Is anyone in the phoenix area going through a foreclosure with bank of america? (short sales, real estate)

[shiksa]

I am letting my house go because I need to move out of state in a few months. I stopped making my mortgage payments two months ago and have gotten notices attached to my mortgage statements that I am late or behind on my payments. My mortgage was through Countrywide but of course now it is owned by Bank of America. I finally got something in the mail from a company trying to get me to short sale or do a modification on my loan. I've been advised by a realtor not to do a short sale if I need out of the house in 3 months. Just wondering what's going to happen next and how long does it take Bank Of America to foreclose the home or do whatever they do? I now owe more than twice what the house is worth here.

[azjack]

It could be a significant amount of time before the Trustee Sale process begins. Since you are definitely leaving Arizona and have no desire for any modification, just make it clear to the lender that they are getting the property when you leave. I believe that the term is jingle mail.

There is a remote possibility of having them agree to a deed in lieu of foreclosure. You can contact the lender now and ask. It would be less of a credit hit than a full foreclosure.

[Rick Lee]

Why not do a short sale? Might as well try to rescue your credit on the way out the door. Either way, you're netting nothing at closing. All you have to do is sign papers your realtor sends you once there's a reasonable offer and wait for the bank to approve the sale. Seems a lot better for everyone than mailing your keys in or just abandoning the house.

[azjack]

Short sale would be fine, but OP says house value is half of loan amount. While some lenders might accept $100K (possibly less) when $200K is owed, that is not happening enough to make it a likely scenario for someone who has one foot out the door already. I would think that the only thing more stressful than moving to another state with a foreclosure underway would be adding 4, 5, 6 months of short sale rigmarole and then having the foreclosure anyway. If success was more likely than not, it might be worth it. But success is not likely.

Also, I would try to keep your hazard insurance paid (if possible) until the lender or someone else owns the house.

[Rick Lee]

I don't see how it'd be stressful at all, since you still leave and just let your listing agent and the lender handle the whole thing. I have an accepted offer on a short sale now for $322k and I'm pretty sure the amount owed is in the $500k range between the two notes. While banks are not very rational these days, they'd rather get 50% of something than 100% of nothing. As long as the offer price is in the ballpark with area value and BPO's, the bank knows they're not going to be able to sell it for any more than that on the courthouse steps or as a REO. So why wouldn't they approve a short sale?

[azjack]

"they'd rather get 50% of something than 100% of nothing. As long as the offer price is in the ballpark with area value and BPO's, the bank knows they're not going to be able to sell it for any more than that on the courthouse steps or as a REO. So why wouldn't they approve a short sale?"

I agree wholeheartedly that appears to be the rational choice. But more often than not, it simply does not work out. I suspect a combination of lenders/servicers being overwhelmed and indifferent to the outcome. But there also appears to be a desire to push the ball down the road as long as possible, perhaps avoiding FDIC scrutiny when the depths of the banks' actual losses are known.

Let us know how your short sale purchase plays out.

Another factor may be how much one is underwater with a primary lender versus a secondary lender.

[Discovery1]

Originally Posted by Rick Lee

I don't see how it'd be stressful at all, since you still leave and just let your listing agent and the lender handle the whole thing. I have an accepted offer on a short sale now for $322k and I'm pretty sure the amount owed is in the $500k range between the two notes. While banks are not very rational these days, they'd rather get 50% of something than 100% of nothing. As long as the offer price is in the ballpark with area value and BPO's, the bank knows they're not going to be able to sell it for any more than that on the courthouse steps or as a REO. So why wouldn't they approve a short sale?

True.... Also Banks surely going to loose more money when any home going into foreclose.

[cmist]

I agree the short sale is worth a try, and like Rick Lee says, hand it over to the listing agent, and whatever will be will be.

Worst case scenario is you get the foreclosure like you expect, but at least the potential for a better outcome is there.

Don't even get me started on banks though... I doubt they personally care whether it forecloses or not. They are not concerned about the borrowers credit and they have already been propped up regardless of poor business decisions. They get to sell the home for market value whether its a foreclosure or not, and in either case they are no longer receiving payments. They aren't really motivated by their bottom line or any sense of urgency and they operate with extreme indifference. For that reason, its understandable to take the stance that a short sale is futile.

[AZ Tracy]

Here is the Arizona Foreclosure Workbook. Within it you will find some helpful information regarding timelines, etc.

I would recommend the OP talk to a real estate agent that is experienced in the short-sale process. With the limited information given, it sounds like they may qualify.

[Rick Lee]

Originally Posted by cmist

Don't even get me started on banks though... I doubt they personally care whether it forecloses or not. They are not concerned about the borrowers credit and they have already been propped up regardless of poor business decisions.

In the case that began this thread, it certainly doesn't appear to be the bank's fault the owner decided to walk. So how has the bank been propped up by a bad business decision, other than for lending money to someone who later decided to walk? Perhaps the bank only lent an 80% loan to value and the owner racked up another 20-30% HELOC from a different bank. Not the first lienholder's fault. I have no sympathy for banks who make bad decisions and refuse to move on short sales that could make everyone a lot happier than foreclosure. But let's face reality here. Some of these banks are getting 1000 new short sale packages PER DAY. They just aren't staffed to handle this kind of stuff and they stand no chance of making money by hiring more people to deal with it. The best case scenario is that they lose less money, not make anything.