortgage lender's position is protected by the second lender, unless the second lender does not want to foreclose. The first will need to give something to the second to gain its cooperation or you will not be able to get your offer accepted...

An agent with experience in short sales will help to expedite your transaction and protect your interests. You don't want to miss any important detail due to inexperience or find out your transaction is not going to close on time because no one has followed up in a timely manner. Worse you do not want to find that you have “passively” removed contingencies you did not want to remove because your agent was not watching the calendar and expediting inspections or the appraisal.

Submit Documentation & Purchase Offer to Lender
Once the seller has accepted the offer (which will be contingent on the lender’s approval of the short sale), it will be sent to the lender for approval either by a Short Sale Facilitator or the listing Agent. You do not have an agreement until the lender accepts. Your agent should put together an offer package that includes an Agency disclosure, the offer, a copy of your deposit check, Short Sale Addendum, letter of pre-approval and other documents.
1 vote Thank Flag Link Tue Sep 21, 2010
I'm so surprised that I had not read your post prior to now. I am very interested in how this bankruptcy played out for you with regards to dealing with Countrywide now that they are the new servicing entity on your mortgage originated with Greenpoint. I am going through a very similar situation myself and have done extensive research on the California statutes regarding foreclosure, bankruptcy as well as my own experiences with Greenpoint and Countrywide.

My sale date is scheduled for Feb. 9th per the trustee but Countrywide states that they have no record of a foreclosure sale date in their files. I've submitted two qualified written requests to Countrywide since December requesting information they still have not provided to me such as my interest rate, my monthly payment amount, if I have an escrow account or not, my principle balance, the amount needed to reinstate my loan and the question of the hour - who is holding my original promissory note?? Which is necessary to hold a foreclosure sale in the first place.

Two weeks until the sale date and I have yet to receive any answers, loan mod options or anything that will allow me to stop the foreclosure proceedings without filing BK or hiring an attorney.

Crazy!! I'd love to hear about your story.

Diane Wheatley, Broker
diane@moveupproperties.com
(909) 981-5589
1 vote Thank Flag Link Sat Jan 24, 2009
I had a buyer that wanted to buy a home in Arizona, but he had a Chapter 7 bankruptcy 7 months ago. After researching the web I found a loan program at http://www.cfsflex.com, they allow a mortgage after a foreclosure, short sale, or bankruptcy. There is only a six month waiting period. Good to see lending options coming back.
0 votes Thank Flag Link Sun Jun 30, 2013
I would go about negotiating a modification from your lender using the assistance of a real estate broker with negotiation expertise. This may prove fruitful as many banks are reluctant to foreclose if they have another option.

If modification doesn't work, you should consider a Short Sale.

Good Luck and choose your agent carefully! Don't hire a company that charges an up front fee for modification work (our team has never charged anyone a dime for these services up front). You should only pay if & when you get an acceptable modification.
0 votes Thank Flag Link Tue Apr 24, 2012
the site below may be of help....it has info on both shortsales and foreclosures....
0 votes Thank Flag Link Mon Jan 26, 2009
Cindi Hagley…, Real Estate Pro in San Ramon, CA
MVP'08
Contact
Hi Rick. I would check with your bankruptcy attorney first because the chapter 7 needs to come first. Did you request to reaffirm your mortgages in your bankruptcy petition? How soon before your meeting of creditors or have you already had that meeting? I work with a very reputable loan modification company and in the past when we've had clients in a bankruptcy, the petition and the trustee had to be dealt with first before we could modify the loans. A lot of times you will need to liquify/dispose of your other assets first so that your mortgage companies can see exactly how much money you have left and the true state of your finances in considering your request for modification.

I hope this helps.

Rhonda Burgess, Broker
Realty World Southern Living
0 votes Thank Flag Link Fri Dec 26, 2008
SORRY reading your situation. , NO your circumstance not odd you are like many here in USA.

Stay on top working with lender they truly dont want your home back. Maybe roll in your lack of payments into backside of note, or request a short sale. Keep contacting lender show you have vested interest in working everything out for all parties favor.
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Thu Dec 25, 2008
Rick:

You should be checking with your BK attorney regarding the status of your home in the bankruptcy.

I spent 15 years working as a Insolvency and Restructuring Advisor (financial not legal end) in the Bankruptcy Field. My understanding (this is not meant to be legal advice and you should definitely check with an attorney on this) is that when you file Chapter 7 all your assets and liabilities as of the date of the filing are turned over to the Chapter 7 Trustee to administer. If you have equity in your home, the Chapter 7 Trustee will sell it to satisfy as much of your debt as possible. If you do not have equity in your home the Chapter 7 Trustee will abandon the property from the Bankrupt Estate, at which time the lender can continue the foreclosure procedure or you can work out a loan modification with the lender (assuming they are willing to do that). Your BK attorney may be able to help facilitate the loan modification.

Hopefully this helps you with your decision on how to proceed. Dare to Dream.

Shel-lee Davis
Real Estate Consultant
RE/MAX Palos Verdes Realty
0 votes Thank Flag Link Wed Dec 24, 2008
The good thing is that Countrywide in my opinion is one of the best to work with when trying to do a work out. However, the chapter 7 makes it more difficult to work with them at this time. However, once your debt is discharged through the chapter 7, you can refafirm the debt and try to do a modification of your loans. You should get your finacial information together and see what is affordable and present that case to countrywide. At your level you may want to get an attorney that is an expert in dealing with this type on situation and if you know one that is dealing with countrywide that would be even better. If you do not know one you can searched on linkedin and most likley find one.

Good luck.
0 votes Thank Flag Link Wed Dec 24, 2008
In your current situation, since the bank took stay on foreclosure could go for loan modification. But remember that every bank is diffrent AND every situation is unique in it self. You could contact mr & we could work it out.

grandfinance@gmail.com
Web Reference: http://www.goforloanmod.com
0 votes Thank Flag Link Wed Dec 24, 2008
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