Comments on: Fannie Mae Strikes Against Strategic Defaults

By: Jim

Jim — Sat, 28 May 2011 01:06:03 +0000

Just walk away!
Treat it like a business decision.
Maybe it’s an under performing asset.

Biggest reason not to do a SS…. possible deficiency judgement.
If you live in a non-deficiency’s state you might want to look into just going the FC route.
If you live in a deficiency state, good luck.
Also keep in mind….. both a SS and FC are going to wreck your credit.
Good Luck.

By: Lori Haugen

Lori Haugen — Tue, 04 Jan 2011 16:54:11 +0000

It is becoming more and more clear daily that my Realtor is clueless. With two botched deals behind us, we are trying to move on with our lives. We are releasing our clueless agent and we have moved into our respective apartments that we put money down on. The house will be vacated in two days. We have been advised that there will be t ax implications if the home is not our “Primary Residence”. So if we continue and secure a short sale, we will have tax liabilities. Of course our Realtor is disagreeing and telling us most of his clients are letting their house sit empty. I submit
that they either don’t realize the implications or are willing to accept paying increased taxes rather than effect their credit.

By: Bill Gassett

Bill Gassett — Fri, 31 Dec 2010 13:40:30 +0000

Lori – Yes they are one and the same. Unfortunately it sounds like your Realtor is clueless. The LENDER is NOT selling the home YOU are. The only function of the lender at this point is to approve or not the terms YOU present them. The Realtor you are using obviously does not understand short sales at all. My suggestion would be to try to free yourself from this person and find a good attorney to represent you.

One of my biggest pet peeves is Realtors who take listings in an area that they have no competency in. This person is taking your financial future in their hands without proper knowledge to get the job done.

By: Lori Haugen

Lori Haugen — Fri, 31 Dec 2010 06:02:58 +0000

Mr. Gassett

Is an “Escrow Deposit” the same as “earnest money”?
The buyer gave a $1,000.00 earnest money payment to be held by a third party. Our Realtor told us that banks usually do not collect the earnest money and it is not given to us as the seller because it is the bank that is the seller and they are the ones that collect any money that is in escrow such as taxes or insurance. We have lost all confidence in our Realtor and believe we have missed our window of opportunity as we have sat by and watched two offers blow up in our face. We are thinking that we are just plain running out of time and the bank will probably make our minds up for us and foreclose, as we have already received word from WF that our only options now, after failing to secure an offer and close a deal that is at FMV, is to do a deed in lieu of foreclosure or foreclosure.

We are now wondering what the repercussions are with a foreclosure. I think that we meet the criteria to be excluded from paying taxes on forgiven debt because;
1) I lost my job 2) I have serious health problems and 3) We are insolvent. I am not sure if our loan/debt is a non-deficient one or not, so it is possible they can’t come after us if the contract states that they will trade the debt for taking possession of the property. I do know that the longer we do not make payments and stay on the market in hopes of a possible short sale the FMV is crashing downward and this will effect the gap that determines insolvency.

By: Bill Gassett

Bill Gassett — Thu, 30 Dec 2010 23:45:15 +0000

Lori I am sorry to hear about your situation. The one thing I would question right off the bat is why in the world your Realtor did not collect an escrow deposit? That is just plain stupidity and obviously allowed the 1st buyer to walk without any consequences. The whole purpose of having an escrow deposit is to avoid the situation your just went through. Not sure about the 2nd offer and why the buyer was told to withdraw their offer? I wish you the best with your short sale and hope everything works out for the best.

By: Lori Haugen

Lori Haugen — Thu, 30 Dec 2010 23:28:59 +0000

Mr. Gassett
I am a joint tenant in common with another single gal. I have serious health issues and have been out of work for over a yr. now. My soul income is court ordered alimony. We are definitely in a distressed position. WF agreed to a short sale. We had a buyer and the deal was accepted and we were 3 weeks from our closing date and at the deal went south. Our home was off the market for over 3 mos. and the buyer had nothing to lose by walking. No earnest money was collected, which made it easier for him. In the meantime, we had put money down on separate rentals and signed leases, had utility shut of dates and changed addresses for mail. Then nearly 24 hours plus, we had another buyer over Xmas. They wanted acceptance of their offer within 24 hours on Xmas eve. Our Realtors were both out of town and we didn’t have a printer, scanner/fax. Over the holiday while visiting relatives they were counseled to withdraw their offer. So a few days later that deal fell through. Now we are proceeding with moving out. We have a vacancy binder to cover our interest plus we are paid up on all taxes and ins. We are, however, 3 months delinquent on our mortgage. We were counseled to stop paying to facilitate a more probable outcome on the acceptance of short sale by our loan servicer. WF is has been hassling us about the delinquency and checking up on the condition and if it is still our primary residence. Soon it will not be, and even though we are hopeful that it will sell in a short sale, there is a good chance we may run out of time and WF will foreclose. I also will not be able to keep paying utilities for two places. My credit is trashed due to divorce and I don’t think the chances are good that I will recover financially and I soon will be on disability, so I am not concerned about the future implications regarding employment, and I am not in need of a loan. My friend however, has a career as an RN and would like to eventually buy again in the future. We are individually and collectively insolvent and I am not sure of the tax consequences of a foreclosure.
Signed “Running out of Time”

By: Bill Gassett

Bill Gassett — Thu, 04 Nov 2010 18:20:08 +0000

Holly I agree with you completely! There is a lot about the banking industry and the decisions that they make that I will never understand. Instead of reducing the rate and still making money they would rather foreclosure and lose money. This one the surface makes no sense at all. On many occasions as it turns out the investor makes out better for tax purposes with a foreclosure. The bail out money is also part of the equation as well.

By: Holly

Holly — Thu, 04 Nov 2010 15:14:46 +0000

Our home is underwater, worth 295K, we owe 330K. We contacted the bank about a refinance and for 12K cash at signing we can get a better rate, 4.62% which will save us 18K over the next 30 years. I am disgusted. We have been making our payments on time every month and just getting punished for it. The banks get to borrow money at .2%, why can’t they loan it to homeowners that are responsible, current and underwater at 1% (that is 5x their cost) with 2 points.

The total cost of ownership would be so much reduced that strategic defaults would no longer make sense. This would help the people, help stabilize the market, and free up a lot of cash flow for citizens to spend in the economy. I did the math, our mortgage would go from 1,822 to 944 a month if we could refinance at 1%. Do that for everyone and that will Stimulate the economy without a dime from Uncle Sam.

It could be said it isnt’ fair to the investors, but lets face it, the government bailed out alot of the banks by buying mortgages (5 trillion worth?) and the MBS (1 Trillion?) so cutting their future earnings to preserve the assets held by the taxpayers doesn’t seem all that unreasonable to me.

By: Bill Gassett

Bill Gassett — Sat, 16 Oct 2010 18:54:30 +0000

Vic what I would encourage you to do is a strategic short sale and not a strategic foreclosure. You may not be buying a home but your credit will take a serious hit which will mean you will get the highest rates for everything including car loans and credit cards.

By: Vic

Vic — Fri, 15 Oct 2010 21:57:02 +0000

Any suggestions: Currently owe $278K on home valued at $140k…a few neighbors have forclosed, homes up for auction. Wanted to refinance from a 6.25% down to the lower offered rates, Wells Fargo said no. We can afford payments but also realize we will not recover $138 negative equity in the next 10 years to sell when we retire. Many people have told us to walk….I’ve waited 2 years hoping to refinance, I’ve lost hope now. Suggestions? Oh by the way, we can afford our payments

I live in California, loan is a Fannie Mae loan, don’t plan to buy into the so-called American dream of trying to own a home. I’m ok with renting for the next 7-10 years. Banks won’t short-refinance to me, won’t sell the home to me actual market value. I don’t qualify for any of these government programs because I can afford my payments. Really thinking of strategically defaulting beginning next month!