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"Intentention to Foreclose" Letter Received Today (4+ years after Ch7 discharge)

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  • "Intentention to Foreclose" Letter Received Today (4+ years after Ch7 discharge)

    We received an "Intention to Foreclose" letter today from Interstate TD Investments. They acquired our 2nd Mortgage after it was sold off last month. Here is some background info:

    Location: Idaho
    Value of home: 127,000 (according to Zillow, for what that is worth)
    Owed on 1st: 84,000

    2nd mortgage is at 37,000 owed with late fees, interest, etc.

    Both were discharged in our Chapter 7 Bankruptcy in August of 2011

    We've paid through on our 1st mortgage, never missing a payment. We did NOT reaffirm the loan.

    We stopped paying the second mortgage in 2011. It has been sold twice, with Interstate TD being the new lien holder.

    Some thoughts and questions...

    Is an "Intention to Foreclose" letter always the beginnings of the foreclosure process, or are they sometimes just a way to try to initiate some sort of payment agreement? (we've not received a notice of default, or an actual "notice of foreclosure")

    We've actually been saving, and were going to write a settlement offer on the 2nd this summer. Would it be wise for me to simply write that settlement offer letter in response to their "Intention to Foreclose" letter? While the house is not underwater, if you consider the amount still owed on the first against the amount they might get at auction...and all fees they would have to pay...it does not seem like they would stand to gain enough to make it highly worth their while to foreclose. Any suggestions on a reasonable settlement offer?

    If we decide to walk away from the house, how much of a hit is a foreclosure on the ability to buy a home in the future. Of course, we'd stop paying the first and start saving... Any idea how long foreclosures are taking in Idaho? Also, the second mortgage is only in my husband's name. He took it before we were married. Does that mean a foreclosure would only show up on his credit report? Would we maybe be able to get a loan in my name sooner if the foreclosure doesn't show up for me?

    I've been reading these forums for years now... I appreciate any and all help you can offer as I process our newest circumstances in home ownership post Chapter 7

  • #2
    According to Nolo the actual foreclosure process starts with a notice of default: http://www.nolo.com/legal-encycloped...sure-laws.html. I don't find anything saying it is a required part of the foreclosure process. So the notice of intent to foreclose is probably an attempt by the lender to get you to pay without starting the actual foreclosure process. It is impossible to know whether they will follow through and send a notice of default if you don't pay.

    Now probably is a good time to offer a settlement if you have a lump sum you can pay. Be sure to point out that your loan was discharged in bankruptcy, so they will not be able to get a deficiency judgment against you. Keep in mind that they probably paid much less for the mortgage than the balance. So, foreclosing could be more profitable than you think. I'd try a low ball offer of 10% and see what they say. They may counteroffer. If they just reject it, you can offer more. I am no expert on loan settlement.

    I believe a foreclosure will show up in the public records of your credit report. You'll be able to buy a home again eventually.

    LadyInTheRed is in the black!
    Filed Chap 13 April 2010. Discharged May 2015.
    $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

    Comment


    • #3
      Thank you for your response LadyInTheRed I will send them an offer letter Monday morning, and wait to see what happens. I do realize they paid probably pennies on the dollar to buy the loan. I still can't see them truly wanting to foreclose though. By the time they pay whatever fees are involved in foreclosing, and pay off the first mortgage...there would be very little, if any money left over for them. On a good day I don't think they could get more than 90,000 for the place at auction. The market in our area is flooded with foreclosures for sale (many unoccupied). And, we've been living here, but have not put a penny into the place knowing we may still walk one day. It needs new floor coverings, baseboards, to be painted on the exterior...and the kitchen cabinets are in bad shape. Even though there technically is some "equity"...at most, what they'd probably end up with is another empty foreclosure sitting around needing work. I'm hoping the timing will be right for a fair settlement.

      It sounds like the foreclosure will show up only in my husbands records since I'm not on the house. Haven't been able to figure out how being in a community property state affects that though if I tried to buy a home in my name only in the future. Still researching... Thanks for your help!

      Comment


      • #4
        Even in a CP state, a foreclosure should not show up on your husband's credit report unless his name is on the mortgage.

        Be sure to describe the condition of the home in your letter. Good luck and let us know how it goes.
        LadyInTheRed is in the black!
        Filed Chap 13 April 2010. Discharged May 2015.
        $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

        Comment

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