Short Sale after Chapter 7. What are our responsibilities??

[kcfaninin]

Our Chapter 7 was discharged April 2010 and we did not reaffirm our mortgage. Denied Loan Mod through Chase. We are now in the process of doing a short sale (for moral reasons, helping Chase get the most money they can for our home which is $80,000 under water) The home is currently listed with a realtor who is helping us with the short sale process.

Chase is requesting pay stubs, bank statements, hardship letter, etc. Why do we need to supply this and why are they even asking for it when we are no longer responsible for the mortgage? Can we refuse to submit it and still proceed with the short sale?

Why do they need to know our financial business when we can walk away at any point. Our agent got a little irritated with us when we questioned it. It seems irrelevant at this point to have to provide this info.

Also, which would look better for us when it comes to applying for a new mortgage down the road, a short sale, foreclosure, deed in lieu, etc? Should we cancel short sale and sit tight rent free for as long as possible? We don't know what to do. Rental property is scarce where we live. Right now if our house would sell, we don't have anywhere to go.

Thanks

[tobee43]

did you surrender the house in bk?? if so, you don't have to provide anything more to chase. if your bk is closed and discharged. it's chase's problem, not yours.

ok...normally your state Indiana is a deficiency state. had you not listed or included the mortgage in your bk, then chase can attempt to pursue you for a deficiency judgment as a result of a short sale etc. however, under the "The Mortgage Forgiveness Debt Relief Act and Debt Cancellation " due to your insolvency (your bk) you should have no responsibility for any costs etc. that may occur as a result of the sale by the bank. also, i would just ask chase for a deed in lieu and let them short sale or whatever they want to do...of course all provided the mortgage was included in the bk.

a quick google search yielded the following...hope it helps a bit.


"Deficiency judgments Indiana are subject to terms and provisions of an original mortgage agreement made between the homeowner and a lender secured by a given homestead property. In short, a deficiency judgment is a court award as the result of a lawsuit filed by a lender against a homeowner/borrower following the sale of a property. In essence, the deficiency award amounts to the amount of money a lender is still owed on an outstanding mortgage loan, even in light of earlier repayment and sale via a foreclosure auction. The amount deficient following a foreclosure sale, which can include costs associated with the fees and costs of the foreclosure proceeding for the lender, becomes what is known as the deficiency judgment amount.

State Indiana Statutes Governing Deficiency Judgment in Foreclosure Sales

Per the Indiana Code, Article 29 Chapter 7, deficiency judgments are allowed in the following circumstances:

•If a property is sold via foreclosure auction, and the ensuing sale price is less than the outstanding amount of debt owed on a mortgage including foreclosure fees and costs, a borrower can be subject to the difference via a deficiency judgment
•It is also notable that second and subsequent junior mortgages may also incur the potential, and likelihood, of a lender attempting to recover losses via a deficiency judgments as well

State of Indiana Statutes Governing Deficiency Judgment in Foreclosure Alternatives

Unless otherwise explicitly stated and prevented in a no-deficiency provision in a given foreclosure prevention action, borrowers engaging in a short sale or deed in lieu of foreclosure deal will be subject to deficiency judgments, if pursued by the lender.

Getting Legal Help with Deficiency Judgment in Indiana

In reality, a homeowner can greatly mitigate their risk and losses during or before foreclosure through consulting with a foreclosure lawyer in Indiana. Not only are certain mortgage agreements exempt from deficiency awards per the provisions of the original loan agreement, but additionally, certain lender actions may negate their ability to recover a deficiency award in certain cases. Furthermore, a homeowner can avoid foreclosure, while also preventing a deficiency judgment in Indiana, by negotiating a short sale or deed in lieu deal that includes a no deficiency provision. All of these options are highly case-specific and encompass relative complex real estate and foreclosure laws applicable to the state of Indiana. Consulting with a foreclosure lawyer in Indiana is the only viable method for a homeowner to prevent future financial losses following or before foreclosure."



that last part i would only think about doing IF you didn't list the mortgage on your bk. otherwise, i would think you don't even need to speak with chase!

[justbroke]

The only reason to work with the bank on a short sale, is so that you can get the home sold and into a different name! Otherwise, there is no reason to work on a short sale, since the majority of them still fail to close. (Yes, there are some that make it through closing, but that's the minority.) If you have already listed the home for some period of time and there is no sale, then ask the bank about a deed in lieu of foreclosure. This saves the bank a bunch of money over paying for the foreclosure process. However, I would be careful when there are junior mortgages or other liens... since the bank may not want to deal in those situations. It just gets more complex with 2nd and 3rd mortgages (and other liens).

Both a short-sale and deed-in-lieu look better. Typically you can expect to be able to purchase, with sufficient credit, deposit and cash reserves, within 2 years. However, a foreclosure may push that ability out to 3 years or more. The sad part, is that the time is usually measured from the point of the change in ownership (the foreclosure, the DIL or the short sale). Underwriting can be tricky but there are people who have purchased outside the current guidelines with special and specific circumstances.

[panda]

Just for clarification, as I keep stumbling upon this being included in bankruptcy thing for mortgages, like it is a choice. First of all , my understanding is that any debt owed must be included in your bankruptcy, which would include any mortgage. What you do in regards to the paperwork in your bankruptcy for the mortgage is normally one of three options, reaffirm, pay and stay, or surrender. No matter which you choose your mortgage must be included in your bankruptcy.

It is strongly urged to never reaffirm by the more senior people on here, surrender is one option I did not explore. I chose pay and stay, and then after our bk discharged we decided to let the home go. It was included in our bankruptcy and discharged in our bankruptcy, and the bank agrees that it was discharged. I get notices every month that state they are for information only as we have a discharged bankruptcy. We are waiting on a foreclosure which seems will take eons to get to, but a short sale just was not happening for anyone where we lived, nor did we want to be involved anymore with our bank as they just keep perpetuating lies everytime we would talk with them.

We have a Fannie Mae Loan serviced through BOA. There are very specific guidelines for them regarding short sale and deed in lieus which require all of the documentation referenced above regarding hardships, payslips, ect... We preferred not to get involved in any of that, nor do we want to give them any info on our monetary situation that is any more current than our bankruptcy, so we walked from our home without giving them any information other than the fact we were moving and the home was vacant.

These are choices each of us makes with these homes that we do not keep, but make sure you know the rules surrounding what you are doing before making a decision. I do not feel that a deed in lieu or short sale is worth the effort, my credit is already bombed from the bankruptcy, but it is making steady progress, and is already on the way back up. My understanding is the foreclosure should not make any difference if it ever shows up on my credit report, as it is already showing as included in my bankruptcy on my credit report, time will tell on this and I refuse to stress on it any more right now.

Plus if you have a home included in your bankruptcy you are not subject to any deficiency balance, that is one of the pluses of going the bankruptcy route.

These are my opinions and understandings only, your mileage may vary.

[tobee43]

panda: Just for clarification, as I keep stumbling upon this being included in bankruptcy thing for mortgages, like it is a choice. First of all , my understanding is that any debt owed must be included in your bankruptcy, which would include any mortgage. What you do in regards to the paperwork in your bankruptcy for the mortgage is normally one of three options, reaffirm, pay and stay, or surrender. No matter which you choose your mortgage must be included in your bankruptcy.

it actually is a choice with the respect on what your intention is at the time of filing. for example, and we are in that "older" group you refer to. and after 33 years we surrendered our home. that...is what was included in the bankruptcy as well as the debt of the mortgage balance monetarily.

many no asset chapter 7's keep their homes yet list their mortgage as a liability and then later on in the petition there is an area where you signify your intent... whether it's to retain, reaffirm or surrender or other., etc.

i agree with your statement about not being responsible of any deficiency balance; however, provided it falls within the guidelines of the Mortgage Forgiveness Act.,etc.". yet, if you foreclose AFTER you reaffirmed your mortgage after your discharge, i think there could eventually be an issue if you are one of the lucky one's ( NOT!) that reside in a deficiency state.

[panda]

Tobee, I think we are just restating the same thing. As you said you file with what your intention is at the time of your filing. If you reaffirm and then let your home go you would be responsible for the deficiency. According to our attorney, stay and pay means to only stay as long as you pay. I asked specifically if we could walk doing this with no deficiency and she said yes, as long as we did not reaffirm, which is what I have read on here before. We did not reaffirm, but we did not surrender either. We were current on our payments until we discharged and then we let the home go.

Our attorney marked "other" on our bk petition, and then typed in stay and pay, which was allowed where we lived. Our discharge total included all of our monetary items including our mortgage, that were specified in our bankruptcy petition and we were a no asset case as well.

I just feel really bad for some of people who are doing the best they can by trying to short sell with these banks harping on them, when in the end they do not need to do this after there bankruptcy's are done. I understand wanting to do what is right, but the banks scare tactics are horrible, and some of the realtors are playing into this as well. I refuse to play their games any longer. Sometimes others just need to be reassured that they do not need to play this game either so they may have some peace as well.

The OP did state they were discharged and did not reaffirm, they would not be accountable for a deficiency from everything I have read and understand.

My thoughts and opinions only, I am not a lawyer just another person having gone down this journey.

[tobee43]

panda:I just feel really bad for some of people who are doing the best they can by trying to short sell with these banks harping on them, when in the end they do not need to do this after there bankruptcy's are done. I understand wanting to do what is right, but the banks scare tactics are horrible, and some of the realtors are playing into this as well. I refuse to play their games any longer. Sometimes others just need to be reassured that they do not need to play this game either so they may have some peace as well

point well taken. but i must say, and it may because i have never heard that an atty put in the other_________ pay and stay...! interesting to me.

i wanted to reiterate the discharge and not reaffirming confirmation, as some can get rather confused with all this being thrown at them and many are usually just along for the ride. sometimes they are lucky and get off that ride with some place nice and good...while others find themselves in the middle of the desert without shoes.

[panda]

I agree about the not reaffirming Tobee. Just to clarify the exact wording on our intentions was to retain and pay,and I knew our attorney was doing something as she had told me she would not let us reaffirm (not that I wanted to anyway), so when we were signing the paperwork, her assistant was printing up the paperwork while we were signing and I asked about it, as the paperwork I had found previously only had reaffirm, redeem, surrender on it, but her program she was using had the "other" notation on it, this was checked and next to it was printed retain and pay. She said that was the only option she ever used, unless someone wanted the surrender option. Our attorney was a retired assistant United States trustee, and she had a commanding and impressive knowledge of how and why to do things a certain way.

[tobee43]

panda, yes, i got that. i just found it so interesting that is was actually written out. our's was easy, of course, it was just to check the surrender box. i just didn't know an atty would actually write out the pay and stay option. however, as you are living proof, it was no problem. it's always good when you have an atty that knows the system well.

[despritfreya]

but i must say, and it may because i have never heard that an atty put in the other_________ pay and stay...! interesting to me.

Tb,

I use a phrase that is a little more "legalese" but, it is basically the same thing. As you know, I never allow my clients to reaffirm mortgages. There intention under "Retain-other" is to stay and pay - I just phase it differently.

Des.

[debee]

We have a Fannie Mae Loan serviced through BOA. There are very specific guidelines for them regarding short sale and deed in lieus which require all of the documentation referenced above regarding hardships, payslips, etc...

Good info, panda. Thanks.

[tobee43]

Tb,

I use a phrase that is a little more "legalese" but, it is basically the same thing. As you know, I never allow my clients to reaffirm mortgages. There intention under "Retain-other" is to stay and pay - I just phase it differently.

Des.

thanks des. it was just my first thought of a trustee looking at the words.."pay and stay" would be somewhat synonymous with reaffirming without signing. and of course.., we have all learned from you never reaffirm that mortgage!

[kcfaninin]

Thanks to all who replied to my original post. Yes, our mortgage was IIB. We have been living here rent/mortgage free for 14 months. We wanted to do something about getting our name off the title. Plus we didn't want someone showing up at our door and giving us a 30 day notice to get out.

With a deed-in-lieu, how much time do you typically have to vacate the property? Will they allow us to stay here until the property is sold? We are very uncomfortable with giving Chase all of our financials for this short sale. We understand in a typical short sale that is the requirement but, our situation is unique that we were discharged prior to starting the short sale process.

What do you feel is our best option in our situation. We live in a very small, close knit, upscale neighborhood with very nosey neighbors. We just didn't want our community knowing about a foreclosure, that is why we chose the short sale route. It has become more of a headache with the showings and all the paperwork Chase is requiring.

If we signed a 6 month contract with the realtor, can we decline further business with them? We have had it listed for 3 weeks now. What will happen if we don't provide the documents Chase is requiring?

[tobee43]

i wish you the best of luck with chase. we have been trying for over 3 years to either do a deed in lieu which they refused, (although we owned another property with another bank which did one), however, they, chase, will not budge.

we have now come to terms with the fact we can do nothing to get our names off that deed, at least not for 20 years since that is the statue of limitation in the state where our property is or was.

we just ended up leaving after our first notice from the bank, that was well over 3 years ago. we have attempted everything to no avail with chase, including but not limited to...a deed a lieu, a short sale, a long sale...(just kidding). but, we hung upside down and inside out and they just will not nothing.

the odd thing about our situation was there was PMI on an FHA and the FHA has certain criteria which must be followed...as with many other lenders...sally mae, freddy mac, etc. with the FHA a foreclosure must take place for the lender to collect on the PMI, yet, chase, according to the FHA has filed no paperwork at all in our case.

i know this is an extremely difficult time for you, please don't let any thing or body make you feel uncomfortable about your situation. i know that's so easy to say, but we were there as well, in a very very small country community where everyone knew everyone. at some point, we just had to hold our heads high and do what was best for us as a family.

you're time factor is going to depend on how quickly they have been foreclosing in your area. the country our property is located in, hasn't had a ONE sheiff's sale since oct 2010, that property is in Judicial state, as is yours. so i would check the county sheiff's web site to see how quickly they are moving in your area.

if i were you, i would stay and save as long as possible! we didn't do that since it was dead of winter and our heat and electric costs more than our current TOTAL monthly expenses...so it really was a saving grace that we just left.

best of luck to you! ...oh as far as the realtor, it's still your choice to sign a contract or not so if you get an offer just up the price to pay off the mortgage, the realtor will get the hint really quick

[panda]

First find out who owns the loan. Is chase the servicer? That is semi normal, but then again I have seen how some of these loans were sliced and diced and it is difficult to find out who owns them. Fannie Mae And Freddie Mac, which are the two most conventional mortgage types are the ones who require most of the documentation you are talking about, but it could be some others as well.

Unfortunately, you are not a unique situation anymore, there are a lot of us with bankruptcies going through foreclosure and a lot of things are just starting to get figured out. I know with Fannie they do have a program to lease back after a deed in lieu, see below. There is another group you can search for as well that deals with staying in you home for a long time, search loansafe and read up on there as well. Keep asking questions as that is how you will find out what will work for you.

http://www.fanniemae.com/kb/index?page=home&c=homeowners_moreoptions

Short Sale
A short sale is the sale of a home for less than the balance remaining on your mortgage. If your mortgage company agrees to a short sale, you can sell your home and pay off your mortgage balance with the proceeds. Short sale benefits:
Eliminate or reduce your mortgage debt
Assistance for relocation may be available
May be able to recover your credit score—and get another mortgage—faster than if you went through foreclosure

Deed-for-Lease™
A new program that allows you to temporarily lease your home. You first transfer the ownership of your home to the mortgage company (called a Deed-in-Lieu of Foreclosure, see below) in exchange for release from your mortgage loan and payments. You can then rent the property back—at an affordable rate—and remain in the home as a tenant. Deed-for-Lease benefits:
Stay in your home and neighborhood—no need to move or relocate
May be able to recover your credit score faster than if you went through foreclosure
Assistance for relocation may be available at the end of your lease
Avoid foreclosure

Deed-in-Lieu of Foreclosure
With a Deed-in-Lieu of Foreclosure (DIL), transfer the ownership of your property to your mortgage company in exchange for a release from your mortgage loan and payments. DIL benefits:
Eliminate or reduce your mortgage debt
May be eligible for relocation assistance
May be able to recover your credit score—and get another mortgage—faster than if you went through foreclosure

Get the Help You Need
1. Gather Your Information
Gather the information you will need to present to your mortgage company—income information for all borrowers, other debts or monthly payments you have, and the reasons and status of your financial hardship. Visit KnowYourOptions.com for helpful forms such as Financial Checklist and Call Log to help you better prepare.
2. Contact Your Mortgage Company
Call your mortgage company (this is your servicer) for assistance as soon you can—even if you are just beginning to have difficulty with your payments.

3. Other Resources
If you are having difficulty contacting or working with your mortgage company, you can also contact the Fannie Mae Resource Center at 1-800-7FANNIE (1-800-732-6643). Or, contact a HUD-approved housing counselor for assistance.