Florida Strategic Foreclosure

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I have a traditional mortgage with Third Federal (20% down, house cost $427k in 2003) @ 5.99%

House is worth about $250k. No second mortgage.

Bank holds the loan, they did not sell it to Fannie/Freddy or anyone else, they actually do the servicing AND hold the loan.

I tried to work on re-financing but because I make too much money they would not do it. They will only refinance to 80% LTV……makes no sense, they already have the loan…….anyways. From a financial/business perspective I did a strategic default and stopped paying in March 2013.

Now they have notified me (almost 1 year later) they will move forward with a Foreclosure. I asked for the amounts of re-instatement and they are showing $5000+ in legal fees. I have only received 1 letter from a lawyer, there has been nothing filed in court, so at best they paid this firm a few hundred dollars to start a file, and maybe a few hundred more to start a title chain……..not happy with the $5000 in BS legal fees. The late fees are $1200 or so and then the rest is P&I and escrow which all looks correct.

I was hoping that a strategic default would open up options for them to negotiate. Doesn't seem like it is. So I have two choices:

Re-instate (yes I have the cash to backpay, etc. and get current), or just start the foreclosure process, which I am told is about 850 days in Florida if fought (I live in Palm Beach County).

I am not sure if they would pursue a deficiency.

I am thinking perhaps I send a Certified letter to them (they won't talk over the phone, just refer me to this law firm they hired, who I do not believe is even registered to do business in the state of florida), and try to negotiate some terms.

I would gladly reinstate at a current reasonable rate (I had perfect credit with them prior to default). So I write them a $30k+ check and remain in the house all I want is a good fair rate. Is there lawyers that would help with this or is this something I would likely be on my own with? (negotiating a modification). Once again, this is not one of the big banks that cut deals with the government, this is not a fannie/freddy mortgage either. Its a traditional fixed loan from an institution that mostly just deals with prime borrowers.

[AngelinaCat]

We have tried to push a strategic foreclosure on DH's ex-wife's place. She filed BK in 2012 and was discharged and closed. She also gave up the place and wants it out of her name.

The lender is Springleaf Financial (aka American General Finance). Last December 2013, she got a notice that she was being sued for foreclosure. With our help, she answered the summons. And that is where this matter sits. The plaintiff has to answer, and so far, nothing is happening....

[LadyInTheRed]

You say you tried to refi, but that is not the same as a modification. It is not suprising that they would not agree to refinance an underwater mortgage. Did you ever ask for an in-house modification instead of a refi?

Is there lawyers that would help with this or is this something I would likely be on my own with? (negotiating a modification).

If you plan to hire an attorney to fight the foreclosure, then the same attorney can try to negotiate a modification. But if the bank is willing to do a modification, you should be able to do it without an attorney. Try contacting the bank's attorney and proposing a modification wherein you reinstate the loan in exchange for a reduction in the interest rate. You could also negotiate on the attorney's fees. If you hire an attorney, this is all going to get even more expensive with no guaranty that you will get a modification.

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You say you tried to refi, but that is not the same as a modification. It is not suprising that they would not agree to refinance an underwater mortgage. Did you ever ask for an in-house modification instead of a refi?



If you plan to hire an attorney to fight the foreclosure, then the same attorney can try to negotiate a modification. But if the bank is willing to do a modification, you should be able to do it without an attorney. Try contacting the bank's attorney and proposing a modification wherein you reinstate the loan in exchange for a reduction in the interest rate. You could also negotiate on the attorney's fees. If you hire an attorney, this is all going to get even more expensive with no guaranty that you will get a modification.

LadyInRed,

Yes I asked for modification. Was referred to the "special servicing" department. I filled out there mountain of paperwork, prior tax returns, pay stubs, bank account information, etc, etc. They said they only will modify for hardship. I told them "why have me fill out a mountain of paperwork when you know I make $xxx,xxx"? So, no modification for me. I simply wanted a reduced rate. I got no where. There position is, you can afford to pay, so pay. My position is, this house is an investment and it may be a bad one, and I am going to decide on what best suits me, which may not be continuing to pay. Certainly I would rather negotiate a better situation for myself and the bank.

I would pay arrears and late fees, just want them to work with me………...

[LadyInTheRed]

I would pay arrears and late fees, just want them to work with me………...

If they won't talk to you, call their attorney and offer a settlement.

ETA: If they will negotiate, don't pay a penny until you have a deal in writing!

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If they won't talk to you, call their attorney and offer a settlement.

ETA: If they will negotiate, don't pay a penny until you have a deal in writing!

I will try this approach before attempting to hire an attorney to work with their attorneys.

Its hard for me to understand the logic in a foreclosure department. Whats a "win" for them? Getting a property through the system and then sheriff selling it? I would think not. I would think the position that is best for the is a reinstatement. I don't think getting a principal reduction is likely for me, but I am reasonable. I will come up with something reasonable, and try to make an offer.