Up until this point we've avoided answering The Question: "Where do we go from here?" We've been so focused on getting through the storm that we haven't been able to think about a day when are ARE actually through it. With an offer in hand and agreed upon, ready to go to the lawyers tomorrow to begin the negotiations with the bank, it's time for us to think about our next step more than in the hypothetical sense. This is when it gets real. This is when we have to decide if we're going to continue to have two full-time working parents, and if not, who's quitting and finding an evening/weekend job to make ends meet without forking out more for childcare than we expect to pay for rent monthly. This is when we have to decide if we're going to stay in our beloved town, close to the neighbors and friends that have become such a bedrock for our daily lives, or if we are going to move somewhere cheaper and/or closer to my office (assuming I stay working full-time) to save on time and commuting expenses. This is when we have to decide if having those ties close to us is more important than reducing my stress-level as a mom and as a commuter, if good friends and good schools are more important than an extra 60-90 minutes a day spent out of a car. This is when we have to decide if we're going to ride out this process to the last possible moment in our beloved home, leaving only when the closing date looms large and near, or if we're going to get ahead of the tide and set-out to create a new beloved, albeit rented, home, even if it means walking away from living rent-free for another month, or even several months. This is when we have to decide what else to cut from our already slashed budget to make ends meet as we move from shaky to solid ground again.
This is when we have to start asking and answering all of the hard questions. Thankfully, we realize that our decisions aren't set in stone. If we make a move in one direction, and we find it is the wrong path, we can correct it. However, some decisions, like what rental we choose, are easier undone than other decisions, like one of us quitting our relatively good jobs. When the lease is up on a rental we dislike, we can move. Annoying, but not life-altering. Giving up on jobs that do offer somewhat stable incomes and benefits - not so easy to walk away from in this economy. Even so, my heart cries out to be home more with my kids, finances be damned...which they would be should I quit. (sigh) Questions, questions, questions.
Thursday, September 23, 2010
Wednesday, September 22, 2010
Day 113 - A Light at the end of the tunnel...maybe
113 Days on the market. That's a lot of days to be in "show the house at any moment" mode, especially with three young kids and two full-time working, commuting parents. Exhausting. Tiring. Annoying. But it has apparently paid off. Yesterday afternoon we received an offer! I know nothing about the potential buyers except that they looked at the house twice last week (2 of 5 showings in 7 days last week!). The offer is pretty good - not top-notch - but good, and let's face it: beggars can't be choosers, right? We counter-offered today, mainly regarding which appliances we will leave (they want all, we want to take all but the stove and the dishwasher). I'm sure we can come to an agreement, though. So now the real fun and hard work begins: getting the bank to accept the offer.
I feel like I should take a few moments to better explain the short-sale process, because through-out this journey I've learned that many people don't really understand what the term "short-sale" really means. Some people actually think it means that the home-selling process is stream-lined, or shortened, and that couldn't be farther from the truth! I'm not an attorney or real-estate agent, but this is my take on all of the reading, consulting and interviewing agents and attorneys, and other research I have done over the past few months. (Obviously, if you're looking for hard and fast, complete and legally accurate information, I should not be your source. :) Talk to a real estate attorney and/or a knowledgeable Realtor for specific information.)
A short-sale is when the seller is short on funds to close the sale because the amount for which they can sell the home is less than the amount outstanding on their mortgage or mortgages, if more than one lender, and they lack the necessary capital to pay off the balance remaining. Generally speaking, a seller has to be delinquent on their mortgage payments in order for the bank to consider a short-sale approval, and they have to have experienced a substantial change in their lives that make it difficult or impossible for them to fulfill their obligation to the bank. There are exceptions to this, of course, but they are not common. At this point we are coming up on 120 days past-due and the offer we have received is for approximately $105,000 less than our mortgage balance. Since we don't have that kind of money laying around (if we did, we'd pay the mortgage - duh!), we must submit the offer to the bank and wait for them to respond in one of the following ways:
1.) take the offer as payment in full for our debt, forgiving the balance,
2.) take the offer as partial payment for our debt, reduce the balance remaining (forgiving a portion), and allow us to sign an unsecured note for difference, or
3.) reject the offer which would require us to either secure funding elsewhere to pay off the balance, to allow the home to go into foreclosure, or continue to solicit offers on the property in the hopes that one will come in to the banks liking before they get around to foreclosing.
There is an option #4, I suppose, in that the bank can counter-offer the buyer's offer, and let the buyer decide if they will accept the new purchase price; then the process would proceed with the options above. There are a lot of things that come into play in determining which way the bank will go, such as the amount they project they'd have to pay in fees to foreclose, time the home has been on the market, the balance remaining, and the local laws concerning their options for recourse on the loan. This last point is very important for us since we live in WA, which is what is often referred to as a "non-recourse" state. What this means is that the laws fall generally in favor of the seller not having to pay the balance above what a lender is able to recover from selling the property at auction or on the market following foreclosure. What that really means for us is that if the bank will not do option #1 above when they respond to the offer, then we are better off - credit hit aside - to allow the home to go into foreclosure. Again, this is not always the case, but in general it's how it works, and it is how our attorney has advised us to proceed should the bank be unwilling to forgive the balance of the mortgage.
How long does this take, you might ask? That is the $64,000 question, and it is entirely dependent upon the bank. Our buyer has given us 90 days to get a response from the bank. If the bank does not respond in that time, they can walk away from the deal. According to the attorney with whom we've consulted, we should expect for the bank to take close to 90 days to respond, for them to lose the offer and/or supporting documents at least twice, and to never speak twice to the same person at the bank. All in all, it's a messy system at best, and many banks, especially smaller entities like ours, are simply not equipped to deal with the high volume of these types of sales the housing-market crash and recession have spurred. We're hoping for a best case scenario which would be that the bank responds favorably in about 45-60 days. The buyer, and most banks, expect to close 30 days after the bank approves an offer. On the short end of the spectrum we could be closing sometime in November or December (Happy Holidays...). It's also not uncommon for this to drag out 6, 8, 10 months if the bank really drags it out and if buyer is willing to stick around that long. Realistically, we're probably looking at closing sometime in January or February.
So thank you for your prayers and support as we've worked through the insanity of the last four months to get to this point. Keep it coming, because that was the easy part, and we need it more now than ever. We're not out of the woods yet. Now....we wait some more.
I feel like I should take a few moments to better explain the short-sale process, because through-out this journey I've learned that many people don't really understand what the term "short-sale" really means. Some people actually think it means that the home-selling process is stream-lined, or shortened, and that couldn't be farther from the truth! I'm not an attorney or real-estate agent, but this is my take on all of the reading, consulting and interviewing agents and attorneys, and other research I have done over the past few months. (Obviously, if you're looking for hard and fast, complete and legally accurate information, I should not be your source. :) Talk to a real estate attorney and/or a knowledgeable Realtor for specific information.)
A short-sale is when the seller is short on funds to close the sale because the amount for which they can sell the home is less than the amount outstanding on their mortgage or mortgages, if more than one lender, and they lack the necessary capital to pay off the balance remaining. Generally speaking, a seller has to be delinquent on their mortgage payments in order for the bank to consider a short-sale approval, and they have to have experienced a substantial change in their lives that make it difficult or impossible for them to fulfill their obligation to the bank. There are exceptions to this, of course, but they are not common. At this point we are coming up on 120 days past-due and the offer we have received is for approximately $105,000 less than our mortgage balance. Since we don't have that kind of money laying around (if we did, we'd pay the mortgage - duh!), we must submit the offer to the bank and wait for them to respond in one of the following ways:
1.) take the offer as payment in full for our debt, forgiving the balance,
2.) take the offer as partial payment for our debt, reduce the balance remaining (forgiving a portion), and allow us to sign an unsecured note for difference, or
3.) reject the offer which would require us to either secure funding elsewhere to pay off the balance, to allow the home to go into foreclosure, or continue to solicit offers on the property in the hopes that one will come in to the banks liking before they get around to foreclosing.
There is an option #4, I suppose, in that the bank can counter-offer the buyer's offer, and let the buyer decide if they will accept the new purchase price; then the process would proceed with the options above. There are a lot of things that come into play in determining which way the bank will go, such as the amount they project they'd have to pay in fees to foreclose, time the home has been on the market, the balance remaining, and the local laws concerning their options for recourse on the loan. This last point is very important for us since we live in WA, which is what is often referred to as a "non-recourse" state. What this means is that the laws fall generally in favor of the seller not having to pay the balance above what a lender is able to recover from selling the property at auction or on the market following foreclosure. What that really means for us is that if the bank will not do option #1 above when they respond to the offer, then we are better off - credit hit aside - to allow the home to go into foreclosure. Again, this is not always the case, but in general it's how it works, and it is how our attorney has advised us to proceed should the bank be unwilling to forgive the balance of the mortgage.
How long does this take, you might ask? That is the $64,000 question, and it is entirely dependent upon the bank. Our buyer has given us 90 days to get a response from the bank. If the bank does not respond in that time, they can walk away from the deal. According to the attorney with whom we've consulted, we should expect for the bank to take close to 90 days to respond, for them to lose the offer and/or supporting documents at least twice, and to never speak twice to the same person at the bank. All in all, it's a messy system at best, and many banks, especially smaller entities like ours, are simply not equipped to deal with the high volume of these types of sales the housing-market crash and recession have spurred. We're hoping for a best case scenario which would be that the bank responds favorably in about 45-60 days. The buyer, and most banks, expect to close 30 days after the bank approves an offer. On the short end of the spectrum we could be closing sometime in November or December (Happy Holidays...). It's also not uncommon for this to drag out 6, 8, 10 months if the bank really drags it out and if buyer is willing to stick around that long. Realistically, we're probably looking at closing sometime in January or February.
So thank you for your prayers and support as we've worked through the insanity of the last four months to get to this point. Keep it coming, because that was the easy part, and we need it more now than ever. We're not out of the woods yet. Now....we wait some more.
Sunday, September 12, 2010
The Path to Now, Part 3
Continued from The Path to Now, Parts 1 & 2
The spring, summer, and early fall of 2008 passed fairly uneventfully. We were adjusting to being a two-working-parent household and having Mr. Four Walls' mom live with us, but financially we had stabilized. Don't get me wrong, it was tight, but it was doable. We we're making it, and had started in earnest to attack our credit card debt that had been hanging around so long it was almost a family pet. I downsized my car from the requisite Mom-mobile to a four-door compact to account for the long commutes and high-price of gas (that was the summer of $4+ per gallon of gas), as well as lowering the payment over $100 a month and reducing the insurance. Mr. Four Walls was working steadily, and we both received much-needed raises from our starting salaries. We knew eventually we should sell the house and down-size our expenses, but for the time-being we could make it, hoping to ride it out until values recovered a bit and we could break even. We weren't out of the woods, but we thought we were navigating through them, and every once in a while we caught glimpses of the pasture beyond. Then the season turned.
Mid-fall, I began not to feel well. It was more than just a cold, but we were so busy that I ignored it as much as I could. One morning in early December I woke up with a racing heart beat, and I couldn't ignore it any longer. It was a horrible feeling, like I had just ran a mile at full-speed hopped up on caffiene, but I had been asleep. The closest to feeling like that I had ever come before was when they had tried to stop my pre-term labor with Miss Florida, and the medication was horrible. Every few heart-beats my heart would jump, and then pause, and then jump. It was so scary. Mr. Four Walls took me to the ER, and thankfully we discovered that it was only a reaction to receiving a slightly incorrect dosage of medication for a different chronic condition that I've had for years. Very manageable and treatable, but it wiped me out for a couple of weeks, not to mention added the extra expenses of a trip to the ER and all the follow-up visits. Right about the time I started to feel a bit better, the huge snowstorm hit, leaving Mr. Four Walls essentially out of work. On top of that, he told me he wasn't sure but he thought he might be laid-off in the near future, and the week of Christmas he was. Merry Christmas, right?
All contractors in our area were, and are, still struggling to keep the work lined up, so it wasn't a complete surprise. They told him they expected to have another project for him just after the 1st of the year, so we resigned ourselves to the fact that Mr. Four Walls was taking an extended, unpaid holiday break. Not wanted, but not the end of the world. Two weeks turned into three, and then to four. I again started to feel really tired and "off," but knew that it wasn't my medication. I started trying to remember the last time I had been visited by my favorite aunt. I knew I had seen her in November, but could not recall for the life of me having a visit in December. Mr. Four Walls swore I had, and I believed him, chalking my lack of recall up to me being sick and barely functioning for the first half of December. By mid-January, however, I knew something was brewing. As I awoke the Saturday of MLK weekend I rolled over onto my stomach and about leapt out of bed in pain. I looked at Mr. Four Walls as he stood at the sink brushing his teeth.
"You have to go buy me a pregnancy test. Now."
He stood there looking at me like I was crazy. I had a Copper IUD, the statistically most effective form of birth control on the market, and in 5 years we had never had this issue. Even so, I made him go to the store right then and there, and he, being the loving and obedient husband he is, went without a fight. As he handed me the tests (a 2-pack - wise man) on my way into the bathroom, he told me I was crazy. Three minutes later....
....I knew nothing. The stupid test didn't work! Not even the control window registered anything. I got up and started the day, doing the usual Saturday morning chores and biding my time until I had to...um... pee. Mr. Four Walls still thought I was completely crazy and didn't even bother to come upstairs to our bedroom with me when I told him I was heading up to take the other test. Three minutes later....
....a faint positive. Very faint but definitely there. Alone, I sat on the edge of the tub for a few minutes, forcing myself to breathe in and out as I stared at the double line on the stick. I was so worried about how Mr. Four Walls would react. I was scared of another pregnancy. Obviously, it was not the best time for us financially, but my bigger concern had to do with how my previous pregnancy had ended: in a NICU with a teeny baby born at 32 weeks. The thoughts, fears, and questions flooded over me. How could we afford this baby? I hadn't even been at my job for a year. How would they react? Could I even carry this baby since I still had the IUD? 32 weeks is borderline for positive outcomes in the NICU. What if this one came sooner? It felt like I sat there forever. I was so shocked I didn't cry, just stared and tried to catch up to my racing mind. Finally, I called out downstairs and asked Mr. Four Walls to join me.
I was shaking, at least on the inside, as he came through the door. He had made it no secret that he wanted to be done with babies after our second was born, but had held off making it permanent to respect my wishes that we wait a few years to be sure. I had left the test sitting on the side of the tub, and asked him to go look at it while I sat on the edge of the bed, waiting for his reaction. He picked it up and stared at it in silence for a few seconds. I walked over to stand next to him.
"So two lines means you are, right?"
"Yes."
Silent pause.
He turned to me, wrapped his arms around my waist, smiled and said, "Ah, crap." I have never laughed so hard in my life! I kissed him and thanked him for being so kind. Then we truly began the steep descent toward losing the house, together.
I'll continue The Path to Now in yet another entry.
The spring, summer, and early fall of 2008 passed fairly uneventfully. We were adjusting to being a two-working-parent household and having Mr. Four Walls' mom live with us, but financially we had stabilized. Don't get me wrong, it was tight, but it was doable. We we're making it, and had started in earnest to attack our credit card debt that had been hanging around so long it was almost a family pet. I downsized my car from the requisite Mom-mobile to a four-door compact to account for the long commutes and high-price of gas (that was the summer of $4+ per gallon of gas), as well as lowering the payment over $100 a month and reducing the insurance. Mr. Four Walls was working steadily, and we both received much-needed raises from our starting salaries. We knew eventually we should sell the house and down-size our expenses, but for the time-being we could make it, hoping to ride it out until values recovered a bit and we could break even. We weren't out of the woods, but we thought we were navigating through them, and every once in a while we caught glimpses of the pasture beyond. Then the season turned.
Mid-fall, I began not to feel well. It was more than just a cold, but we were so busy that I ignored it as much as I could. One morning in early December I woke up with a racing heart beat, and I couldn't ignore it any longer. It was a horrible feeling, like I had just ran a mile at full-speed hopped up on caffiene, but I had been asleep. The closest to feeling like that I had ever come before was when they had tried to stop my pre-term labor with Miss Florida, and the medication was horrible. Every few heart-beats my heart would jump, and then pause, and then jump. It was so scary. Mr. Four Walls took me to the ER, and thankfully we discovered that it was only a reaction to receiving a slightly incorrect dosage of medication for a different chronic condition that I've had for years. Very manageable and treatable, but it wiped me out for a couple of weeks, not to mention added the extra expenses of a trip to the ER and all the follow-up visits. Right about the time I started to feel a bit better, the huge snowstorm hit, leaving Mr. Four Walls essentially out of work. On top of that, he told me he wasn't sure but he thought he might be laid-off in the near future, and the week of Christmas he was. Merry Christmas, right?
All contractors in our area were, and are, still struggling to keep the work lined up, so it wasn't a complete surprise. They told him they expected to have another project for him just after the 1st of the year, so we resigned ourselves to the fact that Mr. Four Walls was taking an extended, unpaid holiday break. Not wanted, but not the end of the world. Two weeks turned into three, and then to four. I again started to feel really tired and "off," but knew that it wasn't my medication. I started trying to remember the last time I had been visited by my favorite aunt. I knew I had seen her in November, but could not recall for the life of me having a visit in December. Mr. Four Walls swore I had, and I believed him, chalking my lack of recall up to me being sick and barely functioning for the first half of December. By mid-January, however, I knew something was brewing. As I awoke the Saturday of MLK weekend I rolled over onto my stomach and about leapt out of bed in pain. I looked at Mr. Four Walls as he stood at the sink brushing his teeth.
"You have to go buy me a pregnancy test. Now."
He stood there looking at me like I was crazy. I had a Copper IUD, the statistically most effective form of birth control on the market, and in 5 years we had never had this issue. Even so, I made him go to the store right then and there, and he, being the loving and obedient husband he is, went without a fight. As he handed me the tests (a 2-pack - wise man) on my way into the bathroom, he told me I was crazy. Three minutes later....
....I knew nothing. The stupid test didn't work! Not even the control window registered anything. I got up and started the day, doing the usual Saturday morning chores and biding my time until I had to...um... pee. Mr. Four Walls still thought I was completely crazy and didn't even bother to come upstairs to our bedroom with me when I told him I was heading up to take the other test. Three minutes later....
....a faint positive. Very faint but definitely there. Alone, I sat on the edge of the tub for a few minutes, forcing myself to breathe in and out as I stared at the double line on the stick. I was so worried about how Mr. Four Walls would react. I was scared of another pregnancy. Obviously, it was not the best time for us financially, but my bigger concern had to do with how my previous pregnancy had ended: in a NICU with a teeny baby born at 32 weeks. The thoughts, fears, and questions flooded over me. How could we afford this baby? I hadn't even been at my job for a year. How would they react? Could I even carry this baby since I still had the IUD? 32 weeks is borderline for positive outcomes in the NICU. What if this one came sooner? It felt like I sat there forever. I was so shocked I didn't cry, just stared and tried to catch up to my racing mind. Finally, I called out downstairs and asked Mr. Four Walls to join me.
I was shaking, at least on the inside, as he came through the door. He had made it no secret that he wanted to be done with babies after our second was born, but had held off making it permanent to respect my wishes that we wait a few years to be sure. I had left the test sitting on the side of the tub, and asked him to go look at it while I sat on the edge of the bed, waiting for his reaction. He picked it up and stared at it in silence for a few seconds. I walked over to stand next to him.
"So two lines means you are, right?"
"Yes."
Silent pause.
He turned to me, wrapped his arms around my waist, smiled and said, "Ah, crap." I have never laughed so hard in my life! I kissed him and thanked him for being so kind. Then we truly began the steep descent toward losing the house, together.
I'll continue The Path to Now in yet another entry.
MIA at 90+ days on market
Wow, it's been awhile since I posted. Life has just taken over, and I haven't had much time to sit and compose. The back-to-school rush coupled with lining up new childcare arrangements for all three kids, on top of a pretty heavy work-load at the office and seasonally-expected lengthening evening commutes have worked against me in the free-time department. I apologize if you've been looking for an update, and I've been MIA.
So, where are we on the house, you ask? Right where we were at the time of my last post, for all intents and purposes. The last week of August and the first week of September were good for showing volume, about a half dozen in a 12 day period, I think, but not much else. We even had our first "no-notice" showing a couple of Saturdays ago. That was fun, and I'm very thankful that I wasn't in the shower when the agents and their clients decided to walk into the house! We again, for the third time I believe, thought we had someone ready to make an offer, but they have disappeared. It's probably for the best, since I highly doubt the bank would have taken their low-ball offer, and they were going to offer the max for which they were approved. It probably would have been a waste of their time, but it also would have gotten the process started at the bank for us, and given us an idea of how much of a hit the bank is willing to take. We've been told they won't pre-approve a short sale, so we have no idea where they stand until we get an offer. If we get an offer....
So, where are we on the house, you ask? Right where we were at the time of my last post, for all intents and purposes. The last week of August and the first week of September were good for showing volume, about a half dozen in a 12 day period, I think, but not much else. We even had our first "no-notice" showing a couple of Saturdays ago. That was fun, and I'm very thankful that I wasn't in the shower when the agents and their clients decided to walk into the house! We again, for the third time I believe, thought we had someone ready to make an offer, but they have disappeared. It's probably for the best, since I highly doubt the bank would have taken their low-ball offer, and they were going to offer the max for which they were approved. It probably would have been a waste of their time, but it also would have gotten the process started at the bank for us, and given us an idea of how much of a hit the bank is willing to take. We've been told they won't pre-approve a short sale, so we have no idea where they stand until we get an offer. If we get an offer....
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