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Bank of America Was Going to Foreclose and Then Changed Their Mind. – Nancy

“Dear Steve,

We own a house in Urbandale,IA. My husband and I lost our jobs and our house was foreclosed on. Due to lack of legal advice (we used vastly case over-loaded IA. Legal Aid and a state funded mediation service) and lack of foreclosure knowledge we moved out of the house after the foreclosure.

We continued attempted modification process but were finally advised we did not qualify. I continued to watch for the sheriff sale of the house but it continued to get canceled.

The house remained in our name and the city was getting after us to repair the wood siding etc so we were concerned about why the bank had not sold it. We just received a letter saying that back in May 2011 Bank of America rescinded the foreclosure.

Bank of America will not take a deed in lieu unless the house has been on the market for 6 months (they say Freddie Mac insists on that). We are not sure what the best thing for us to do is at this point.

We are paying $1040.00 a month for rent of an apartment and do not know if financially we are better to move back into the house and make the repairs or put it on the market and let it go as a short sell or deed in lieu. or finances are still limited – what is your advice?

Nancy”

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The Answer

Dear Nancy,

Interesting situation indeed. It’s a less common but not unheard of situation. Banks sometimes don’t take the homes back so they don’t have to be on the hook for upkeep and taxes on the property.

So as it appears, you still own the house and it is still severely delinquent. I’m uncertain how moving back in and repairing it would prevent Bank of America from later snatching it back in a future foreclosure without reaching an agreement with Bank of America to address the underlying mortgage default.

It seems that moving back in would make immediate financial sense but what’s the plan if they change their mind? Are you willing to just wait for that event and in the meantime invest in the property?

Post your answers in the comments section below.

Big Hug!

Bank of America Was Going to Foreclose and Then Changed Their Mind.   Nancy
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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • John

    FYI, It has been 3 months since the notice of rescission and still haven’t seen anything from BoA as to why or what is next – which is kinda nice.

  • John

    Hello Nancy, I live in Granger just north of you.   I’m by no means a legal expert, however from my understanding once a bank rescinds a foreclosure decree, the Mortgagee (bank) is barred from seeking deficiency judgment.  This is new as of 2009  (Section 654.17 of the Iowa code), so you shouldn’t have to worry about the bank going after you for legal fees, unpaid payments, etc.   I am somewhat in the same boat as you, I had a foreclosure decree filed in early October, and just received a notice of rescission myself – although I still have no idea why, as I did not even challenge the court proceedings.  I guess I will figure it out sooner or later.  I’ve been on Google for over 5 hours today, and still completely clueless.  Good luck!

    • http://GetOutOfDebt.org Steve Rhode

      Keep us all posted on what you learn. Fascinating.

      • Nvetter51

        Will do Steve! Nancy

    • Nvetter51

      John,

      I hope you are still watching this post…I haven;t checked it for some time (as you can see) so I did not see your email. I am so glad to hear from someone else with this issue and thank you for the info. We received the rescind letter in mid October and have just received another letter from BOA saying they are starting foreclosure process all over again. This makes absolutely no sense to me…we have no idea why it was rescinded either. I have contacted BOA as they requested and was informed that if we do not have the full amount in past due to pay upfront we are not eligible for any assistance program. I am trying to find a short-sale realtor so we can list and hopefully do a deed-in-lieu. I would really like to correspond with you further and maybe compare notes. Hope to hear from you soon!

      Thanks,
      Nancy

      • John

        Hello Nancy.  I’ve been waiting to hear back from Catherine at Iowa Legal Aid for about 3 weeks now – I’m guessing she has forgotten about it – So I’ll be following up with her today. Mostly I am curious if they have to start completely from scratch – such as all new proceedings, demand of delay starts fresh, etc.

        But if your goal is to move on from the house completely since you are already not living there – I think I have some advise that can be of help. While it is likely true that Bank of America has no assistance programs for a situation like yours, what they do have is a cooperative short sale program.  Depending on if you qualify , there is a HAFA program this is a government program that BoA works with.  If you do not qualify, they have their own In-House program simply called “Cooperative Short Sale”.  There terms of both are fairly similar.  You simply need to prove you cannot afford the payments and back payments.  Once you have done that, they will start you on a process of attempting a short sale on your home.  Upon the completion of the sale – they will give you a check for $2500 – $3000.  You have 120 to try to have a successful short sale.  If after that time it is not yet sold, they will work on a deed in lieu of foreclosure with you – where you are still eligible for the $2500 – $3000.  Part of the program removes all of your liabilities for past payments – however you are already good to go there since by rescinding the foreclosure actions without your written approval – they have given up thier rights to any of that anyway.

        I called JC Walker @ Remax – honesty just because I’ve heard him on his radio show on 98.3 and thought ” well, if he has a radio show, he probably knows what he is doing”.  He stopped out at the house with another gentleman, named Don Ferguson.  Don works out of the ReMax office in Clive.  What he does is sets ups all the paperwork and such for your shortsale, and he is also in the business of buying such properties – so chances are he will be also make an offer on your home.  If BoA rejects his offer – the JC will get it on the market.  BoA pays for all the cost with this.

        I’d suggest giving JC a call (I think he is out of the Altoona Branch).  That’s as far as I have got in the process, as I asked them to put a hold on everything while I figure out the recission process. (As I’m more than happy to keep living in the home as I am now for free, and plan on restarting the short sale process once they restart the foreclosure process)

        BoA’s website for this is here http://homeloanhelp.bankofamerica.com/en/short-sale.html

        Also – if you call BoA to work directly with them on this, they will set you up with a company called RDC to do the short sale, which I tried before working with Don & JC.  While I havn’t really had anything too negative from BoA, trying to work with RDC is an absolute impossible nightmare.  What Don does is basically a replacement of RDC – so that is an extra bonus.

        BTW – if you mention me, John is not my real name – but they will likely be able to know who I am just from being in the City of Granger  :)

        Good Luck –

      • John

        Hello Nancy.  I’ve been waiting to hear back from Catherine at Iowa Legal Aid for about 3 weeks now – I’m guessing she has forgotten about it – So I’ll be following up with her today. Mostly I am curious if they have to start completely from scratch – such as all new proceedings, demand of delay starts fresh, etc.

        But if your goal is to move on from the house completely since you are already not living there – I think I have some advise that can be of help. While it is likely true that Bank of America has no assistance programs for a situation like yours, what they do have is a cooperative short sale program.  Depending on if you qualify , there is a HAFA program this is a government program that BoA works with.  If you do not qualify, they have their own In-House program simply called “Cooperative Short Sale”.  There terms of both are fairly similar.  You simply need to prove you cannot afford the payments and back payments.  Once you have done that, they will start you on a process of attempting a short sale on your home.  Upon the completion of the sale – they will give you a check for $2500 – $3000.  You have 120 to try to have a successful short sale.  If after that time it is not yet sold, they will work on a deed in lieu of foreclosure with you – where you are still eligible for the $2500 – $3000.  Part of the program removes all of your liabilities for past payments – however you are already good to go there since by rescinding the foreclosure actions without your written approval – they have given up thier rights to any of that anyway.

        I called JC Walker @ Remax – honesty just because I’ve heard him on his radio show on 98.3 and thought ” well, if he has a radio show, he probably knows what he is doing”.  He stopped out at the house with another gentleman, named Don Ferguson.  Don works out of the ReMax office in Clive.  What he does is sets ups all the paperwork and such for your shortsale, and he is also in the business of buying such properties – so chances are he will be also make an offer on your home.  If BoA rejects his offer – the JC will get it on the market.  BoA pays for all the cost with this.

        I’d suggest giving JC a call (I think he is out of the Altoona Branch).  That’s as far as I have got in the process, as I asked them to put a hold on everything while I figure out the recission process. (As I’m more than happy to keep living in the home as I am now for free, and plan on restarting the short sale process once they restart the foreclosure process)

        BoA’s website for this is here http://homeloanhelp.bankofamerica.com/en/short-sale.html

        Also – if you call BoA to work directly with them on this, they will set you up with a company called RDC to do the short sale, which I tried before working with Don & JC.  While I havn’t really had anything too negative from BoA, trying to work with RDC is an absolute impossible nightmare.  What Don does is basically a replacement of RDC – so that is an extra bonus.

        BTW – if you mention me, John is not my real name – but they will likely be able to know who I am just from being in the City of Granger  :)

        Good Luck –

      • John

        BTW – Sorry for the horrible grammar & spelling – I only had a few minutes to write back.

  • Nvetter51

    Dear Steve,
    Thank you for your response.
    I understand, from reading some of the articles on your site, that some lenders are willing to forgive late fees and interest in some cases. If a deal could be had with BAC maybe would be possible to make repairs and refinance… What would be our other options and what if we can not pay the taxes at this time? Would the house then sell for taxes owed? Are we able to buy the house at that point if we could obtain the amount owed in taxes at that point? What happens if we just let it sit the way it is? We are very unsure as to the best way to take care of this or if we need to take care of it… We truly appreciate your assistance.
    Thanks,
    Nancy

    • http://GetOutOfDebt.org Steve Rhode

      The problem is that until Bank of America takes back the house you are on the hook for the mortgage.

      Have you spoke to Bank of America lately about this?

      • Nvetter51

        Yes, I have spoken to both BAC and their FC attorney. FC attorney says they do not know – it was BAC. BAC says sorry for confusion – you can list it for 6 mos and if doesn’t sell then will do deed in lieu. My main concern with short sale is in IA they can then get a deficiency judgment. How do we get them to agree not to do that – BAC rep. said I would have to check state laws so I take it they will go for that. Also, there is a $5,000 tax lien on the house so the title is not clear. WOW- when it rains it pours…my husband and I lost our jobs within a year of each other and I am 60 and he is 65 – not a great market out there for re-employment at this time.
        Thank you again for your time and assistance – greatly appreciated!  Nancy

    • http://northeast-properties.com Andy Faria

      Hi Nancy,

      I hope you don’t mind if I add to Steve’s advice.

      You shouldn’t worry too much about the taxes at this time. If they go unpaid the city will contact BOA and many times they will go ahead and make the payment. They typically do this because the property taxes are a senior lien to BOA, meaning no matter what happens the property taxes will be paid out of the proceeds of the sale, before anybody else gets paid. Basically, the city is protected and is guaranteed to get paid. (until of course the amount of taxes exceeds the value of the home) Yes, the city has the right to foreclose on a property to collect unpaid taxes, but up here in MA for instance, we very rarely ever see that happen for years and years.

      If I had to take a wild guess as to why BOA called off the foreclosure sale, my first thought would be a title issue. I have been seeing this more frequently as of late. When the FC attorney is taking steps to foreclose on property they are required to do a title search, basically making sure that they would be getting a clean title to the property. If they turn up any issues it would need to be cleared before they can transfer ownership from you to them through foreclosure. This could be minor and only cause a short delay, with them picking up with FC as soon as the title is clear. It could also be a rather lengthy process if there are major obstacles involved with clearing title. My suggestion would be to contact the foreclosure attny directly to find out their reason for pausing foreclosure. Many times they will be able to tell you exactly what is going on.

      If the foreclosure attorney doesn’t know what is going on and they tell you it was BOA’s request to postpone, then you should speak directly to BOA. See if you can find out why they have placed everything on hold. If they don’t have a good reason and there is clear title, then maybe it is in your best interest to list the home for sale as a short sale. It won’t cost you anything to list for sale, and if BOA is willing to give you the time, then it’s probably worth it to try for the short sale instead of just waiting on the foreclosure. In would benefit you moving forward with a short sale as opposed to the foreclosure.

      If you can’t get any definitive answers from either the FC attny or BOA, then I would suggest that you speak to an attorney yourself. You would want to find a local real estate attorney or even a bankruptcy attorney that could help get this property out of your name.

      Good luck and please keep us posted on your progress.

      • Nvetter51

        Andy,

        Thank you so much for all your information. I hope you will read what I just wrote to Steve as we are so concerned at this point… I guess we will attempt to get BAC to put in writing they will not get a deficiency judgment and try for the short sale. If you have any further suggestions we sure do appreciate it.

        Thanks,
        Nancy

      • http://northeast-properties.com Andy Faria

        Nancy,

        You should probably start interviewing real estate brokers. Try to find one that is very comfortable and has experience with short sales in your area. It won’t cost you anything and they can do a lot of the leg work for you.

        You will never get BOA to give you anything in advance saying that they will agree to waive the deficiency, don’t waste your time with that right now After you receive an offer and the short sale has been approved, that is when you will get in writing their intent with the deficiency. Just make sure to let your real estate broker know that any kind of deficiency is unacceptable and you won’t accept the short sale if that happens.  

        The tax lien. Is that for the property taxes? .. or is it another personal tax lien? There’s a difference. The property tax lien you wouldn’t have to worry about and should get straightened out in escrow. But if you have income tax liens (irs or state) your broker would need to know about that right away. Those liens would need to be released separately, but the good news is you may be able to get part or all of them paid through the short sale, as a junior lien.

        Andy

      • Nvetter51

        Andy,

        Sorry for the delay in this answer – I did not see your second post on 10/27/11 until just now.

        I so appreciate your input and advise as we are pretty lost as to what we should do in this situation. We will contact Realtors right away. The tax lien is a personal lien with the IRS and is for approx. $5000.00. Since we are out-of-work the IRS has put it on hold for now. I am glad to know now how to handle the short sale and glad to hear it may get paid off if the house sells.

        One question: I had a woman contact me a few months ago interested in the house for her parents. Should I contact her myself to see if she is still interested  or give her name to the Realtor we choose to list with? Do you recommend one Realtor over another?

        Again, thank you so much for taking this time with me and being so helpful – it is deeply appreciated!

        Nancy

      • http://northeast-properties.com Andy Faria

        Hi Nancy,
         
        That is good news that it is an IRS tax lien. There’s never any guarantees that it will be approved but you may be able to get that paid through the short sale Just make sure that you let your broker know about it as soon as you list. They will want to get the ball rolling with the IRS asap, many times before an offer to purchase is even rcvd. It can take a while.
         
        I am in MA and am not aware of good short sale brokers in IA. I would suggest that you start with google. Try “short sale” and your zip code and see what comes up. Call a few of them. What you are looking for is a broker with experience in short sales. They are a different transaction than a conventional sale, and a broker that has experience will be worth their weight in gold.
         
        If you already have a potential buyer, be sure to pass that info along and your broker should look into it.  
         
        Now, one more thing that you need to be aware of. The future tax implications of a short sale. There can be a big difference if you sell it as a “primary residence” as opposed to a “second or investment property”. Talk to your broker and tax professional about this, but it may actually be in your best interest if you moved back in to the property. Here is the link to irs.gov that explains this.
         
        http://www.irs.gov/individuals/article/0,,id=179414,00.html
         
        Good luck, and please keep us posted on how you make out. I am subscribed to this post and will always try to respond asap.
         
        Andy

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