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Short Sale Deficiency Balance on Second Sould we negotiate?

#1 User is offline   simpki44 

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Posted 13 December 2010 - 02:25 AM

After moving to UT for a job relocation due to unemployment we accepted a short sale on our primary residence in MI. We tried for several years to sell but no offers.
Here are the loan deatils - We purchased the house in 1992 for $82K lived in it & paid it off. We took out a HELOC & remodled the exsisiting home $275K. Durring construction it was discovered the entire house had to be completely removed due to building codes. We convereted the HELOC to a construction loan. Upon completion we took out a $352K loan & a piggy back $150K HELOC for final items to complete the house. Both were with the same bank. In 2005 rate dropped significantly & since we were there to stay we refianance the first to a 4.75% 30 yr fixed. The original bank subordinated their position on the 1st loan & refinanced with another company. In 2006 & 2007 we ran into a hardship, unemployed... We defaulted on the first & second & the house went into foreclosure. Tried to work something out but no one would work with us. We Moved in 2/2008. Sold 6/2008 for $330K Short Sale. Negotiaions went smothly, everyone as willing to take what they could get. Chase who was the 2nd lien holder were very helpfull, told us the would release the lien for $30K & they would not come back after us for the balance. We were not physically at the closing our realtor was representing us.

11/2008 we receveid a letter demanding payment for full amount of $150K. I sent them a certififed letter & my closing documents,explaining the hardship & no where was there any documentation of a defiencey balance that we owed. 10/2010 I recevied a letter from a collection company representing Chase claiming we owed now $187K in a defiencey balance.

I have sought legal counsel. We have sent a Debt Validation Letter, certified. They receveid it 11/20. They have aprox. 7 more days to respond. IF they do not respond with the requested documents are we off the hook? Is this just another case of Bundled Mortgage Charge Offs that a collection company will hound us forever...Is there a possibility to have the SOL run out on this? Of course it is a huge ding on our credit but everything else on our credit is good. Was the Debt Valdation letter a good idea? Just looking for a second opinion...Thanks!
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#2 User is offline   Suze Orman 

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Posted 16 December 2010 - 04:28 PM

View Postsimpki44, on 13 December 2010 - 02:25 AM, said:

After moving to UT for a job relocation due to unemployment we accepted a short sale on our primary residence in MI. We tried for several years to sell but no offers.
Here are the loan deatils - We purchased the house in 1992 for $82K lived in it & paid it off. We took out a HELOC & remodled the exsisiting home $275K. Durring construction it was discovered the entire house had to be completely removed due to building codes. We convereted the HELOC to a construction loan. Upon completion we took out a $352K loan & a piggy back $150K HELOC for final items to complete the house. Both were with the same bank. In 2005 rate dropped significantly & since we were there to stay we refianance the first to a 4.75% 30 yr fixed. The original bank subordinated their position on the 1st loan & refinanced with another company. In 2006 & 2007 we ran into a hardship, unemployed... We defaulted on the first & second & the house went into foreclosure. Tried to work something out but no one would work with us. We Moved in 2/2008. Sold 6/2008 for $330K Short Sale. Negotiaions went smothly, everyone as willing to take what they could get. Chase who was the 2nd lien holder were very helpfull, told us the would release the lien for $30K & they would not come back after us for the balance. We were not physically at the closing our realtor was representing us.

11/2008 we receveid a letter demanding payment for full amount of $150K. I sent them a certififed letter & my closing documents,explaining the hardship & no where was there any documentation of a defiencey balance that we owed. 10/2010 I recevied a letter from a collection company representing Chase claiming we owed now $187K in a defiencey balance.

I have sought legal counsel. We have sent a Debt Validation Letter, certified. They receveid it 11/20. They have aprox. 7 more days to respond. IF they do not respond with the requested documents are we off the hook? Is this just another case of Bundled Mortgage Charge Offs that a collection company will hound us forever...Is there a possibility to have the SOL run out on this? Of course it is a huge ding on our credit but everything else on our credit is good. Was the Debt Valdation letter a good idea? Just looking for a second opinion...Thanks!



Did you happens to get the name of the person at CHASE that told you that you would be off the hook? Lets wait to see what happens over time. Whatever you do do not make a payment at all. Contact all the credit bureaus and put your explanation on your credit reports so people who are looking will see you do not agree with this opinion. Let me know how it goes- if it keeps up I will see what I can do.
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#3 User is offline   simpki44 

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Posted 16 December 2010 - 10:49 PM

Thank you Suze for your reply. Yes I did get his name, Forest Green. Really! I have notes with dates that we spoke as well. I also have an email from my realtor state they would not come back at us. From my understanding the Creditor has 30 days from the date they recevied our certifed notice to provide the original loan paper, payment history, closing documents etc. They have until 12/20/10 - this Monday to send us something. Otherwise if they can not verify the debt they can not come after us for it. I still have no documentation that any of the closing money they recevied was put towards anything on our loan nor will they provide it. Funny thing also is they nost recent notice only had my husbands name on it even though it was a joint account.

I have been working on getting all of our credit corrected. I have 15 days left until I can send in another dispute. 5 time in 8 months.

I have also looked into the State of Michigan Law on Short Sales. It stipulates that Chase had 90 days to contact us after the short sale closing in June 08 to set up payment arrangments. We did receive a letter in November 08. They claimed they did not have our correct address. However our address was on the closing docuemnts, which they had. So they completely missed the 90 day window and they admitted it.

We have been through so much in the past 5 years, as have many others. I seem to think this might be the next wave to hit troubled homeowners who did short sales or went into foreclosure in many of the hard hit states before the rest of the US went into trouble. I think they are just throwing it out there to see if they can get away with it. I will keep you posted. Thank you again for all you do! It is very much appreciated. Happy Holidays!
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#4 User is offline   Suze Orman 

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Posted 19 December 2010 - 03:24 PM

View Postsimpki44, on 16 December 2010 - 10:49 PM, said:

Thank you Suze for your reply. Yes I did get his name, Forest Green. Really! I have notes with dates that we spoke as well. I also have an email from my realtor state they would not come back at us. From my understanding the Creditor has 30 days from the date they recevied our certifed notice to provide the original loan paper, payment history, closing documents etc. They have until 12/20/10 - this Monday to send us something. Otherwise if they can not verify the debt they can not come after us for it. I still have no documentation that any of the closing money they recevied was put towards anything on our loan nor will they provide it. Funny thing also is they nost recent notice only had my husbands name on it even though it was a joint account.

I have been working on getting all of our credit corrected. I have 15 days left until I can send in another dispute. 5 time in 8 months.

I have also looked into the State of Michigan Law on Short Sales. It stipulates that Chase had 90 days to contact us after the short sale closing in June 08 to set up payment arrangments. We did receive a letter in November 08. They claimed they did not have our correct address. However our address was on the closing docuemnts, which they had. So they completely missed the 90 day window and they admitted it.

We have been through so much in the past 5 years, as have many others. I seem to think this might be the next wave to hit troubled homeowners who did short sales or went into foreclosure in many of the hard hit states before the rest of the US went into trouble. I think they are just throwing it out there to see if they can get away with it. I will keep you posted. Thank you again for all you do! It is very much appreciated. Happy Holidays!



Okay let me know- if you get anything- and after I know we are at the safe date for you- if you still need I might just give a call to them.
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#5 User is offline   simpki44 

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Posted 15 February 2011 - 01:51 AM

View PostSuze Orman, on 19 December 2010 - 03:24 PM, said:

Okay let me know- if you get anything- and after I know we are at the safe date for you- if you still need I might just give a call to them.



Well Suzy - no response from them as of yet. We spoke to our attorney & he advised as long as they have not added anything to our credit, no judgment...don't rock the boat. I'm not sure if it is wise or not. Any reccommendations?
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#6 User is offline   simpki44 

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Posted 03 November 2012 - 11:56 PM

Update.... Nov.2012.... As the clock keeps ticketing toward the first date we defaulted on our HELOC. We have officially until 04/2013 before the statutes of limitations runs out. We have heard from about three collection agencies try to collect on them but none can provide us with any documentation they own the loan or that they have the original loan documents.

Over the least year and a half I have paid off all our past debt, credit cards anything we owed that was delinquent when we moved to Utah and short saled our house. Our income has steadily increased... 2008 - $48k, 2009 - $86k, 2010 $189k, 2011 - $230k. Estimated to be around $200k for 2012. I have been audited by the IRS for 2009, 2010, 2011. Passed with flying colors and only owed $1,275 additional. Whaoooo! 2013 looks like its going to be another big year as well. We've had a few issues with our marriage because I know am the bread winner and he has taken the back seat- or so he feels.

We rent a home for $2500 per month, we have 5 car payments which I make my 21,18 & 17 year old kids pay each $175.00 per month for their car payments. 2 of the three are in college, one out of state (with in state status) the other at a comm. college living at home. All have part time jobs. We have great health insurance benefits.

We started putting 25% of my husbands weekly income into his UPS Teamster pension. My company matches at 100% which I will beging to invest in 2013. They also give profit share each year in September.

Now that we have a substantial income going and we will be able to start saving for our emergency fund, paying off the cars and saving for a home, where do I begin...
Our credit scores have not improved as much as we like. One of the issues hindering this is i have to use my personal credit cards/debit cards for all my business expenses (avg. $4,000 per month). Credit cards limits -1 @ 350/ 1-@$500/ 2-department stores @ $500 each/ 1-$2000. All paid in full every month, but are above 50% credit limit when all credit bureaus update monthly.
Does anyone have any suggestions on the following...
1- save for a house
2- save for emergency fund
3- pay off car loans
4- get our credit in shape to qualify for a house
5- limit our tax liability
Thank you...
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