Homeowner · concord, CA · Member since 2008 · 12 posts · 0 votes
I've got a beautiful home in the san francisco east bay area which is of the hardest hit right now in declining property values. anyway, i bought this house with a friend 3 years ago and our intention was to stay for a few years and get out. now we're stuck and although we're not in default, we both want to get out from under this deal as soon as possible. we are currently in the middle of a short sale process, but have two lenders and the second is not happy about the thought that countrywide isn't gonna give them any money. My question to you all is this... If the banks decline the short sale, my friend and i are thinking about just walking away. we're both braced for 7 years of bad luck and see it as our last but acceptable option... we're not all caught up in "loosing our home" emotions because we want out. What can happen to us if we do walk?? Legal and tax wise?? Where might i find some current reading on the laws. anyway if anyone has a thought... let me know, Thanks
Real Estate Investor · Las Vegas, NV · Member since 2008 · 1k+ posts · 447 votes
18y
The lenders can slap you with a deficiency judgement for whatever they aren’t able to collect from a foreclosure auction. If you have any other assets they are at risk.
Homeowner · concord, CA · Member since 2008 · 12 posts · 0 votes
18y
don't have too many other assets. don't have much, can't loose much. just my car and a 401k worth about 10k. would those be at risk??
I like your thinking Krzysztof... i hope it plays out that way..... do you think thats really a possible outcome?? sounds too good to be true.
Manhattan, NY · Member since 2008 · 801 posts · 61 votes
18y
Originally posted by Krzysztof Duszkiewicz:
don't walk! just stop making payments; it will take them 3-5 months to initiate foreclosure ( it starts with " notice of default"); but in the meanwhile congress will passs the BAILOUT; then uncle sam will buy your " toxic" note for something like 30 cents on a dollar; after that - most likely - uncle sam will " modify" your loan ( how'bout zero interest plus knocking off 65% of principal - would'n you make that kind of payment ?); all that sacrifice on part of uncle sam only to keep YOU - a 'homeowner' at home ( they said it so many times before that it became sorta anecdotical).....
Uh, that's not what is being talked about in the bailout. The government won't actually buy the toxic loans, but the bonds representing the packaged bundle of CDOs.
If the average homeowner thinks they are going to see any benefit from the bailout they have not only been smoking weed but unlike the claims of Bill Clinton they have most definitely been inhaling.
Manhattan, NY · Member since 2008 · 801 posts · 61 votes
18y
If you just walk away the lender will seed a deficiency judgment. You already know the hit your credit will take and as David said be prepared for a forensic audit of your loan application and supporting documentation. If they request anything to "clarify" anything, I would let my attorney handle the details.
Homeowner · concord, CA · Member since 2008 · 12 posts · 0 votes
18y
Hey everyone, thanks for the feedback. Yeah, I was striaght and legit on all my loan apps. everything was above board.
Thank youTaz and David for the clear thinking.. who actually does the forensic audit.... Courts or lenders?
Real Estate Investor · Mountain View, CA · Member since 2008 · 234 posts · 32 votes
18y
I'm going to take a slightly different angle at this question and ask why you want out? Is this your residence or a rental? If it's your residence, why the need to move? If you stay put and can afford the payments (no indication that you can't), there's no credit hit or other negative to worry about.
Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
18y
If you are serious about the short sale keep negotiating even after the second lender says no...they may eventually say yes. You may need to go higher up in the organization. You may need to find out who the true investor is behind the note and negotiate with them. (I had to do that when Countrywide said no but in fact, after I finally found out who the investor was and actually talked on the phone with them, I got approval for $7000.)
Also, make sure they state in the approval letters that it is paid as agreed and nothing else is due.
But I agree with Tom that you should try to turn it into a rental if you don't want to live there anymore. From what I've heard, it would be several years before you could purchase a home again after a short sale..
Homeowner · concord, CA · Member since 2008 · 12 posts · 0 votes
18y
Hi Shari, thanks for the response. I really appreciate the short sale info.... my primary is through countrywide and my second is through wells fargo. so far (and we're only three weeks into this) wells fargo has already gotten back to my agent and said they won't accept if they cannot get countrywide to offer them some money. my agent is doutful that countrywide will want to offer wells fargo anything. so i'm fearing being stuck. maybe my agent should do as you suggest and see if the actual investor will play nicely with wells fargo.
I appreciate the tip on renting the house, i'm also trying to separate myself from my co-buyer. since we bought the house, she has become financially unreliable and deceptive at times when dealing with finances. I'd really love to just wash my hands of it all. I don't see myself buying anything any time soon after this whole experience. the thought of dealing with lenders again makes my stomach turn. thanks again for the good advice.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
18y
No need. Closing costs were rolled into the first two. Yes, many, many people bought homes at the inflated bubble prices with absolutely no money out of pocket. That's a huge factor in the current crisis. Folks say "all these foreclosures, REOs and short sales are destorying my property values". No, the values they thought were there were fiction, and prices are falling back to their real value. But, for folks that are looking at being $200K, $300K or more in the hole on a property which will never again in our lifetimes be worth what it was at the peak, what choice do they have but to walk away?
Homeowner · concord, CA · Member since 2008 · 12 posts · 0 votes
18y
Yeah Jon, my place is about 200k in the hole. good to know i'll always be stuck!! Think i'll go drink some hemlock... just kidding, anyway..
in this situation where i'm not in default, and my mortgage doesn't adjust until 2010, do i have any leverage to try a loan mod to get out of the interest only aspect of my loan.. i'm getting the impression that these lenders will only deal if your in some stage of default.
Homeowner · concord, CA · Member since 2008 · 12 posts · 0 votes
18y
Oh and by the way Krzy... that is a five string bass that i do solo instrumental stuff on. I have a few buddies that play Chapman.. what a cool instrument.
Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
18y
Jon, you don't look that old! You honestly believe homes will take more than 30-plus years go up to 2006 prices? Our market seems to be holding at 2003 prices but I do think it will be 5-7 years to start moving up. Inflation alone will contribute enough to get the prices up and rents sure aren't going down.
Lee, your agent should have put a small payment to Wells Fargo into the net sheet for Countrywide's approval. Wells will expect $2000-5000 to accept the short sale. You will have to re-negotiate with Countrywide to accept less. Believe me, if Countrywide has already accepted your sales price and costs, they will take a few thousand less but it will just take more time--3 weeks is nothing in the life of a short sale transaction. I'm surprised you've heard anything from either of them. Keep plugging away but Wells will want something for sure.
If you want to keep the property and try a loan modification, talk to the loss mitigation department of Countrywide. I was at a party last night and a guy told me his daughter just got a loan mod from Countrywide and they REDUCED the balance owed and reduced her interest rate to a market-rate fixed loan. She was not behind in payments. It's worth a few phone calls.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
18y
Yes, I do honestly believe that's possible. The long term trend for housing appreciation is inflation. You only have to look at the inflation adjusted Case-Shiller data for the last 100+ years to see that's true. There were a couple major changes about 1910 that lowered prices, then again after WWII that brought them up. But never in the last 100+ years have we see anything like whats happened in the last eight.
Look at this thread. here's an investor who owes $335K on a property that's now worth $190K. Its a condo in FL. I think FL's going to be harder hit than CA because you have a lot more business and industry in CA. FL also got very overbuilt, with a lot of the properties behind hocked off on fairly naive investors who got caught up in the bubble. I don't think its out of the question to see prices for those condos fall another 20% in the next couple of years. This bailout does appear that its going to ease funding, but I'm not convinced its going to help the FL condo market much. That would make her condo worth about $150K. Now, figure inflation averages 4% going forward. It takes 20 years at 4% appreciation to get from $150K to 335K.
So, OK, maybe I'm overstating just a bit to say "never in our lifetimes". And most areas didn't bubble like FL, NV, or CA, and so won't see such dramatic shifts. But, I seriously doubt we'll ever again see the sort of dramatic appreciation we saw from 2000 to 2006.
The Case-Shilller recent data shows a value of 273.94 for LA at the peak and 154.98 for June 2003. That's a 43% drop off the peak. It takes 15 years at 4% appreciation to make that back up. Add on the 5-7 years you think its flat, and its 20 years before we see those prices again.
Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
18y
I'm not sure I read the chart right but it looks like their computations show the average price in LA in 2001 was about $110,000. If that's what the chart is indicating, it's wrong. I bought my first LA property in 2001 and it was a beater in a somewhat rough area for $125,000. There have been a number of sales in the neighborhood within the past few months for similar homes for around $200,000. (At the peak it would have been about $275,000) At $200,000 a buyer can get an FHA fixed loan that would enable them to have a monthly payment within $200 of market rent in the area. But, I may be reading the chart wrong.
Within the Los Angeles metropolitan area there are areas hit mildly, somewhat hard and very hard. The further inland you go, the more it was overbuilt.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
18y
I was looking at the data from the S&P Cash Shiller data. The June 2008 data, latest available. keep in mind that's an index, not a value. The June 2003 value of 154.98 doesn't correlate to any specific price. I can't figure out if this is adjusted for inflation or not.
Fully agree there are many, many local factors. Even looking at this index for a single city doesn't tell you prices on a specific street.
Real Estate Consultant · Member since 2008 · 792 posts · 30 votes
18y
f you are serious about the short sale keep negotiating even after the second lender says no...they may eventually say yes.
That is great advice. "No" means one of two things: "No for now" or "I'm not allowed to say yes but my boss might be".
Countrywide will easily allow the second to receive $3,000. $3,000 is their reflexive answer when asked how much they will let the second have. Are you sure that your agent knows what they are doing?
*By the way, has anyone on this thread read "Crashproof" by Peter Schiff? If you have, it will shed some light on when "values" will return.
Homeowner · concord, CA · Member since 2008 · 12 posts · 0 votes
18y
Shari Posey, you are awesome!! you had me at hello.... haha. Thanks for the info on wells and the loan mod. I know patience is key here as well... we'll see how this goes. thanks again for the extremely valuable response.
Homeowner · concord, CA · Member since 2008 · 12 posts · 0 votes
18y
Hey Dave thanks for your comment as well, very good insight for me. My agent said that wells was hinting that they wanted way more than 3K, but i agree with you that this first no is more a bluff.... I will persist. I do believe my agent knows what she's doing, and after having these conversations with you I feel like I have some way to gague that now. Thanks again.