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.

Day 141: Looking Ahead

Credit Score: 654

Things I'm looking forward to in the next place we live:

Neighbors that know how to park without damaging other people's property

Parking spaces wide enough to encourage neighbors not to damage others' property

A shorter commute for Cory

No HOA fees or assessments

No HOA board or meetings

Neighbors that don't have domestic disputes, drunk arrivals, or outdoor telephone conversations, all at 3am. In English or otherwise, I'm not picky.

Bedroom windows that don't face a parking lot where such events would still happen anyway

Windows on more than one side of the house

A kitchen big enough for two

More counter space

Enough space for a table AND computer desks AND guests over, all at the same time

An interstate that's more than a block away

Walking to restaurants

Being debt-free

Temporarily pretending spiders don't live in the new place

Central heating, and I wouldn't complain if there's air conditioning

I think we can get all that in an apartment. The only questions will be where, and for how much. If we didn't leave the neighborhood we're in now, we could get all that for the same as the mortgage used to cost us. We'd really like if we could get it all for less than the mortgage. If we go to the nice areas of the city, the areas we'd really like to live in eventually, we really couldn't get it for any less than our mortgage+HOA dues. While we could afford that, I'd rather put less rent in to the apartment and be saving the difference for a future down payment. Or if we find we're permanently disillusioned with home ownership, save it for retirement or a great vacation or something.

They say rents are at an almost all-time high right now though - a response to home ownership and home prices being at almost all-time lows. So everyone in this foreclosure situation is pretty much doing the exact opposite of what we "should" be. But we've all got extenuating circumstances that make foreclosure the only thing we can do. I'd sure love to be able to go out and buy a house right now. Prices are low, interest rates are low, and if I ever buy a house again, it'd be one I plan to live in for the full 30 years of the mortgage. But it's not practical. The $100,000 debt on the condo is looming over my head and forcing me in to renting for a pretty long time. Sorry Market, I can't help ya.

Day 122: When It Rains, It Pours

Credit Score: 654

Voice Mail: 15

Email: 3

Paper: 23

On-Time: 134/136

We're now up to NINE Notices of Default! No kidding. These guys are serious about making sure we got this document. It feels very Harry Potter and I'm half expecting letters to come down the chimney soon. 

After getting the first notice on our door on Saturday, we received four letters in the mail Tuesday. Two addressed to me and two addressed to my "unknown spouse and/or domestic partner." Poor nameless Cory. :) After that, we got four notices via certified mail on Thursday - two for each of us again. And finally, Friday, we got another envelope hanging on our door knob asking us to call the mortgage company. 

Sorry I can't share all these notices with all the people that are still eagerly awaiting theirs. I hope yours turn up soon. And I hope none of us will owe the huge tax burden that creeps closer every day. 

Now that it's July, my next credit report became available (based on my self-inflicted rules). I checked Experian this time and it was very interesting. It included all the same information, it now reflected three months of missed payments on my mortgage, but it included one new tidbit. It tells me when each entry will drop off my report. My original student loans will drop off ten years after they closed. My consolidated student loans are still current so don't have a drop off estimate yet. It looked like all my closed loans drop off ten calendar years from when they closed - January 2014, January 2015, 2016, 2017, etc. Always January, which is good to know. The month of closure is irrelevant. 

Instead of a drop-off date for the mortgage, since it's not closed yet, there's a date when the loan will report as positive. January 2019. Seven calendar years from now, or seven calendar years from my original missed payment. I won't be able to tell which until I see the report again with more information. It's possible that date won't change and that'd be really nice for the homeowner. No matter how long the bank takes to foreclose then, your credit is only affected for seven years from the start of the default. If it updates on my next view of the report though, when we're in to 2013, then it's just another way for the bank to be controlling your life by neglecting their duties. I would think, though, that if the 2019 estimate were going to move to 2020 then they wouldn't have mentioned when it was going to go positive until after the account is closed/foreclosed/settled. Experian would be creating a liability if that date changes. If January 2019 rolls around and that loan is still reported as negative, I can hold up my print out of today's report saying I was promised a positive report. They've been doing this a lot longer than me though and probably have some legal disclaimer in place that it's only an "estimate" or that there's an assumption that all future reports are positive. 

Anyway, it was very useful to learn when each of my credit lines will drop off my report. Starting in just a couple years, I might start losing some of the positives that are bolstering my score and be left just with the actual accounts I have open - my two new credit cards.

Day 117: Notice of Default (for serious)

Credit Score: 654

Phone Calls: 15

Emails: 3

Paper: 14

On-Time: 133/135

Yaaaaay! For reals this time. Very definitely a Notice of Default was taped to our door last night. Over the weekend, we had received a letter that our loan was being transferred to a local law firm, then BAM! notice was posted. I like this firm already. If this pace keeps up, we could still be done this year, and still under the tax-free bill.

The significance of this notice is both that we've actually made some progress and that we're officially going down the non-judicial foreclosure route (the good one). They can still change their minds up until the sale actually happens, but it's still really rare for anyone to do a judicial (judge involved) foreclosure on such a tiny property.

Maybe this transfer is why it's been all quiet on the western front the last few weeks. And I imagine it'll continue to be quiet. The lender isn't trying to collect anymore (although the notice did say exactly how much I could pay them to un-default myself), and I'd guess that the lawyers aren't going to waste any time or money on extra papers to us.

I'm probably too optimistic, but I'd like to think that this law firm would want to get this over with as quickly as possible. All the government programs out there are designed to halt this process. If they get repeatedly halted in the middle of these foreclosures, the lawyers must get paid less.

Foolishly optimistic or not, I'm a little more hopeful of a tax break now. :) I'll be very interested to see whether we get a notice of sale at the 30-day minimum. If we do, we could be moved before Thanksgiving. There’s no maximum between the Notice of Default and the Notice of Sale though. Once we get a Notice of Sale, there’s both a minimum and a maximum, so everybody’s locked in. Until then, you could say this is artificial progress, but I’m still happy.

July looks to be an exciting month. Fireworks, perhaps the sun will finally come out, Olympics opening ceremonies, and potentially, a Notice of Sale.