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Bank of America Problems. Mortgages, short sales, deed in lieu and foreclosure.
Doing the right thing is not always an option
I have heard about others having Bank of America problems for years, but now it is I who has been dealing with this bank for over 2 and 1/2 years. I own a home with my ex-husband. Without going into detail you can probably already tell why the house is a problem when you read the words ex-husband. Divorce, an ugly word, is the main reason that the problems with Bank of America even started. I will briefly state that due to the divorce, neither my ex or I could afford the home alone and so we would have to sell. It was on the market for a year with practically no bites at all. Our price started with us making a very small amount from the sale, to breaking even from the sale, and from their was lowered and lowered and lowered. Still no bites. Finally we lowered it enough to get an offer and entered the world of Short Sales.
Short Sale is a world of its own.
The name short sale is in a way an oxymoron for it is not "short". It takes a very long time. Even if you think you can wait it out knowing this and the buyers say they can wait it out because they really want the house, most of the time it doesn't work out. What should be a very simple procedure somehow gets overly complicated, overwhelming, and perhaps one of the most frustrating experiences I have ever been through. The amount is "short". The house is selling for less then you owe the bank, so there is a ton of paperwork to be faxed. Bank statements, paystubs, W-2s, tax paperwork. Doesn't sound like much but as the case is being worked on at the bank time runs out again and again so you need to submit new documents again and again. I lost count over the last 2 years how many items I actually faxed over paperwork to Bank of America.
My ex and I have been through three short sales in the past 2 years, some lasted longer then others, but each time the buyer backed out because it took anywhere from 3 months to 6 months, to even 8 months. I can't blame them really. My ex lived in the house for free for almost 2 years and at least maintained the house. I am not really sure what the bank was waiting for.
I, on the other hand, was waiting to see once a short sale went through what would happen to the difference that we owed on the house that was not covered by the sale. Say you owe $300,000 on a house and the bank approves a sale for $250,000. What happens to that $50,000 that was not paid back to the bank. I was told by several lawyers that one of three things could happen:
1.) they would forgive the debt.
2.) they would forgive the debt but issue a tax form so that it would need to be filed as a gift (this would be split between my ex and I) on our tax returns.
3.) they would expect us to pay back the difference.
The last short sale we thought was definitely going to go through. During this time my ex remarried and moved to a new house in anticipation of the short sale going through. I rent a small house while waiting to start rebuilding my credit. Still waiting. The sale didn't go through, the buyers backed out. Our home that we still own is now vacant and winter is approaching. This brings us to the world of deed in lieu of foreclosure.
Deed in lieu of foreclosure
Deed in lieu of foreclosure, or handing over the keys to the bank, is another option. One that I thought would be quick, easy, and painful but at least I could start rebuilding my credit. Your credit will suffer almost as much with a deed in lieu as with a foreclosure but not quite because it is seen as cooperating, but your credit will suffer worse then it would have with a short sale. I was wrong. It was not quick and easy, just painful. I called to speak to someone and was told I would need to once again fax over all the paperwork. They claimed that because I was working with a different department they are not privy to all the information that was sent to the short sale department. They then asked me why I would want to do this since the house was not even on the foreclosure list. I was shocked to hear this since we haven't paid on the mortgage in over two years. It is crazy that the bank does not even recognize our house as one that should have been foreclosed upon already let alone not even be on the list to start the foreclosure process. I was also told within 5 to 7 business days that a specialist would call. I never heard from a specialist. My ex took over and called Bank of America and has finally come to the realization that no one really knows what they are doing. The breakdown of communication at Bank of America is laughable (something that you must do in order to not break down and cry). Not to mention that he was told that someone from the bank has driven by our house twice in the last two month and claims someone is living there. The house is completely vacant and is deserted. The situation is insane.
I have decided to walk away. As I was once told by a very wise person that I am privileged to know, doing things over and over again the same way and expecting different results is the definition of insanity. I have found a way to rebuild my credit and walk away from the house and the insanity. I wonder how long it will take them to foreclose? The house has been left alone now and is deteriorating each day without someone to care for it. Winter is upon us and there is no heat in the house. No telling what will happen. People wonder why the banks are in trouble even though the government has given them money to help them with mortgage loans to help the housing market. They obviously are not using these funds correctly.
Please bare with me while I share one more story that helped me put the housing market in perspective. The media says the housing market is turning around but I am not sure how it can. A real estate agent I know told me of a trip she made to California recently where she got to visit the short sale department at a bank (not Bank of America). The building was stories high and as you walked in there was beautiful marble and columns and greeters. She was sent to a floor several stories up. There were multiple elevators that brought you to different floors. As she got off the elevator the lobby was nice and still marble but not as nice as the entrance to the building. The greeter walked her down multiple hallways that became more and more dreary as they walked until she arrived at this small little room where she saw 9 people working amongst tons of files - the short sale department. There were so many files from floor to ceiling that there was nowhere to sit. She stood and talked with these people after the greeter left. She was told that they made minimum wage, they needed to touch 10 files a day and make some kind of progress on each of them, and close at least 3 files a week or they would be fired. There were 9 of them, there are over 400,000 short sales just with this bank alone. Amazing, huh?
I don't know what the answer is to this but I tried to do the right thing. Unfortunately I was not allowed to do it by the entity that would be served best by helping me. I am sure many of you have been through the same type of situation. Please feel free to share your thoughts in the comment section below.