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Re: Conserve your cash and energy. Dee
Posted by JK (the other JK) on March 26, 2008 at 1:23 PM
In Reply to: Re: Conserve your cash and energy. Dee posted by Rod on March 26, 2008 at 10:29 AM
: Steve, : How would you sleep at night knowing the bank is losing money because of you but you are collecting rent in the meantime that you have no intention of giving to them. Also consider the hardship to the renter when they have to move on short notice after the bank takes it back or that the bank now may have a hostile occupant to deal with. Now you have given them two messes to clean up. : Personally, I think if you are going to walk, just walk. :
: ROD :
: : :Dee
: : When I spoke to the loss mitigation Bank rep on the phone, I asked her if we could work an arrangement where I put a renter in the home, the bank collects the rents, and the bank discharges us from responsibility on the loan (deed in lieu, etc.), her response was, "If you want to put a renter in the home, that's you're choice." She expressed no interest in the Bank wanting to collect rents. I think that is a foolish thing for a rep to tell a person considering foreclosure. Granted, my initial (and present) gut feeling about the real property sophistication of the rep is that she is not. Also, in the yellow left hand column of the this page are several links, one titled 50 State Foreclosure basics. In the Ca Code section is "rent skimming", which caught my attention. From my initial read through, rent skimming does not apply to me because I've owned RM property for longer than 1 year. (I'd appreciate some input on this matter if anyone knows??!!) So, it APPEARS that I can put a renter in the property and collect rents during the process. CRAZY, I know. Thanks Steve
: : One more thing, I highly recommend that if you're considering giving your property back to the bank, that you keep detailed records of all your conversations with all Bank reps and send them a copy of your understanding of any conversations. Banks are held to a high standard and misleading information they disseminate could be evidence of dealing in "bad faith", something they will bend over backwards of which not to be accused. : :
: : Steve.
: : : Have you looked into renting and keeping the rental income and what the bank might do because you're not making payments? Is the bank allowed by contract to any rents collected while you're not making payments? Ive seen this asked before and I've never saw an answer so Im just wondering if this is something that you've looked into?
: : : Dee : : : : Ward
: : : : Thanks for the input. I tend to agree with you that foreclosure is a better alternative than SS. Besides, we've contacted the Banks loss mitigation department, explained our situation, and got very little input or energy from them to work out any sort of arrangement. What is unfortunate is that it is in both ours and the banks best interest to work something out NOW before the value of the property drops any further. An economic upside to allowing foreclosure is that we can rent the unit during the foreclosure process and receive rental income. Question:
: : : : If we do suspend mortgage payments and force foreclosure, what is the effect of a foreclosure on credit scores?
: : : : Is there any rule of thumb on the credit hit? 15,20,30% decrease in scores? Or a 100, 200, 300 pt drop?
: : : : Many Thanks Steve : : : : : Steve, : : : : : IMHO, I would walk. : : : : : #1. Your credit report would simply show you were late making X number of payments. : : : : : #2. No, because the foreclosure of any senior lien wipes off title any junior lien. : : : : : #3. Intent to occupy is demonstrated by a person’s conduct. So if you changed your voting district, driver’s license, children’s school…all in anticipation of moving and then didn’t at the last minute, I’d say your intent to move to the new locale was genuine. : : : : :
: : : : : -------Ward : : : : : =========== : : : : : Is it better to walk or attempt to negotiate a SS under the following circumstances:
: : : : : My wife and I own a property in Rancho Mirage, CA.
: : : : : Purchase price $385k. 80/10/10 financing. The HELOC second was refinanced into a better interest rate, but the balance was not paid down nor used for anything other than the purchase. The 80 first is original PMM. Both are with the same lender.
: : : : : Current MV is +/- $350k.
: : : : : Total P&I and taxes is +/- $2400/mo. including a very expensive HOA.
: : : : : When we purchased the property in '04, long-term rents were around $2500/mo., so we felt comfortable in case we needed to rent to cover expenses. Since, with the slump in the sales market, there is a glut of rentals on the market and l/t rents have plummeted to $1250/mo.
: : : : : We no longer want the property. We've actively but unsuccessfully tried to sell the property over the last several months, dropping the price from $439K to $389K.
: : : : : My questions are:
1) If we negotiate a SS, what are the effects on credit? I understand that it's "bad", more specifics would be appreciated.
2) If the Bank forecloses on the first and uses the "one action", does the Bank have recourse for the HELOC even if the two loans are from the same Bank and were used to fund the same purchase?
3) What determines if the property was purchased as a primary residence? Is it the buyers intent at the time of sale? In other words, we live and have a home in the Bay area that has been our primary residence for tax purposes. Can it successfully be argued that when we purchased the RM home it was our intent to move into the RM home as our primary residence (but were forced to stay in the Bay area for reasons beyond our control), thus preserving the primary residence protections?
4) Under these circumstances, is it more advantages to SS or let the bank foreclose? Vacant homes are a huge liability and are at risk for vandalism. The moral thing to do would be to #1 disclose to your tenant the situation and put them on a month to month rental and #2) hang on to the rent to give to the bank if they decide they want to take it. If not you should consider donating the funds to a charity. Karma can be a b@#$%.
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