Thoughts After Foreclosure

I was “young and naive” when I bought a home in 2006.  New home totalled $750K and mortgage broker found loan based on that.  Note that I was naive to beleive that the mortgage broker would find the best loan for us as they worked for the home builders themselves.

Anyways, I signed loan docs w/ Wells Fargo, Alt-A, 80/20, Interest only 5 years w/ First loan $565K, Second HELOC $185, 0% down, mortgage payment excluding insurance+property tax $4K/mos. (This is the worst loan ever I don’t know how I thought I would survive w/ this loan)

In 2008 I hired a real estate attorney/broker for legal advise.  He said I would be able to walk away w/out deficiency judgment since my HELOC was originated at same time of 1st loan and it was used for purchase of home.

I have no debts besides my >100K student loans.  My income is very good despite the economy.

Reasons for letting go home:
1.  Decrease hours at work due to chronic back pain 2.  Have 4 dependents to support 3.  First loan resets in 2010 to ARM, second loan balloon payment due in 2012.
4.  My income 7K/mos and my payments had been 5K/mos (mortgage+ins+Prop tax). That leaves very little for any other expenses.
5.  Bank would not work with me without me giving them my financial status.  My attorney said not to give them any financial info about me.
6.  I’m upside down 310K and no equity in home
  
Thus I walked away.  My home foreclosed on 6/09 and sold that very same month.  I have not heard from the bank at all.  My Fico dropped 768 to 650.  I see that credit report lists first loan as “Foreclosure proceedings in progress” but the second loan it is categorized as “bad debt/Collections”.

Now I’m afraid that the bank has sold my loan to a debt collection agency.  I have read thru the site but still have questions.  I wished I had seen your site before the foreclosure as I would have considered a short sale.  Now what do I do?

1. Contact Wells Fargo? if so what do I say?
2. Do nothing?
3. If I save for 3 years I would be able to cash out on a home <150K --- then I risk collection and wage garnishment

What to do? what to do?Hmmmm...

Thanks for any advice you can give.

Lee in CA

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Hi Lee in CA,

I’m not sure I would do much except for keeping record of any FCRA, FDCPA, Rosenthal Act, RESPA, etc. violations.  For some of those violations the consumer can be passive and wait to see what develops and for others a certified letter could be sent to trigger the violations.  Maybe for the most part, right now it’s a sleeping bear that should be left alone.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney fro legal advice.