Day 82: Reported

Credit Score: 653

Phone calls: 12

Emails: 3

Paper: 12

Just like at a restaurant, someone goes to the bathroom and the food arrives. I go out of town for a few days, and finally get reported to the credit agencies on Day 77. I now have 131 on-time payments and 132 total payments on my entire credit report. So perhaps I've only been reported for being 30 days late, not 90 like I technically am. It was a nice, big, 60-point wallop either way.

I've also been upgraded to non-automated voicemails. I got my first real person calling recently. We also got our first in-person paper delivery a while ago, but I neglected to mention. There was a small envelope on our door knob one day with a template paper for leaving messages. Blank lines to fill in subject, phone number, and the receiver's name. It was odd to get a hand-written message on the door telling me to call "the bank" concerning "your mortgage". Awkward... They know where I live!

Day 69: Power of Information!

Credit Score: 710
Phone calls: 11
Emails: 2
Paper: 8

The Seattle Weekly news article about us was published today! You can find it here. Cory and I met with Nina Shapiro a few weeks ago when our lawyer mentioned she was looking for people to talk to about strategic defaults. I was cautioned by pretty much everyone that I shouldn't put any more "out there", that talking about defaulting on a blog was already tempting fate enough. Be it wise or not, I like to share when I've found something particularly difficult in hopes that other people won't have to deal with the same issues as me. Any exposure does raise my risk of getting sued by the bank, but that just sounds so unlikely.

Fun that we're even the story opener. :) Nice talking with you, Nina!

I did actually make some progress in non-newsworthy ways over the last couple days. I was confused back in April when my credit score dropped because I really had been expecting 90 days before getting reported, plus the bank had only just threatened to report me. Additionally, Credit Karma continued to say that I was 100% on-time for all my payments. I didn't really know what was up, but went with it.

I finally bothered to investigate more, and found this chart on Credit Karma:

My credit score dip was due to opening the new line of credit with the credit union! It took a full four weeks between my credit score rising for getting more lines of credit (and a higher credit limit) and the score dropping for reducing the average age of those lines. Odd. Opening the card was to improve credit in the long run, and I knew that having a company verify my credit would dip it a bit, but I hadn't factored in that a new card would so significantly drop the average age of my accounts. Of course it would, looking back now.

It means I've got a little more credit score excitement to look forward to now. My next free credit report will by July 1, if I follow my self-enforced rationing, so I'm actually looking forward to my score dropping sooner than later, so I can see it in my credit report sooner than later.

We've also now gotten the "we want to help, send us all your information" three full times. - It feels eerily similar to "Resistance is futile. You will be assimilated." to me. - I don't particularly care to send them all my financials, but they seem to think that I'm not sending it because I don't speak English. The latest packet came with a Spanish version as well. :)

Day 65: More Warnings

Credit Score: 710
Phone calls: 10
Emails: 2
Paper mail: 7

This month, I officially hit 4 years in the condo! That's not exactly a good thing. It marks the time we've all been in this housing crisis, really. I bought the condo just after prices started dropping and everyone was saying it was a good time to buy. This week in the news, they're actually saying prices are now as low as they're going to go, and they may start rising as early as next year. That foreclosures will be lessened as the banks start clearing out their backlogs. And that rent is the highest it's been in a long time. This is when I choose to default... I'm so clever.

At least I'm officially three missed payments in now. March, April, May. I figure my credit score will drop again mid-May when I pass the third grace period for payment.

No real progress since the last update, though. Actually, it's probably a little negative progress. We got another letter in the mail saying we have 30 days to resolve the past due payments or they'll send the notice of default. Which means at least 30 more days before we get the notice.

If I were in a situation where I didn't want to lose the condo, I guess I'd appreciate seeing that they're in no hurry to give notice. And it'd be nice to know that your timeline just got bumped out 30 days. But I'm not. It's just more delay, more time in the process, and more likely to cost me tens of thousands in taxes.

Better than 100 thousand selling it though. I've got to keep telling myself that.

Maybe this will go down in Schrodinger family history as Jane's 20,000 dollar mistake. :)

Day 47: One Step Forward and Two Steps Back

Credit Score: 710
Calls: 9
Emails: 1
Mail: 3

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?)

Day 44: Notice of Default

Credit Score: 759
Phone Calls: 9
Emails: 1
Mail: 3 (+1 that doesn’t count)

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.

Till then, we keep waiting.

Day 31: First Opportunity for Notice

Credit Score: 759
Phone Calls: 9
Emails: 1
Mail: 1

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. ;)

Day 19: Precursors

Credit Score: 758

Number of Emails: 1

Phone Calls: 1

Paper Mail: 0

Day 15 marked the official missed-the-payment-entirely line. Sure, it was due on Day 0, but Day 15 marked the end of the grace period and the first appearance of a late fee. It was preceded by a phone call that my payment was almost late, and followed by an email that my payment was officially late.

Part of this economic adventure has been realizing that I don't want to be with a bank anymore. I don't want my money sitting with a company whose whole intention is to make money off me. I don't like that my bank had to take a bailout, that they consider adding fees to necessities like debit cards, that their executives get ridiculous bonuses while their customers suffer, and that they're a rather heartless business. I'd rather pull my money out of the corporate goliaths and bring it local. I have joined my husband's credit union and am working on moving all the bills over to that account. Everything from my paycheck to the power bill will start going through his/our credit union. We had not joined accounts since getting married yet, so this was a perfect opportunity.

Knowing that I don't want my money with banks, I also knew I didn't want my new credit-boosting credit card to be with a bank or major corporation. So I joined a second local credit union. I learned that I can't join without some money being in their accounts, but I only had to have five bucks in an account to get the credit card. I opened a basic savings account, no bells or whistles, and applied for a credit card.

They did a soft-check of my credit score to open the savings account, and a hard check to open my credit card. My credit score actually did not budge at all despite the hard check and a new higher credit limit. Not yet at least. I was approved for their lowest interest rate on their only credit card, and the teller said she'd never seen anyone actually qualify for that. :) While it's good to have great credit and reap those rewards, I'll soon be like the rest of her customers and won't look so squeaky clean. That's why I'm doing this now - before my score drops for other reasons and to use that time dropped to recover simultaneously. That hard credit check will stay on my credit history for two years, but since it appears to have had no effect, no big deal.

I decided that since my credit score didn't move in the slightest, it's not worth getting a second new credit card. Maybe if I'd seen it jump a few points for having doubled my credit limit, it'd be worth considering tripling my credit limit. The hassle of a fourth institution (2 credit unions, 1 bank, +1 new) handling my money isn't worth it – not to mention a fourth username/password pair! If I was still going to get a third card, it'd be with the third credit union I qualify for through my job. I believe I've maxed out potential credit unions at that point though.

Once I get all my bills sorted and have verified that they've all transitioned to the credit union for a month or two, I'll close the bank account and move that cash to the new savings account. It'll be wholly in my name, so on the small chance that Cory runs off to Canada with some cute indie hipster chick and takes all our newly-joint money, I'll still have something for me. Moving all my money will also - and more practically - mean the mortgage company (who is luckily different than my bank) will have no access to my money and will not know where it is. I had been previously worried that they'd pull money out of my account despite me no longer authorizing it, but since they haven't yet, I'm not worried anymore. That would be literally stealing, and while I have very little respect for my mortgage company, I do think they're above stealing (money at least, not houses).

Cory and I will also start actually using our credit cards. Till now, we've only been using debit, seeing no need to insert more people in to the process and having no need to carry a balance ever. Now though, I've gotten some tips on when it really is better to use credit: (1) any time the card leaves your sight, (2) you don't have your purchase already in hand, or (3) at particularly vulnerable locations. From now on, we'll use our credit cards at (1) any restaurant that takes your card away from the table, (2) any time we order something online, and (3) at all gas stations. This way, we'll have protection from unauthorized purchases (1&3) and protection from incorrect/damaged products (2). We'll aim to stay below 10% of our credit limit on each card per month, to maximize the credit score benefits of using the credit card.

In the next couple weeks, I imagine the phone calls and emails will be more prevalent. Perhaps paper mail will show up. And I'll find out if Day 30 brings a drop to my credit score, or the first phone call + 30 days, or the late fee + 30 days, or some random date that they finally get around to reporting me.