We avoided a deficiency judgement

The last  story for my state representative This one happened in 2011….

Judith and Sam,

Judith and Sam are friends of mine.  I was at their wedding.   Their story is a little different They only had one mortgage and it was for a mobile home on a rented lot.  They bought their home right after the marriage for $59 K… Things were going OK even thought they were paying over $900/ month for their mortgage (payment) and lot rental…Then Sam lost his job.  He was unemployed for over a year.  They did some things to try to keep body and soul together.  A paper route and a home day care business. But it wasn’t enough. Plus they had 4 children.  I heard though the grapevine that they were in trouble and I got involved.  After 10 years of owning their home they still owed $57K on it and it was worth $30 K. Molbile homes are on rented lots are different.  They are repossessed like cars but they are really homes that people live in.  All the laws to protect homeowners do not seem to apply to these people.   I asked 3 0r 4 lawyers for opinions.

I talked to the bank.  They were most unhelpful.  I tried to get them to modify the loan.  I suggested that they lower the principal and put the mortgage at 8%.  That would bring the payment down to place they could afford.  The banker kept saying that they could afford their mortgage.. They could not…  They had 4 children, the youngest a newborn.   I then suggested a deed in lieu of foreclosure The banker seemed to sneer over the phone line.   I set up a plan with a charitable group.  They had offered help with the deposit and some rent.  I suggested we needed a lawyer to give pro-bono work for a bankruptcy and that the charitable group  would pay the fees.  They could also help with the deposit Time passed and the phone rang.  It was another banker and she offered a deed in lieu of foreclosure and gave them 2 months to move out and $300.  I also had them agree not to go for the deficiency so they did not need the bankruptcy lawyer J.    Despite all of my friends problems the only item they were behind on was the payments for the mobile home.

Without the negotiation my friends would have been hit with a deficiency judgment and forced to declare bankruptcy.

 

 

Will Aishia get a deficency judgement?

Deficency judgement continued….

Aisha

In October of 2011 I showed a house for a buyer.  The owner was home.  She is a lovely lady who developed breast cancer.  She was paying her mortgage until she couldn’t work because of the cancer.  Aisha is a single mother who now has a reasonable job.   She tried to get a loan modification but her bank wouldn’t talk to her.  They tried to tack on all sorts of fees and call it a loan modification. Aisha has two mortgages.

When her home either short sales or is foreclosed on she will get a deficiency judgment for the second mortgage.  So first you get sick. Then you lose your job. Then you lose your home. Then you get slapped with a deficiency judgment for the entire second mortgage.

Losing your home to foreclosure

I was asked by my representative at the Idaho Statehouse to tell stories of hardship.  The stories are real and the names have been changed:

John

I listed the home in February 2008. It is probably what drove me to my run for Congress. It made me mad enough to run. It was a short sale with Wells Fargo. John is a school teacher.  He and his wife took out a second mortgage on his home. The home appraised for $30K more then the home was ever worth.  Five months later, his wife left him.  He didn’t know he was upside down until he tried to refinance according to the divorce decree. He tried to pay the mortgage but released that he was selling everything he owned make the payments.  Without his wife’s income he could not make the payment.

I listed the home and dropped the price to $185K.  In April I had a good offer at asking price.  The bank would not let me call in and talk to a negotiator.  In the end they rejected the offer even though it appraised for 98% of the offer.  That is very good for a short sale.  They didn’t tell me they canceled the file for over a month.  Everyone I talked to gave me a different story.  One person said it was that the second wouldn’t settle.  My client would have settled a bit  of money to make the deal go fast (we were within the 3 month window of nonpayment of the mortgage).  We upped the price and never got another offer.  My seller was so upset that he moved before the foreclosure.   The home foreclosed in February of 2009 and the bank sold the home in May of 2009 at $165K.  During the summer a company called him asking for a $70,000 deficiency judgment.  At this point I became involved again.  The company was willing to settle for $7000 but John didn’t have the money.  We went and saw a bankruptcy lawyer.  We offered the bank $3000 at the end of summer school.  They said they needed the money right then.  I explained that he wouldn’t have the money until he got his summer pay.

In the end John, who only had the mortgage against him, had to declare bankruptcy.

Volunteerism… Frusteration with a customer…

Some people volunteer at the soup kitchen…. Others at the homeless shelter, etc.  I help individuals save their homes or at least ease them out gently.  I am very good at this and most people appreaciate my help.  I gained my knowledge through  my early entry into the short sale market (2007)  I have learned how to reach the correct people at banks.   I have taken my knowledge and I try to put the client and the lender together to work a loan modification out for my customer.  I never take money and I choose my cases.  I always sort of figured as long as I am selling a home a month I can afford this work which is also important.  Once in a while I am just helping them lose their home with dignity (not a shortsale).

 

In early June a woman called on a rental.  I was on vacation but she had recieved foreclosure notices on her home.  She is on SSI disability and she swears she paid them.  I talked to her for about 20 minutes and suggested she stay in her home until the foreclosure.  I also volunteered to work with her and try to prevent the foreclosure.  I asked her to call me on Monday when I would be home from vacation and we would set up a time.  Time passed and she didn’t call.

Fast forward to Tuesday (7/19) and she called me and wanted help.  She lives in Caldwell, a town 30 minutes away from where I live.  I ask her if she can come to Boise and she says she can’t because she doesn’t drive.  I ask her if she has email and she doesn’t.  I ask if any of her friends have email and they don’t.  I take a deep breath and volunteer to go to her and bring my printer/copier.  I ask her to find reciepts and we agree to meet at her home on Thursday 7/21/2011.   I pull all the deeds, foreclosure notices, etc…. Anything Title- One can give me and drive to Caldwell.  I am five minutes late because the exact entrance to her street is hard to get to.

It is a property surrounded by busy streets and very near the railroad tracks.  The yard has trash and furnature strewn all over it.  I knock on the door and she is NOT HOME.   I call her and she doesn’t answer her cell.  About 10 minutes later she calls me back and rudly asks who this is.  She says she couldn’t find the papers I wanted so she went out.  I suggested that we meet anyway because I could get started without the receipts.  The phone rang and I needed to take it so I asked if I could call her back in a few minutes.  She said yes.  I called her back and she didn’t answer.  I left a message saying I would stay in Caldwell for 30 minutes please call me back.  I went to the gas station then a cafe for a meal.  I read over the deads and realized that whether or not she had paid the bills I could help her.  It was a small second mortage and at most she owed $800.  She was upside down in the first.  This would actually be easy (even without the money order receipts).  I make busy work in Caldwell by visiting an apartment complex I manage for my step mother.  I visit with 3 of the tenants then at 12:30 PM I get into my car and drive towards Boise.  Just as I am leaving town she calls.  I tell her I have read her documents and know I can help her can we meet while we I am still in town. I remind her I don’t charge for this.  I also tell her if we set up another meeting  (after I leave Caldwell) she will have to come to Boise.  She tells me she is at her mothers home.  I suggest I go to her mothers home.  She tells me she is too busy baking pies…. At this point I inform her that I have done  several hours of work on her behalf and drove to Caldwell to meet her.  I will only meet her on my terms in Boise.  She says she might give me a call.

 

I think I just had to vent…..  If pie baking is more important then saving her home perhaps she doesn’t deserve to be a homeowner….Also she knew I was driving in to meet her and she should have been there.  I just don’t get it.  Hopefully, my next pro-bono case will want my services.  I also had put off paying clients a half day to handle her case.

 

Why I sell HUD HOMES…MORE OF AN ESSAY..

Over the years I have been the buyers agent for several homes in the Treasure Valley.  The first thing you want to do is make sure your broker has signed the agency up to sell HUD homes.  The first time I sold a HUD home I had to refer my client out and lose a significant portion of my commission check.   It also makes the deal stranger since you know all the in and outs of the deal and the other agent doesn’t.  Talk to your broker or the office manager and ask for the HUD number and check to make sure it is active.  It needs to be renewed every year.  Being the government your brokerage will not get any notice when it needs to be done….

HUD  homes are government owned homes that have been foreclosed on but the government has insured them when to original loan was taken out..  OH no !  Unfortunately I just broke some rules about selling or talking about HUD homes.  We are not allowed to use the words repossessed, REO, distressed, foreclosed when describing these homes because HUD feels that these words have negative connotations  .  We now have to use the words HUD owned.  This also means that the Intermountain multiple listing service had to add a separate category called HUD homes.  This is very annoying because it one more parameter you have to search for.

Now those of you who no me know that I am a rare breed.  I am a Democrat in Idaho who has run for Congress.  If anything ever turns me into a person who thinks the government is malevolent it will be selling HUD homes.  HUD makes the rules for everyone else but does not seem to feel the need to follow them.  Someday I will blog about this….. They will not fix things (even things to inspect the property).  They set their own timelines that are difficult for the loan officers.   They make you rush for brokers signatures and make you send docs in expensive Fedex packages.  When you make a mistake they threaten to cancel the contract.  The mistake can be forgetting to get an initial.  I must admit to being paranoid by now.  To my credit the contract that I have pending was perfect the first time.  You have to be on top of things and be your buyers advocate.

So obviously I do not like HUD or selling HUD homes….  Why do I do it?  Because it gives my buyers a chance to get into the housing market with FHA loans.  Also HUD, Fannie Mae and Freddie Mac all have a home owner first look programs.  That means that my buyers are only competing against fellow owner occupants and not investors.  This is a huge advantage to first time home buyers. HUD homes are also often competitively priced with FHA financing (for insurable property). HUD bidding is easy and everything else will seem harder then it needs.  I work for my buyers and not my comfort.  It is important to me that my buyers get a home that  works for them and I am willing to work hard and make my loan officers to work hard to make this happen.

I truly believe that part of the American Dream is to own your own home.  It makes us as individuals, the community and our country stronger.   Part of helping my clients achieve this dream is to offer them as many homes available in my community.