Questioning attorney advice on loan mod and intention for a long stay.

[tools2teach]

We live in southern California and our mortgage is with Countrywide (now B of A). We hired a reputable attorney with intentions to help us stay in the home as long as possible, so that we could have a nesting egg after the foreclosure.

We haven't gotten a NOD yet and we haven't paid since July of last year. His advise in the first step of prolonging the process is apply for a loan mod. His intention in doing this is to show out lender that we want to keep the home and stop the foreclosure process in it's tract.

I got a call from our attorney today stating that we should start doing a short sell on our home or apply for a reduction of principle for our loan which we aren't being opposed to since we love where we live.

I think a short sell is premature in the process since there's been no NOD and short sell could hurt us if we were to sell the home within a few months. His advise was to show the lender that we are working with them, again to stop the foreclosure process.

My question for some of you who may know the process better then I do is, what if the short sell falls through in a short period of time? That defeats the purpose of our intentions. 2) Is it premature to even think of a short sell since we never got a NOD? Is go to real estate agent and the attorney pushing for a short sell to make a buck?

[ryan]

I'm just going to comment in general about this, since I am not in Calif....There is a trend among some FC defense lawyers to recommend a simultaneous 2 pronged approach to FC defense.

One prong is to be taking actions that demonstrate to the lender you are cooperative and or want to save the house. Modifications and short sales attempts fall in that category.

The other prong is aggressive legal motion filing to attack weaknesses in the FC complaint and cost a lot time. It may be because Calif is a non-judicial state that this atty's approach is less 'legal' and more cooperative. However, since you don;t even have a NOD, maybe he is holding his 'legal guns' in reserve. Just an opinion.

[helpme2010]

Asking for a loan mod and short sell is a good way to stall the mortgage companies to temporarily stall the foreclosure or give you some time. But it doesn't always work. If your goal is just to stall the foreclosure, it is a good strategy if it works. I tried it once they posted a trustee auction date on my door, but the mortgage company said it was too late to try this. So if you do it before they put up the auction date, you might be able to buy yourself some more time.

[tools2teach]

So since we haven't gotten our NOD yet, then what my attorney is suggesting is that we want to cooperate with the holder of our mortgage. What if an offer is submitted and the banks agrees to the offer, then are we looking to get out sooner then we would expect? We live a desirable neighborhood and I don't foresee the short sell lasting very long, but then again, I can see where my attorney is coming from now, with the responses I have gotten. An NOD can accelerate the process quicker, then doing a short sell before it's too late to do a short sell? Am I correct it in this statement? Are other option is to have our attorney do a loan mod to get principle reduction with a lower interest which would be ideal, probably a small chance given our income is not enough to go on a 30 year fixed. Which one of the 2 would be would be the path of more resistants?

[bulletproof77]

I hate to break it to you, but banks are NOT doing principal reductions, particularly Bank of America. While you (and your "attorney") may think you can string them along, I can assure you B of A WILL continue the foreclosure process. Actually Bank of America is one of the fastest lenders to foreclose in Southern California. I know, I had B of A and I live in Southern California (in a less expensive area than the OC). I tried all the stall tactics and the foreclosure process just continued on it's merry way right up until they sold my house on the courthouse steps..Banks are not doing principal reductions. All they are doing if you get lucky is extending the loan terms to 40 years and placing any missed payments or "principal reduction" on the back end of the note in the form of a large balloon payment. Your attorney may also want to delay the inevitable due to his fee's also. Best of luck, but be prepared because "can't pay-can't stay" pretty much seems to be the rule of the day when dealing with Bank of America. Short sales ? Over 80% are rejected by the lender and most buyers do not want the headache that goes along with a short sale. Buyers just don't seem to want to play that game. A NOD is just your initial notice of default which starts the process. If they really want the house, you can receive your Notice of Trust sale in as little as 90 days after the NOD. The property can be sold 21 days after NTS issued..Actually, re-reading your initial post, it looks like your attorney IS preparing for the inevitable.

[tools2teach]

OK....I just had a meeting with my attorney and real estate agent. His advise is to do a short sell now because the process of getting the approval and the negotiator could take a while. Although, it seems like a gamble, it could work out to our benefit. Real Estate agent mentioned that their was enacted law January through Obama that would speed the foreclosure process giving the banks free reign to speed the process up. I'm sure at this point I don't know what to do. Is the agent selling this idea to get his 6% commission or does he have good intentions? We also have a equity line of credit which was sold to a collection agency. I know it's no guarantee, but would most bank, particular B of forgive this line of credit based on peoples experience?

[shark66]

Real Estate agent mentioned that their was enacted law January through Obama that would speed the foreclosure process giving the banks free reign to speed the process up. I'm sure at this point I don't know what to do. Is the agent selling this idea to get his 6% commission or does he have good intentions??

You haven't actually bothered checking whether such a law existed, have you?

Agent has very good intentions...he's intent on making his 6% on your grief and confusion...

Good luck.

[tools2teach]

I actually checked every site imaginable and I cannot find anything on this new law. If some of you were in my situation, should I continue the path recommended to me or just take the path of the foreclosure process in hopes that the bank will forget about us (highly doubtful considering it's bank of america). I already paid good money to this attorney, so I am trusting him with my future. I just don't know if he is giving the right path to our intentions.

[shark66]

The only one who will gain anything by a short sale (presuming it's ever approved, which is highly unlikely) would be the real estate agent...the very same one who lied to you in order to scare you...

You draw your own conclusions...if it were me, I'd tell him to take a flying f~~k on a rolling doughnut...

Good luck.

[helpme2010]

I would only do the short sale as a means of trying to stall the foreclosure process. You aren't going to get what the house is worth, so there really is no reason to even do a short sale in my opinion. You can also ask for a loan mod and hope that will stall your mortgage company. Otherwise its basically the waiting game, not knowing when they will put that trustee sale notice on your door. I am there right now and when that notice arrives, it's a bit scary. Then you can attempt a cash for keys deal to move out faster.

[SleepWellNow]

Here's my two cents...if the NOD hasn't been filed, I wouldn't start a short sale yet. I have to disagree with the other poster (bulletproof77) regarding B of A moving fast in Southern California. I have two properties (one our primary residence and one a rental) where we haven't paid since March 2009. Bof A has moved very slowly with us. I'm thinking what has stalled the process is...

1. They are Countrywide/Bank of America pay option ARM loans
2. We requested a loan mod and sent in all the paperwork (June 2009)
3. We filed BK the next month (which voided our mod request)
4. We sent in a second loan mod package after our discharge (November 2009)
5. We received an NOD in September 2010 and requested approval to do a short sale in December 2010. The loan mod requests remained in limbo until we received the NOD. Bank of America has postponed both loans so we can complete the short sales.

We actually didn't request the short sale until we received the Notice of Trustee Sale in December on our rental and we were pro-actively contacted to do a short sale in January 2011 on our primary residence, which we are going to do. Waiting until the NTS is filed is quite a gamble unless you are confident your house will sell quickly once you put it on the market because the foreclosure sale date will not be postponed unless you have an offer.


One more thing...before you select an agent, I would check around and make sure your agent is experienced in short sales. Look for a Realtor with a California Distressed Property Expert (CDPE) designation and ask how many short sale listings they have handled (and what their success rate has been). There are many good Realtors out there who are willing to put your needs above their own commissions. They really do want to help. Take your time interviewing and I'm sure you'll find one.

[willsurvive]

I'm not sure if you've filed BK or not?

Anyway, I am a living story of a successful loan mod through BofA. They really do happen. We filed Bk Ch 7, with the intention of staying, but never reaffirmed. My dh lost his job so we stopped paying for 17 months before we received a NOD. We basically didn't hear a peep from them for a very long time. But this may have been because of the initial mess of all the foreclosures, not sure. Anyway, after the NOD we finally were asked to send in paperwork to try for a loan mod. We figured it was a long shot, but they came back with an in-house mod that did add in all missed payments (bummer, but oh well) and a 40 yr. note. Our interest rate is 2% for 5 years and goes up to a max of 4.25% at year 8. Our payment is less than rent so we decided to stay. We seriously never thought we'd be living here still today and feel so blessed.

I'm not sure what to advise you, but just know that BofA does do loan mods! Good luck!

[bulletproof77]

Here's my two cents...if the NOD hasn't been filed, I wouldn't start a short sale yet. I have to disagree with the other poster (bulletproof77) regarding B of A moving fast in Southern California. I have two properties (one our primary residence and one a rental) where we haven't paid since March 2009. Bof A has moved very slowly with us. I'm thinking what has stalled the process is...

1. They are Countrywide/Bank of America pay option ARM loans
2. We requested a loan mod and sent in all the paperwork (June 2009)
3. We filed BK the next month (which voided our mod request)
4. We sent in a second loan mod package after our discharge (November 2009)
5. We received an NOD in September 2010 and requested approval to do a short sale in December 2010. The loan mod requests remained in limbo until we received the NOD. Bank of America has postponed both loans so we can complete the short sales.

We actually didn't request the short sale until we received the Notice of Trustee Sale in December on our rental and we were pro-actively contacted to do a short sale in January 2011 on our primary residence, which we are going to do. Waiting until the NTS is filed is quite a gamble unless you are confident your house will sell quickly once you put it on the market because the foreclosure sale date will not be postponed unless you have an offer.


One more thing...before you select an agent, I would check around and make sure your agent is experienced in short sales. Look for a Realtor with a California Distressed Property Expert (CDPE) designation and ask how many short sale listings they have handled (and what their success rate has been). There are many good Realtors out there who are willing to put your needs above their own commissions. They really do want to help. Take your time interviewing and I'm sure you'll find one.

Yes, the infamous "pick a pay" Countrywide loan...They are under a court order to attempt mods on those loans. However if you don't have one of those you are probably SOL....

[helpme2010]

I'm not sure if you've filed BK or not?

Anyway, I am a living story of a successful loan mod through BofA. They really do happen. We filed Bk Ch 7, with the intention of staying, but never reaffirmed. My dh lost his job so we stopped paying for 17 months before we received a NOD. We basically didn't hear a peep from them for a very long time. But this may have been because of the initial mess of all the foreclosures, not sure. Anyway, after the NOD we finally were asked to send in paperwork to try for a loan mod. We figured it was a long shot, but they came back with an in-house mod that did add in all missed payments (bummer, but oh well) and a 40 yr. note. Our interest rate is 2% for 5 years and goes up to a max of 4.25% at year 8. Our payment is less than rent so we decided to stay. We seriously never thought we'd be living here still today and feel so blessed.

I'm not sure what to advise you, but just know that BofA does do loan mods! Good luck!

I may be attempting this strategy shortly. If they gave me a low enough loan mod deal, I would consider it, but my last 2 loan mods pre-bk kept going up to the point of being more than my original loan amount. I am also going to retry the short sale route for stalling again as well, but I think my time is very limited and I am just trying to buy more time until I can find a job and rent a new place.

[bulletproof77]

I'm not sure if you've filed BK or not?

Anyway, I am a living story of a successful loan mod through BofA. They really do happen. We filed Bk Ch 7, with the intention of staying, but never reaffirmed. My dh lost his job so we stopped paying for 17 months before we received a NOD. We basically didn't hear a peep from them for a very long time. But this may have been because of the initial mess of all the foreclosures, not sure. Anyway, after the NOD we finally were asked to send in paperwork to try for a loan mod. We figured it was a long shot, but they came back with an in-house mod that did add in all missed payments (bummer, but oh well) and a 40 yr. note. Our interest rate is 2% for 5 years and goes up to a max of 4.25% at year 8. Our payment is less than rent so we decided to stay. We seriously never thought we'd be living here still today and feel so blessed.

I'm not sure what to advise you, but just know that BofA does do loan mods! Good luck!

So...continuing to pay for an underwater property for 40 years is a good thing ? Not to be a smart ass or anything (and I'm happy if your happy), but for some people, walking is still a viable option. It also depends in large part what area of the country you are in and if Bend Over America feels that it could profit more by foreclosing than a loan mod..What works in Idaho, may not work in California.