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I really need to get some advice from those who have worked with Bank of America on either a Short Sale or Foreclosure. I live in Michigan (in case that makes a difference), here's my situation:
I live in Michigan and own a condo with my mortgage through BOA (I do not have a second mortgage). I owe 119k on a 30 year mortgage but really want to get rid of this condo, it will be vacant in a few months and I will be living elsewhere. Problem is that condos in my complex are selling for about 50k which would put me about 70k owing to BOA. Seems to me that I have two choices:
1) Foreclosure - Just spot paying my mortgage (and association dues) and let the bank take it in foreclosure. The way I understand it, the bank will eventually auction it off for some amount much less than the 119k that I owe. I assume that they will then attempt to sue me for the difference, which at that point I would either settle with them on a much lower number of file bankruptcy to have that debt discharged. Has anyone gone this route with BOA, do they come after you for the difference?
2) Short Sale - Put my condo up for a short sale (and stop paying mortgage and association dues at the same time) and see if I get somebody to buy it. Lets assume that I get an offer for 50K and BOA approves it. Will they come after me for the difference or will they just write that off?
I have a few months to decide which route to go, just wanted to reach out to the community to see if anyone else had any similar situations with BOA and how their situation turned out.
Most importantly, can you still afford to pay rent on your new location and the mortgage on the Michigan condo.
Seems to me like you can still afford the condo and that you simply do not want to be a long distance landlord.
Sometimes banks will work with you if you have a valid reason (job relocation).
Do you have funds to pay off the balance owed?
How much is your salary in relation to the mortgage plus any future rents in your new location?
Can you still rent out the condo but unwilling to? If rents do not cover the mortgage/hoa/insurance etc. How short do you think you will be each month?
Thank you for the response! Here are the answers to your questions.
[quote=aneftp;28226296]Multiple factors are involved.
Most importantly, can you still afford to pay rent on your new location and the mortgage on the Michigan condo.
I make a decent living, but divorce has killed my income and I cannot afford to keep this property and pay rent on another one and keep up with my other bills.
Seems to me like you can still afford the condo and that you simply do not want to be a long distance landlord.
Technically, if I decided to move back in there I could afford the payments, but it would be very tight.
Sometimes banks will work with you if you have a valid reason (job relocation). Divorced
Do you have funds to pay off the balance owed? No
How much is your salary in relation to the mortgage plus any future rents in your new location?
Can you still rent out the condo but unwilling to? If rents do not cover the mortgage/hoa/insurance etc. How short do you think you will be each month? The place needs alot of fixing up before it could be rented out (my ex has been living there for a few years and is about to move out), I do not have the money fix it up and make it desirable for somebody to want to rent it. For what I pay in Mortgage, Insurance and Association Dues (about $1300 a month), there's no way somebody would pay rent of $1300 so I can break even.
You best choice will be to start short sale process and see if it will work out. For the short sale it's better to keep HOA payments up to date and be few paymens behind on your mortgage.
If you will have a buyer, you will be able to bring short sale package to your bank and see the outcome. You have a good chance for your short sale to get approved due to devorce.
But keep in mind that your lender will be negotiating the amount you can bring to the table. Let say your mortgage is equal to $120K. Buyer agrees to buy it for $50K. After realtors fees you still have about $80K you own to your lender. In order for you to go away from that mortgage and for bank not go after the difference (in that case $80K), you will need pay them cash or make a promisary note and pay some amount you will be able to negotiate within 100 months % free. Usually this amount is between 5 and 20% depending mainly on your financial situation.
If short sale is not going through, bank will foreclosere on you. They will sell your condo for whatever they can (read - cheap) and denending of your state (Recourse vs non-recourse) they might or might not go after you. If you think you will be able to settle on smaller amount at that point, think twice. At that point your debt most probably will be sold to debt collection agency and they will be willing to get way more that you can settle during short sale negotiation.
To keep your HOA current will increase chances for someone to buy your short sale condo. And HOA will not lien.
I recommend you to talk to the real estate attorney. If you decided to use attorney's services, it will cost you $1,5-$2,5K and most probably you will be good to go with best outcome for yourself.
And by the way, there are many little things lender can question like renting some place vs living in your condo. They might disagree it's necessary and will not consider this as your necessary monthly charges. Attorney would know about all that that's why I really recommend you getting one!
I think a short saleI don't know if you have a mortgage or Trust deed but it makes a difference in terms of deficiency payments. I think a short sale is your best bet because you can negotiate for what we call "full settlement language" in which you get BofA to put in writing that they will not come after you for any deficiencies.
You don't have to bring cash to close a short sale. It just depends on the situation and what kind of agent you have negotiating the short for you. We have negotiated them where the seller brings nothing, and we have negotiated notes as EngGirl has alluded to above. Go to shortsalesuperstars.com and there is a list of agents there that do short sales. You must hire an agent that has done several short sales and is familiar with Equator. BofA does their short sales on the Equator system.
There are good pointers above, there is also some misguided information. The way situations are handled are specific to the state you are in.
You have a valid hardship job relocation and divorced. The key issue your are facing, your lender accepting you walking away from the property and giving you with a deficiency judgement?
My answer is no, you are not going to be hit with a deficiency judgement
This is simple to understand -
First get the property listed, showing to BOA that your trying to sell. If it sells good, if it doesn't they you have a history of trying to sell it. Michigan is one of the states that allows both judicial and non-judicial foreclosures. They have the option to do a judicial foreclosure (which can take over a year to foreclose and is more expensive), then hit you with a deficiency judgement. If they do a non-judicial foreclosure (which is cheaper for the bank), expect to receive a 1099C which is treated like income.
It is either one or the other. Mortgage Banks are predictable because they are going to take the easiest, quickest and cheapest way out. When they send you a 1099C, they cannot come after you for a deficiency judgement. Lucky the Mortgage Forgiveness Debt Relief was extended, you can write of any losses from a mortgage.
My advise is to try and sell - listed a minimum of 90 days. Then approach BoA with a deed in lieu. Your income is the key to making this work in your favor, two calculations are needed to show non-affordability.
1st take your loan amount owed ($119) and figure the lowest possible payment = $440 (your calculated P/I) adding your escrows and HOA fee.
2nd minus your new mortgage payment from your gross income. Your calculate your gross monthly income x 31% to show amount how the payment you can afford.
The amount of the first amount (your income) has to be less than the second figure.
Good Luck...
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Last edited by Modification Specialist; 02-13-2013 at 02:07 PM..
dbone123,
Personally, i would stay there and get a room mate.
After a while, start fixing it up and do as much of the work as
you can yourself.
A judgement will totally kill your credit for a LONGGGG time.
Ask all your friends, put up a sign at work, look for that room mate.
Don't destroy your future for the next 10 years without at least
giving it a try.
You have to pay rent anyway, right?
You mine as well be paying for your own home.
Is your condo eligible for HARP 2 financing? (You can e-mail me or DM me and I'll figure out the payments for you)?
This is the program for underwater borrowers and it may help you. I only do loans in Florida but can figure out the payment for you - it may me your saving grace, therefore, you won't hurt your credit.
Bank of America has a cooperative short sale program.
Do you know if your mortgage is FHA VA or conventional loan?
Do you plan to buy or declare BK in the near future?
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Boa
Another way....
