Sunday, January 22, 2012

My House saga

*I wrote this up about a month ago, right before the buyer came back with the notarized paper we've been waiting on since July. We are supposedly in the final stages of the sale, my guess is it either happens this week or it doesn't. I also received a note from the bank this week advising me that they've accelerated the loan and instructed their attorney to start foreclosure procedures. I had been holding back posting it as I wanted to see how things played out and there was a part of me that was being superstitious but given the time this ordeal has taken, I decided that there wasn't any logical reason to keep it under wraps.

It takes a lot to break me emotionally, and I've come close to that point recently. These last 14 months have been a roller coaster ride in terms of emotions and it's probably about time that I broke down some of what has been going on.

There is going to be a lot of opinion in this piece related to my current situation, I make no apologies for my subjective view. I will say that I consider myself average in the total population, so to me it wouldn't be a reach to apply it to others that you hear about in one bizarre way or another.

I'll try and recap as detailed as I can get, there is still a side of me that prefers to keep things a bit vague, due to the nature of putting information out on the internet.

My wife is a social studies teacher, prior to 2010 she had been a substitute for 4 years and had been looking for a full time job for those four years with no luck in the Cleveland area. She would typically get 1-2 interviews a year and considering the number of candidates they told her they had, it was a pretty decent accomplishment. She was never able to get any of those jobs though. 3 years ago she did get an offer in Florida, we heavily considered it. The housing market had just collapsed and it was apparent in talking to multiple realtors that there weren't many options available. We bought our home in 2002 and having so few years in the house had no real equity on it. After much discussion and heart break we decided that the move was just not something we could risk at the time.

We purchased the house for $87,000, our balance was about $77,000 in March of 2011. I can still remember the mortgage broker telling me that we could afford a much bigger house at the time of purchase based on my salary. I'm fairly thankful that I ignored him, knowing then, that the house we chose was the best case we could find in a decent area and if we wound up as a one income household as we soon would after moving in, then we could handle it. I hit it right on that estimation.

Cut to the summer of 2010 and the market was still depressed, but I had been keeping my eye on it. Home values had plummeted further but there was more information available for homeowners on what you could do if you needed to make a change. My wife also got offered a job in Columbus, a much easier and less expensive move for us. We decided to go for it and made the move, putting our house on the market.

We selected a realtor my brother used and who at that point was familiar with the short sale process, many realtors I talked too weren't very familiar with it. We secured a townhouse for rent in Columbus and did the typical cosmetic repairs on the house for viewing. In addition to that we had to have the city review the house for violations. We went through and corrected all of those violations the city listed, including the need to paint the house, not exactly a minimal expense, but required by the city to be corrected in 90 days from their review.

As expected we had no interest in the house for the first 8 months, our realtor correctly handled dropping the price through the process and as it finally got to $25,000 we had some interest in the house. We got two offers on the house and I preceded to call my bank. I should note that previous to the offers, I had talked to the bank and they wouldn't even discuss a short sale option without an offer on the house. Since we were trying to buy ourselves time, we had been paying our mortgage up to that point and our rent on the new place. We essentially were net zero for new income on the move because of it and if you factor in moving costs, upkeep on the old place, and the crush of debt we had already accrued through 4 years of unemployment, well you get the picture.

I did come to find out later, that since our house was an FHA backed mortgage, we could have applied and been pre-approved as a short sale candidate as soon as 90 days after we had the house on the market. I chalked up the bank's responses at that point as ignorance and moved on.

Once we had the offers, the examination began, where the bank asks you to send them your first born, and they apply alien probes to them. (Oh wait, sorry hyperbole). The bank requested a stack of papers on our financials that we provided to them and we were pre-approved for a short sale, except for one point, we couldn't proceed as our mortgage was current, we had to be in default. Crap, the offer came in 2 days after I paid my last mortgage payment and knowing now what I do, I probably should have asked them to back draft it. However, I didn't, perhaps that was my mistake, anyways, we had to wait until June 1 for us to be technically late on our payment and qualified for a short sale. That seemed like more then enough time for everyone (buyer, realtor, and bank) to have things confirmed and then be able to proceed.

It was plenty of time for things to be done, the house was appraised by the bank at $21,000 and our offer was above that, a key point in short sales which should mean there was no discussion necessary. By this point with the bank, we had been passed between about 4 people during the process, which at the time seemed a bit excessive, but knowing how big companies are, not overly concerning.

As June 1 hit, I followed up with the bank and my file was submitted to the negotiator, that's suppose to review the offer, the appraisal and the paperwork and then make a decision. That is supposed to take 5-7 business days once it's been assigned to them, as of June 16, and multiple calls from me, we still had no responses on it. Finally they came back in the last week of June asking for an updated offer as the one they had, had some unreadable parts (their words) due to the passing between entities and they asked for the buyer who was with an LLC to provide a notarized list of the LLC partners. They asked for a number of other documents over May and June too, but we had no issues in turning those around. (proof of funds from buyer, arms length affidavit, notarized response that liens county assigned on the property were not mine, etc)

The bank rejected four different copies of the agreement, saying they were unreadable, the buyers also became unresponsive in the request for the LLC notarized list.

We proceeded to have the negotiators now who were too busy to review the file in time the bank advised on, kick the offers out of the cycle and back into the queue. Starting the process over again each time and with new contacts. At this point my bank assigned a single point of contact for me, who never returned my calls, never answered her phone, and had a voice mail that was often full. They would finally assign me to a new contact over the next couple months that had same issues, and then finally assign me to a third, that I've actually been able to communicate with. Now mind you my single point of contact is basically a message taker, they effect nothing on the results or reviews, they read messages on the system to me, the negotiator is not supposed to be in contact with me, just the realtor. The Realtor advised they went through multiple negotiators as well in that period of time due to unresponsiveness etc.

In the meantime we have a buyer and their realtor who seem to be unable to come up with this rather critical piece of information, as it drags on into September, the bank comes back and says they are submitting my house to the Deed in Lieu (DIL) of Foreclosure office for review, since it appears that we cannot proceed with this offer.

The DIL comes back and says that there are a number of liens on the property and they can't proceed without them being cleared. Part of the problem with a fairly common name and living in a large county, is that you run the risk of having someone with your name around and the Cuyahoga county government will attach a lien to a property at the request of a debtor even if they aren't the same person. There were 5-6 liens attached to my property from the state and federal governments, that an affidavit stating that they weren't mine, wouldn't suffice on. We had to have the entities provide documentation that they weren't mine. So we had to hire a title company to handle the work. Which they remarkably were able to in the time we had to do it. I say remarkably, as the title company's response to me when they provided the information, was "We are so glad we could help, we run into many situations where we can't get this done".

At this point, our buyer is also back and sends over an updated readable offer and asks us to have the house re-approved by the city for sale (we only have 1 year from their 1st review). The buyer wanted to ensure there were no violations, so we paid for the review and scheduled it with the city and luckily only had a minor fix we needed to do this time.

Our buyer sends over the offer and a state of Ohio certification on their LLC, we send it off to the bank. Bank advises negotiator will take 5-7 days to get back to us, after 1 week we get a response from the negotiator asking for 2 papers, that realtor and I quickly provide. Another 2 weeks with no response from the negotiator. Finally I email the negotiator asking for a status and he responds two days later that he's working on it. Another week passes with multiple phone calls to my contact, which finally escalate enough for the negotiator to send a note to my realtor, asking for a host of other corrections and information. One of those is the LLC notarized list. My realtor requests additional insight into the negotiator's requests with no responses to his calls or voice mails and my attempts at having it escalated do no no good either for a response, as of yesterday, they've reassigned it again to a new negotiator. I've lost track of how many negotiators we've dealt with.

In addition to the bank's inability to work on the requests, we have the buyer who has been unable to provide a key document the bank has requested and pulled their offer last Saturday. The buyer's response that it's just not possible to get all of the LLC members together is laughable, all they need to do is sign a list and each could have it notarized, sometimes I do wonder how people are able to do anything sometimes.

So that leaves us with no offer and a mortgage that is now 7 months past due. I should also point out that my credit limits dropped as soon as we missed the 1st mortgage payment and the wife was laid off from her job. Talk about missing the mark on this plan. Phew.

As it sits today, we did receive a lowball offer, that I don't have the amount for yet, but I expect is below 10k, which we'll submit to the bank, can you imagine buying a house for less then 10k. A house that's not in a demilitarized zone that's in move in condition, with a pool and a fairly new furnace and central air system. Bizarre I tell you. There is no guarantee the bank accepts the offer, and I'm guessing they won't, they'll also be considering Deed in Lieu I guess, but at this point I almost don't care anymore. After reviewing some more forums and seeing how many are experiencing similar issues, I sort of welcome the aspect of foreclosure, and a chance to have the courts review the issues and come up with a decision (Ohio is a judicial foreclosure state). At least when it happens, I can put this whole mess behind me and try and start focusing on how to put things back together. In today's discussion with my point of contact, he mentioned, that he has 25 short sale clients assigned to him, since I'm sure there are at least two others that do a similar job, it's absolutely mind boggling to think of how many cases there are that are similar to this, just at my bank, and instances I'm sure repeating across the board.

I suppose there are those that might think it's wrong to have the debt default as it did. I struggled with it at first, but given the market parameters and how business was being done, I believe I proceeded with the right intent and have gotten nowhere with it, factor in that the wife lost her job and the deficiency amount on the house is too much to overcome due to credit being closed up due to having to deficient and I view it as a vicious circle, that I'm happy to get out of at some point.

The thing that gets me though, is I don't think we as a society really have and idea on what's going on right now in the housing market. My neighborhood wasn't the best, it may have been one step above the city, but we've seen almost an 80% drop in home values, and possibly more. The city I'm in now has at least 20 houses with for sale signs out on the yard and these are just the ones with signs in the winter, when we know no one buys in this part of the country.

The impact from this is still going to be felt, as these properties are bought off the market by investors or whoever can purchase it and the tax dollars drop due to the sale price. These municipalities are going to run into serious issues. I read a report the other day that my old city's school hours were cut to 5.5 per day because they didnt' pass another levy.

I wish I could tell you the answer to this problem, but I have no idea what it is. I see people bagging on occupy Wall Street people and I wonder if they really have an idea of what's happened to many aspects of the marketplace that these companies are in control of. While they dismiss the occupiers as a fringe hippy protest, I know that many of them are also part of this due to similar stories like mine.

At the end of the day I'll point out a couple other points as well, my bank has no incentive to sell my property short outside of convenience and time, my loan was an FHA loan, so any money I default on will be paid by the government, in addition to that they've handcuffed the realtors into ridiculously low amounts that they make from these sales, there's little to no incentive for them to get the work done. Especially considering the work is now 10x more and takes about 6-7x as long. How this system makes sense I'll never know.

There is a part of me that will be happy that it ends one way or another.


Grange95 said...

As an attorney, I helped a friend with an underwater foreclosure property in Florida. It took me almost a month to get someone from the bank (located a few blocks from my home) to talk to me. Then, it took a few more weeks to get back a rejection of a deed in lieu because of deadlines that passed while they dithered internally. We ended up getting the house sold via foreclosure, but the inability of banks to maximize their recoveries on these properties is mind-boggling.

Michael said...

Such a sad state of affairs isn't it? It would be one thing if the market hadn't imploded, but given the market did, it's ridiculous the processes these banks are following to resolve it.

I understand they are large corporations that aren't exactly nimble (I work for one that's as lumbering as they come). However, it's been 3 years since a house on my street went for $3k, considering it was 2 doors down and my buyer's initial offer was 9x that, you'd think they'd be able to move on it.

I had the same issue with deed in lieu, every time they'd 'consider' it, they'd talk about how time had passed, although since we were trying to sell it fit the criteria for exceptions, then they'd stop considering it every time the buyer came back.

I am thankful that Ohio is one of the states that requires judicial foreclosure, at least the playing field will change some and my lawyer will be able to make the arguments that fall under deaf ears at this time.

Monica said...

So sorry to hear about all of this...keep your chin up as best you can. Sending lots of positive thoughts your way!

Michael said...

Thanks Monica, appreciate the good thoughts.