Day 283: Auctioned!

Credit Score: 652

Paper: 38
Email: 3
Voicemail: 48

My auction happened Friday! I took a couple hours off work so I could go see it happen and verify for myself that it wasn’t postponed. They said I couldn’t take any photos or video, but I had been planning to show you what happened.

The auction took place exactly where and when the notice said it would. The address turned out to be the trustee’s office building, with the auction happening in their parking garage. Right at 10am, a guy started reading off a bunch of regulations, probably about the rules of bidding, consequences, and ownership rules, but he was waaay too quiet to actually be heard. The forty or so people there had obviously heard it all before so didn’t bother to stop their conversations.

There were three auctioneers with all the auctions of the day split up alphabetically by owners’ last name. Mine turned out to be third on the list for one of the auctioneers. He read someone’s address, read the minimum bid, asked for any bidders, nobody answered, he read the next address. He read my address, read off that the minimum bid was the value of my loan plus some extra (late fees or lawyer fees or interest?) for a total of $173k. There was a booklet that everyone got and it said my appraised value was at $93k.  With that kind of ratio, of course nobody bid. It would’ve just stuck them in exactly the same position I am, of being (apparently) $80,000 underwater. 

I think that appraisal is a really high. Yes, there are three units for sale in my complex  and their list prices are between 95,000 and 128,000 but the only 2-bedroom units that have actually sold in recent records were both last month with one at 65,000 and one at 65,400. Another is pending at 66,000, and a fourth is pending short sale at 88,000 but has been very nicely remodeled (dunno if it’s 22,000 nice, but that’s the buyer’s problem). 

I am oddly upset that the appraisal is so skewed, but shouldn’t be. I wanted the numbers to actually reflect my situation. I am not 80,000 underwater, I am solidly 108,000 underwater. That’s what I’ve been living with for a year and it was belittled to less than 75% of my real burden. If I had to pay taxes on that difference though, I would definitely have wanted a higher appraisal so that less of the loan would have been forgiven. Less forgiven, less taxable income, less taxes. 

Anyway, they read my name, address, minimum bid, asked for bidders, paused, read the next name and address. There was nothing conclusive afterwards so that was rather disappointing. There were still a lot of homes for auction, and mine was done by 10:20, so I left. Maybe something else happened once they were all done, but I decided I’d rather get back to the office and keep going with my day. It didn’t really end up being worth my time to have attended, especially since I came away with zero evidence that it actually happened, but at least I proved to myself that the auction took place and was not delayed. The trustee had the right to delay it up until the moment it was auctioned, so there was always the chance it wouldn’t happen that day.

The auction wasn’t my only adventure since my last post though. I notified the HOA board that we were leaving and that we would only own the condo for 7 of the 31 days this month, so proposed that I wouldn’t pay them the December HOA dues. They could get them from the new owner since they’d own it for three times longer than I did that month. Before giving them that proposal, I did check the rules of the association, and looked for anything that said “HOA dues are the responsibility of whomever owns the unit on the 1st" or something. I didn’t see anything like that though. Just that a late fee would be assessed on the 15^th – after I no longer own it.

Their first response was that if we weren’t paying the dues, we couldn’t use Cory’s parking space anymore since it’s rented and paid for with the dues. Fine. He can park on the street. Their second response was “you have to pay your dues” which isn’t exactly helpful. They started throwing out numbers and making themselves sound like they knew nothing about how foreclosures work. Before this started, I wouldn’t have known anything either, but with how many foreclosures and sales they must have experienced in the last few years, how can they (and the management company) not know the rules of who pays dues the month that ownership changes hands?

I asked our lawyer again because we had heard from him back in our February meeting that some number of months of HOA dues can be tied to the sale and become the responsibility of the new owner - they put a lien on the property. When I asked for more clarification from him this week though, after the HOA started trying to bully me in to paying, he said it was actually dependent on the year the condos were built. Any condos “built” (I don’t know if that means permitted, ground was broken, last one was completed, or first one was sold, but does not mean any of those if it was first constructed as apartments and later converted to condos  - then the conversion date is what matters) any condos built after July 1, 1990 have the authority to put the lien on the property and get dues from the new owners. Before that, they don’t have that authority so it’d mean they come after me for any missing dues. I’ve no idea whether my building was built before or after July 1, but the paperwork all says 1990 – the least convenient year possible. I told the HOA all that information, suggested they find out when exactly these officially became condos, and that I’d be willing to pay 22% of the month’s dues for the time I actually own the unit, I’d keep using the parking space, and that if I could prove to them before the late fee that I no longer own the place, I wouldn’t be liable for the remainder.

They haven’t answered me since that proposal, so I haven’t paid yet and Cory’s still using the parking space. He’d rather we just pay the dues so that it’s not hanging over our heads, but our dues are $330/month. That’s a lot of money, and if I don’t have to spend it, I don’t want to. I hope to get an official document posted on our door soon, saying that ownership officially transferred. Maybe Monday - first business day since the sale? Then I can show that to the board, prove I don’t own the place, and won't have to pay the dues. Maybe we’ll still pay the 22%.

We’re moving out in a week though! This time next week, we’ll be in an apartment. Hopefully we’ll have no mortgage debt, no HOA board still bullying us for money, no HOA board EVER again, and no worries about a huge tax burden looming over us. We’ll be closer to Cory’s work, which will make him much happier, and we’ll be working towards saving enough for a 20% down payment on a home. The goal is still to buy in June, and if we’re able to save our average amount every month, we can probably make it. The question will be whether we can qualify for a loan. 

The news keeps telling us that qualifying for a mortgage is still a huge hill to climb – high credit score, clean credit history, large down payment, and a low percentage of your income going towards the mortgage. If we just use Cory’s credit and income, we meet the first three, but for the loan size we’d want, it’s close to 50% of his income. If we use both of our credits and incomes, we only meet the down payment and percentage requirements. I’ll be very disappointed if we can’t buy a home next year, but getting out from under $100,000 of debt was necessary for our future. Maybe that future doesn’t include home ownership again soon, but at least it includes control of our own money, freedom to change our living situation, and a lot less worry.

Day 262: The Count Down Starts

Credit Score: 651

Three weeks till our foreclosure auction! Our condo is now posted publicly online for sale and hopefully the bank has published the sale notice in a newspaper like they're required to do. I'm not really going to complain if they didn't though. 

Since we're at the final days before no longer owning this place (yay), we went apartment hunting. We seemed to be looking a little early for people's expectations, but some complexes had units that would be available for December move-ins. We definitely wanted to get something solidified for our move sooner than later. The 20 day window after the sale just seems so tiny to find a place and move out. Especially when Christmas is in that window. While apartment hunting, we learned that our biggest priority was still having a washer and dryer in our unit. Any size, any condition, we had a range of prices we'd consider, but it'd better have a washing machine. :) 

After visiting a few apartments and condo sublets, we picked a place and signed a lease! We'll be paying $500 less per month than if we were paying the mortgage and HOA dues here. Plus, it's in our target home-buying neighborhood. It's going to be great to walk to restaurants and great for me to learn the much longer commute.  It is about half the size of our condo but it'll be enough. My in-laws have offered to let us stash all our excess stuff in their basement for up to a year. We're hoping to not need it that long. 

With the savings we've been able to pocket for not paying the mortgage for the last 10 months, and the savings from a relatively cheap apartment for the next seven months, we're estimating that we can afford a 20% down payment on a house by June. Just in time for a ton of houses to come on the market for the summer. 

Unfortunately, nobody is really offering six-month leases anymore. At least not cheaply. With the down economy in the last few years and millions of people losing their homes, demand for rentals has skyrocketed. We signed a one-year lease after closely examining the lease breaking consequences. I couldn't really believe that after essentially breaking the lease on our condo, we're intending to do it again on an apartment, when it really does impact someone else directly - the landlord. But, the lease breaking agreement was pretty clear. There's a $1000 fee and we're responsible for rent for any months between our move out and a new renter moving in. So, we've included that fee and two months of rent into our estimate for how much of a down payment we'll be able to afford. If we don't find a home, or find a short sale that we have to wait on, or find a place that needs some renovations first, maybe we will fulfill the lease.  We'll see. 

Despite the extra cost of breaking the lease, I feel tons better about the foreclosure knowing that we have somewhere to go. The bank can still postpone it if they want, though. Even up until the moment the auction starts, they can decide to postpone. While I don't see why they would, I'm still planning to attend the auction so I can verify for myself immediately that the auction happens. 

Day 229: Next Year Affects This Year

Credit Score: 649

My score dropped again. A friend of ours is getting married next year so we bought plane tickets recently and put them on the credit card. We paid it off on time but not before their monthly report to the bureaus apparently. It increased my debt ratio enough to trip some threshold that the system doesn't like. So, it chopped off a few points. Maybe next month the credit union will report it paid and my credit usage will go back down and my score back up? Or perhaps it sticks around for a while. While not a big deal, if you're watching your score closely, it may be worth finding out when your card reports to the bureaus and pay down any big charges before then.

I have a determined goal now to buy a house again, while interest rates are low and prices haven't bounced back too much. So Corey and I went to see a financial planner - he didn't even glare at us after hearing that we strategically defaulted. The planner says we're on track for buying a house soon (and he'd be happy to coordinate the loan for us). We could even afford a much more expensive house than we've been planning but that would require using both our incomes and both our credit reports. Since my credit is bad and getting worse, we want to just use Corey's. His income is enough to get us a house and location that we like, so no need to use both our stats and end up with a higher interest rate. It was sure helpful to build a down payment by being able to stash away 9+ months of mortgage payments. We could afford to buy now, but will wait a little while. We don't yet meet all of Suze Orman's requirements for buying a house - 20% down payment and an 8 month emergency fund - but we could by next summer. With the condo foreclosure in under two months now (knock on wood), we'll start looking for a place to rent soon, and then think about buying once we're well out of this place and have closer to 8 months in an emergency fund.  I'm excited :)


Although, with the small uptick in home prices, my condo appears to be worth a little more. There are some other units for sale in my complex, some better, some not, but they seem to be averaging a little higher than they were at the beginning of this year. While I may or may not still be 100k underwater, I'm still at least 90k underwater, and that will still be a LOT of taxes to pay.

Final note, my third credit report was self-scheduled to be viewed in a couple weeks, but I think I'll leave it a while longer. Since my credit hasn't done much of anything in a couple months, I don't think I'll learn anything from it yet. If I wait to look at it after the foreclosure, that'll be much more informative.

Day 199: My Foreclosure Playlist

You Keep Me Hangin' On - The Supremes

Rent - Rent: The Musical

How Bad Can I Be? - The Lorax

Shut Up and Let Me Go - The Ting Tings

Everything's Just Wonderful - Lily Allen

Bad Reputation - Joan Jett

Day 177: When to Leave

 

Credit Score: 657

My score is up two more points! I'm liking this direction much more than dropping by huge chunks each month. 

I did hear from the lawyer soon after my last post. He says my shot at foreclosing in 2012 in lots better now that we have the auction date, but it could still get postponed up to four months without me having any notice or say in it. I'm still betting that it'll happen in December based on the crazy punctuality and thoroughness of the law firm that's been sending all the documents. 

As far as when we can move out, he says pretty much any time, but we should still check with a tax professional. There are examples, even examples published by the IRS, that show that people can leave before the sale and still qualify for the tax credit. 

However, after some internet research, we've decided to stay till December. Some tax people, real estate agents, and home owners all recommend staying till the bitter end. For one, you get to keep pocketing your mortgage each month. But mostly, the liability of the condo would remain with us until the day of the sale. November and December are dangerous months to leave a home unattended. If our pipes burst and damage our unit, or the neighbor's units, we're still liable to pay. If people notice the place is vacant and move in or destroy something or get hurt, we're again liable. 

Thus, we'll be staying until the sale. We might even go attend the sale just to verify that it not only happened but to ensure the amount it sold for is the number that actually shows up in the tax documents. 

I'm still having fun looking at houses and apartments online though. We're thinking we'll move closer to Corey's job and I'm looking forward to a new area. I'm hoping to rent a house, just for lower density living and to test-drive home ownership versus condo ownership. House rentals seem pretty expensive though, much more than we'd pay in a mortgage if we bought an equivalent place. Perhaps that just means these owners are still paying their higher interest rate mortgages and need to refinance. Or that the demand is high enough they can ask that much. 

Day 158: Notice of Trustee Sale

Credit Score: 655

YAAAAAYYYYY!!!! It came!! I was so hopeful that the law firm would be just as fast with this notice as with the last one, but I didn't really believe they would be. On the date that was the minimum time from the Notice of Default, they dated the Notice of Trustee Sale, then got it on my door a couple days later.

I saw it taped to my door when I got home from work on Friday. Saturday, again matching the previous history, we had six letters in the mail with a note that we had an additional six letters to pick up at the post office.

I was excited enough to just see the notice on the door because our odds of selling before the end of the year had just rocketed up, but there was one piece of information later in the notice that made it even better - they had a specific date of sale! Date, time, detailed location of exactly where and when my condo will be sold. The earliest would've been early November based on the notice being posted August 3rd, and no, the sale isn't the earliest possible, but it's still pretty darned good. Early December!

I'm really liking this law firm - their punctuality and thoroughness - so I think it's a safe bet that the sale won't be postponed. I'm feeling really good that it's going to sell in December and that we aren't going to owe taxes.

(One person asked me recently "what if no one buys it?" so thought I should explain that quickly. In all likelihood, no one will buy the condo at the trustee sale. The condo doesn't get listed as "on the market" and I don't have to find a seller. What'll happen in early December is that the county will auction off my condo on my behalf to the highest bidder - most likely the bank will be the highest bidder. They have to go through this process to legally transfer ownership from me to the bank. If someone does want it, they just have to pay an amount that the bank accepts and ownership transfers straight to them. But, 99% chance that the bank will own it at the end of the sale, and 100% chance that I won't.)

Even if it the sale gets delayed though, I'm glad to see articles like the one a commenter linked in my last post saying that some lawmakers are worried about this bill expiring. I would think, as the non-expert I am, that allowing the bill to expire could only be damaging to the economy. I had not considered the possibility of a retroactive reinstatement of the bill though. That really could work, and seems more likely than the off-chance that congress will get anything this big (i.e. useful) approved before the election. But, the article is entirely right that if your foreclosure ends anytime in 2013, you don't owe the tax burden until April 2014. So really, congress has until the end of 2013 to give the homeowners that tax relief. I'm more optimistic that it'll happen when the timeline really stretches out that much further.

Now that we've got a date, a schedule we can plan to, and a newly solidified future, Cory's finally onboard with contemplating a new place. He's been a little resistant, knowing that we might still have a year or more in this place. So we've just now started looking online at apartments and rentals. I asked him to circle areas on a Seattle metropolitan map where he'd be willing to rent. I, the transplant, had been repeatedly finding places I thought looked great but that weren't in places he, the native, wanted to live. I'm starting to wrap my head around a much longer commute too. Plus, we think we're definitely paying movers to do all the hard work. We'll be in a new place by Christmas. : )

I did send a copy of the notice to the lawyer we've been working with, and asked if we HAVE to still have the condo as our "primary residence" on the date of sale. What does that really mean? We sleep there that night? We're not paying for another apartment at the time? We haven't redirected our mail yet? Or can we move a month before the sale and still qualify for the exemption? Does a tax advisor make that decision for us? What's needed?

Buuuut, I haven't heard back yet. I'll post again when I do.

As a last note, my credit score went up another point! So far in this process, I've taken two big wallops to my credit score equaling about 100 points. Since those two wallops, my score has increased twice by one point. That's a really slow rate of improvement, but once my foreclosure goes through, my number of missed payments will stop growing, and hopefully my credit score will rise faster. It'll still take 7 years for the negative information to drop off my report all together, so it won't be fully repaired until then, but it'd be nice to see it back at a good number eventually. There's also still the possibility that there'll be a third wallop after the foreclosure finishes, since that'll be the first time that my report officially gets a "foreclosure" on it, instead of just a bunch of missed payments. Credit Karma's simulator says that adding a foreclosure won't lower my credit score, but who knows how accurate that is. It'll definitely be interesting to watch.