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Guest

Cannot believe it has come to this but I have a rental property that simply will not sell even at 15% below its comp's price. Spent four months trying to sell, and two months trying to rent it out again with no luck. Enormous response when we tried to sell but out of seven offers not a single person was able to get pre-approval and we had to pass. Every renter that we have seen is terrible on paper.

There is at least 65K in equity on the table based on comp value reality maybe 10K with a sale after fee's.

So I sent a letter to the bank request a sitdown to discuss a deed in lieu or short sale with absolutely no response, I have gotten two standard phone calls for late payment but not a single one regarding the letter, it was sent certified mail so I know it got there 2 weeks ago.

I am 60 days back at this point on trying to at least force there hand to talk, seems that they simply want to go to foreclosure which seems silly as the laws really don't favor them for recovery out here in California based on what I have read, and the fact that I can really drag it out if I feel the need to be nasty.

This is the first property I have ever had to do this on, so some questions

If the bank forces a forclosure can they sue for defualt and put a lein on our other properties, non of these are in a LLC? All others are in great standing. Some are even with the same lender.

Clearly my credit will be hurt slightly, but I already have a primary home as well as enough cash/equity to purchase another at any time.
So whats the realitive point reduction? If its only 100 or so I can live with that.

Should I retain a lawyer at this point to draw up a better letter , and ask for at least a phone call to discuss this. It seems that they simply do not want to comunicate or are unable to, is there any way to force the issue?

Guest

Isn't there any way that you can meet them right in front and have a discussion.

helping_user

Welcome St0rmB1nger.

If you are finding it hard to sell the rental property, then you can allow the buyer to go for a lease-to-purchase option. This will help the buyer to lease your property for a certain time period and then qualify for a home loan in order to buy the property at the end of the lease period. However, this is only possible, if your lender is willing to provide you with an alternative payment plan with which you can be current on the loan and need not have the loan foreclosed.

Thanks.

Guest

But helping_user,

The lender is not at all interested to talk to him, so I doubt whether he will allow for a repayment plan alterative to one which he has been following initially.

Caron

Hi St0rmB1nger,

Welcome to the forum.

If the bank forecloses, it may sue you for a deficiency. But the foreclosure will have to be judicial in nature. In a non-judicial foreclosure, you cannot be sued for a deficiency.

However, in case of judicial foreclosure, the lender may file for deficiency judgment at the court in order to sue the borrower for the deficiency. But there are Anti-deficiency laws in different states which prevent the lender for filing a lawsuit for the deficiency judgment. However, each and every state does not have such laws and as such the lender's right to obtain a deficiency judgment cannot be waived.

The lender can place a lien on other property in order to obtain the deficiency. But then he should enforce the right within a specified time period as otherwise he loses his right to obtain the deficit amount of money.

Good luck

Guest

See thats what throws me for a loop, in California at least they are looking at 180 days standard before they can foreclose, then I can always do a buyback up to a year out.

I have yet to see anybody online with a positive equity situation get sued for deficiency, also California is a note state so I don't even know if they legally can when the apprasial comes back for mre then what is owed.

I am gong to sit down with a lawyer and draft something on some really expensive looking letterhead and send it to every fax number and address that I can get my hands on and see if they respond. If not they have to al least inform me beofre they file the paperwork for a foreclosure.

Guest

sara

Hi StormBringer,

There are anti-deficieny laws applicable in California but these are limited to funds used for buying primary residence. As such, the laws can be in your favor and it is likely that the lender may not ask for the deficiency.

I think it is a good decision to consult a lawyer and prepare a letter so that the company receives it, gives some importance to the letter and at least informs you before the foreclosure.

Take Care

Guest

Well they are finnaly talking to me, threating really but talking. All the paerwork has been filed for a DIL and hopefully it will go through.

miller_st · Joined: 17 Jan 2007 Posts: 918 168.95 Dollars($)

Good to hear that they have agreed to accept a deed in lieu. It is a much better option than going through the foreclosure process. And it would have less negative impact on your credit score as compared to a foreclosure.

Miller

kenstampe · Posted: Wed May 09, 2007 10:14 pm Post subject:

Miller, perhaps you can explain why a deed in lieu would have a less negative impact on credit scores. A deed in lieu is still a default on a mortgage loan so I believe it has the same credit impact as a foreclosure. There is an advantage to a deed in lieu in that the shortfall won't come back to haunt you in that the lender can't seek a deficiency judgement against you. So I agree it is a better option but don't see how it is less impacting the credit score.

Please advise.

Caron · Posted: Thu May 10, 2007 4:54 am Post subject:

Yes deed-in-lieu does have a negative impact but the advantage is that the lender cannot seek deficiency judgment as in a foreclosure. But why it is less negative or if at all it is less negative than foreclosure, well, I guess those in the business can explain it better.

miller_st · Joined: 17 Jan 2007 Posts: 918 168.95 Dollars($)

Hi Ken,

I suggested that dil would have less negative impact compared to a foreclosure. I developed this idea after going through this Equifax page which says that it is worse to have a foreclosure on your credit history but both foreclosure and deed-in-lieu damage person's credit. This is the page:

equifax.com/sitePages/mycrediteducation/index.jsp?
siteGroup=manageCredit&sitePage=rebuildCredit
&sitePageInclude=rebuildCredit_2

Please correct me if I misunderstood the language used. But what it seemed to me was that they are saying that foreclosure would be the worst thing, so deed in lieu would be rated better than foreclosure.

Miller

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