Laaaaaaaame. The lawyer says the papers we got aren't a notice of default, despite saying "you are in default" in the first sentence of each one. He says the actual notice will have a really big heading that we can't miss. So we're still waiting.
Also, my estimate of Day 61 before being reported to the credit agencies was wrong. My score dropped yesterday. 50 points. I had figured 90 days late was the first statistic they'd use since they'd only officially informed me of the risk of reporting after two missed payments, but there are technically 30-day and 60-day late reports. I don't know which one they've reported me for because I don't want to blow one of my two remaining free credit report views for the year. I'm tempted though. :) I may lose the battle with temptation before July rolls around, when I've allowed myself to look at another one.
Thus, we are now at Day 47, and still awaiting "Day 31" productive actions, but suffering the consequences of "Day 31" punitive actions.
(At least my credit score chart just got interesting?)
We got our Notice of Default yesterday! That makes “Day 43” the actual date of “Day 31,” which isn’t bad! I had estimated in my last post that Day 41 was the earliest we’d hear that we were in default. The letter was actually dated Day 36 (technically earlier than first contact +30, but I’m not complaining). So the bank appears to be pretty on top of this.
Interestingly, the phone calls have stopped. Not a peep since my last post. Well, that or my voicemail is broken.
We have gotten some interesting paper mail though. Day 37, we got a general notice that says “You’re behind on your payments. We’re here to help.” It asked us to fill out the same paperwork we’d seen before where they want to know every detail of our income, expenses, and assets, and pointed out some of the government programs that we don’t actually qualify for. It even had a form to fill out to let them get a copy of our last taxes from the government.
Day 42 we got a notice from my original loan servicer actually – the local company I got the loan from, who then sold it to this bank. Their notice also pointed out the government programs I don’t actually qualify for. But just in case I felt like refinancing my home (provided the loan is only 125% the value), they’d be happy to help. Try 200% on for size, guys.
Then yesterday, Day 43, we got a letter from the bank saying we’re two payments behind and are officially in default. Legal and credit reporting actions may follow if I don’t call them back.
As one more piece of news, I checked the condo complex for sale listings. As of today, an equivalent unit is pending sale at $76,000. Three larger units are pending short sales between $80k and $90k. A smaller unit is pending short sale for $40k. And two larger units are on the market for $80k and $85k. Meaning, of the 7 homes listed in my complex, at least 4 are in some stage of foreclosure. Twice as many as the estimate given by CNN quoted in my Day Zero blog.
Coming up next, as soon as Day 61, they can report me to the credit bureaus as 90 days past due. As soon as Day 66, they can notify us of the trustee sale. Once we get that, they’re on a legal clock, albeit a long one, to finish this up. Also once we get that notice, we’ll know they’ve chosen foreclosure instead of to sue us.
First order of business, my credit score is up a point!
Perhaps there’s a delay between opening a new line of credit and getting any
benefit from it. It’s still only one point, but the long-run is the higher
priority here, and that extra line of credit should keep my score a little more
afloat.
We’re also up to a more expected level of contact from the
bank. We’re getting one phone call per business day from them (generally
between 10 and noon for some reason), and for some reason, they missed last
Tuesday. But, it’s really manageable for us. The clever ploy of changing my
contact number to the land line is paying off as the calls have only gone
there thus far. We’ve turned the ringer off. :) The messages have all been
exactly the same too. All recorded messages saying they have a message for me,
please call back. No thanks.
Also of note, today was the earliest opportunity to receive
the Notice of Default. But, since the bank didn’t contact me on Day 1 (which
would’ve been silly anyway), the actual earliest day will now be Day 41 (30
days from the first phone call). However, there’s no maximum for when the bank
has to give notice. Their foreclosure clocks don’t start ticking until one step
after this notice. They can take their time, and they generally do. Usually
that’s fine with all parties, because most often, people who have defaulted are
doing it because they can’t afford it anymore, and generally want to keep their
homes. When a bank delays, it means more time in their beloved home, and more
time to try to negotiate.
In our case though, because we want to leave, delay isn’t so
helpful. Telling the bank that, though, is even less helpful. So we wait. However
long they take, we’ll stay here and stash away the money we’re saving by not
paying the mortgage to save for the taxes we will eventually owe. I will be interested
to see how close the two numbers end up – the tax amount and the savings.
I did more research and have determined that, unless the
mortgage forgiveness bill is extended, we will definitely owe taxes. I had
thought for a while that because Washington is a non-recourse state, the amount
forgiven would not count as income, as suggested by the IRS. I talked to an H&R Block guy who was
entirely unhelpful. He said, pretty much, that if that was true, he wouldn’t be
seeing so many taxes due on people’s forgiven loans. (That assumes the banks
are doing this correctly AND that he’s doing his job correctly. Bad logic.)
I got my hopes up that maybe, even if the bill wasn’t
extended, we wouldn’t owe tens of thousands of dollars in taxes. BUT, all hope
evaporated when I got a little more detailed information. The loan has to be
considered non-recourse when the loan was created.
Because the bank has the option to pursue a judicial foreclosure – meaning they
sue us for the full value of the loan – it is not non-recourse debt. It’s
considered recourse debt until the bank makes the decision to pursue a
non-judicial foreclosure. We’re staying under the radar hoping that happens,
and we’ll know it has happened when we get the Notice of Trustee Sale on the
door. The bank can still change their mind after that, but won’t as long as we
don’t give them any reason to. The
earliest that could be is Day 61, but more likely it’s months and months away,
maybe a year.
Until then, I keep counting phone calls and checking my
credit score. Just for the sake of creating data.
PS. We didn’t win the
lottery. Saaaaad. Although, if we had, I probably wouldn’t tell you. ;)
