BOA Forclosure Saga - or not

[hedgecat]

I just thought people might be interested in my story because I came here looking for answers and people with similar situations and haven't found any.

I own a home in Washington State. My FHA loan is through Bank of America. I made the payments faithfully, on time, every month. Somehow, even though it was a fixed interest 30-year loan, every 8 months or so, property taxes or whatever other expenses would cause my payment to rise. Then I lost my job with a tech company and still scraped to make that payment.

I put the house on the market in June of last year (2009). No takers. So I made some more payments and finally in October, I couldn't scrape up enough from self-employment to make the payments anymore so I stopped paying. I heard nothing so I called and explained my situation. I was told they couldn't do anything at all for me until I was 90 days past due (December 15th, 2009). I called on that day.

They said, well, we can try a short sale. So I asked my realtor to represent me in the short sale and she agreed. However, no one but no one would tell me at what price I should list it. So, I owe 235k and I listed it for 225K. We had absolutely no interest so I sent a "lawyer letter" asking for a deed-in-lieu. BOA tells me they won't do a dil for "four to six months of the house being on short sale." So which is it? Four or Six months? I don't want the house. I don't want to live in it rent free and take advantage of the bank. I just want to give it back.

December passes and at the end of January, I file Chapter 7. I inform BOA that I have filed Chapter 7 and they take it off of short sale so it's basically sitting in limbo.

Now, today, coincidentally, I have my 341 AND I get what is technically a short sale offer on the house (for 225k). Through reading the forum, I KNOW that a short sale can only cost me money at this point through a 1099 for the difference that BOA would HOPEFULLY forgive.

Not that I am remotely interested in doing this (except maybe to get the house out of my hands and into the new buyers), BOA informs me that as the house was included in bankrupty, NOTHING can and will be done with it until my bk is discharged (on 4/26/10 or sometime close to that) or until I request that it no longer be included.

Ugh - so I'll worry about the house for another 2 months and then I'll bug the heck out of BOA until they release me from it. Not that I think it will do any good but anyway - that's my story. I'll update if anything happens.

[DeadManCrawling]

Somewhat similar to our story, and sorry to hear it, but not surprised.

We stopped paying a year ago, filed CH 7 in December. BoA has not even requested lift of stay, they are so uninterested in our house. Not surprised. Mortgaged for 400k, they MIGHT be able to sell for 190k.

So we are stuck with it, and some peripheral costs, hoping there will be some movement toward foreclosure.

For complicated reasons, we moved in December, to another house, fully paid off. We had to move to meet some other legal timelines unrelated to our filing, but only had a 2 week period to make it all work. So we moved. And are still waiting for BoA to take this pile of bricks off our hands.

[loser104]

If one gets 1099'd at the end of the year due to a loan being forgiven thru either a short sale or DIL, can that amount be included in a ch.7 filing???

[hedgecat]

If one gets 1099'd at the end of the year due to a loan being forgiven thru either a short sale or DIL, can that amount be included in a ch.7 filing???

I doubt it. The 1099 is a notice to the IRS that you had some type of income that is taxable - even though it is certainly not anything like real income if it's coming from a short sale. It's not like you ever had that money in the first place.

You might have to include it in your filing (as some kind of income - maybe your lawyer can advise you) but I'd think the 1099 can only hurt you in a BK AND a tax situation.

[BCA2009]

I know telling someone else not to worry won't stop them from worrying, BUT, I'll do it anyway. Hedgecat, you don't need to worry about the house anymore. If you filed BK and are giving it up, wash your hands of it. You gave the Bank plenty of opportunities to work with you. They blew it. Stay in the house as long as you can, and save up money for your next place.

The question relating to the 1099. It sounds like a house was foreclosed during the year, then you filed BK at some point after that. First question: Did you include the bank in your BK to discharge any deficiency? If so, then your covered - complete form 982.

If they they did forgive the debt and therefore you didn't list them in your BK, you still avoid the income either of two ways:

1) there is a provision on form 982 for a "qualified residence". If it was your home, there is a specific exception just for what you did. You don't have to file BK to take advantage of this.

2) If it wasn't your home, then you should still qualify under the insolvency exception. You lost your home to foreclosure then still had to file BK, I'm pretty sure you would qualify for the insolvency exception.