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[2008] Foreclosure Theory

gatkerson

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Three years ago I was talked into buying a timeshare with Fairfield now Wyndham. I purchased the introductory offer of only 146,000 points for $10,000 which was fine. Two years later my friends and I decided to use the timeshare and take a trip to Vegas where I was pressured into upgrading to 300,000 points which cost me $37,000. It has been a year now and I owe $35,000 and I never use it nor any of the other "perks" that come with it. This cost me over $600 a month. I've tried selling it and have had others try to sell it for me but no luck. After months of research I realize that my timeshare is maybe only worth about $9,000, and thats a big maybe. I've thought about turning it over to the bank and entering foreclosure, so I've been doing my research again. I find many people explaining what will happen but none of the people saying they have ever gone through foreclosure on a timeshare. I've done google searches trying to find anyone that has experienced a foreclosure on a timeshare, specifically Wyndham, but I cannot find anyone. Why is that?? I have a theory.....Maybe Wyndham is allowing owners to go into foreclosure on their timeshare and only taking a minor hit on their credit but in turn the owner is not allowed to speak of their experience. A gag order. Since Wyndham owns the loan, the owner goes into foreclosure, Wyndham takes the deed back, and they resale it for the same that I owed on it to begin with. I understand this is a stretch, I just want to hear from someone saying they have experienced a foreclosure on a timeshare and what happened to their credit, if they had to owe any after the property was sold or were they just free and clear. Someone please respond with their experience.
 

Blondie

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I have no actual experience with foreclosure but it sounds like you are giving Wyndham too much credit. Not sure of any company that lets folks out of paying big money and then slaps them with a gag order. Folks here routinely post of the danger to your credit score/rating if you stop paying. I imagine the first thing people here would say is contact Wyndham and see what sort of situation can be worked out for you regarding what you owe them. Of course defaulting on a loan will have dire consequences. Good luck with resolving this issue. Others here have been in the same boat, but I would guess they are reluctant to post it because they may be too embarrassed.
 

Talent312

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I would think that the creditor would actually prefer that others knew about the foreclosure as a warning. Usually, debtors in foreclosure are reluctant to speak about their experience due to the embaressment and humiliation.

Do not count on the court selling your TS or the holder of the mortgage buying it for anywhere near the balance of your debt. In all likelihood, the bid will be somewhere close to its true value, which will leave you liable for a sizeable deficiency.

A typical tactic of a debtor in foreclosure is to wait until a day or two before the summary judgment and then file bankruptcy, which has two effects -- 1) it stops the proceeding until the bankruptcy is discharged, and 2) it discharges the underlying debt so that no one can come after you for any deficiency that may be owed after the TS is sold.

The stain of a judgment and/or bankruptcy will likely prevent you from obtaining any new loans or credit, increase your insurance premiums, and make renting anything a crap shoot. However, people do survive it. There are ways to protect assets from enforcement of a judgment (other than bankruptcy), and local merchants may be willing to extend in-store credit.

In short, your life will not be as easy, but you'll live.
 

Carolinian

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Talk to a lawyer in the state involved. There are quirks in the law between states. Don't assume all of the details will be the same in one state as another. If Wyndham, the original seller, holds the paper rather than a third party, you may have a purchase money deed of trust which may have some more favorable treatment for you.
 

brobinso

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Analogy

Seems to me that one can draw an analogy to the current housing market in many parts of the country. Many people are "upside down" on their mortgages due to falling home values. They also have little or no equity in their homes. A great many of them are mailing the keys to the bank and walking away instead pay their mortgages. The stigma associated with doing that seems to be decreasing.

With a timeshare purchased from a developer, you are "upside down" the second you sign the paperwork. I suspect one could walk away from the timeshare, should after some analysis, that turn out to be the lessor of the evils.

IMHO
 

dougp26364

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You have a very bad theory IMO. Especially right now with the market being the way that it is.

In the 1980's I was divorced from my first wife. She took the house and the new car, then elected to never pay on them. My income alone was not sufficient to pay the bills but I tried. I fell behind.

One of the items at issue was a new car. The bank came after me since my name was on the title. Eventually, they did reposes the car, then sold it at auction for a fraction of what was financed. I thought I was out of the woods with just a ding on my credit report. That's not what happened.

A few weeks after they had disposed of the car I was informed that they were seeking a judgement against me for the remainder of the value of the loan. They were going after my paycheck in the form of a judgement and then garnishment. At that point I had no choice and ended up filing for bankruptcy to protect myself. A couple of years later my ex-wife and her new husband followed as they were now going after her income.

Timeshare's are not insured loans and the security on them has very little value. I'd almost bet they'll come after you for the money, even if they forclose on the property. This, IMO, is an extremely bad gamble to take. It's very possible that you'll end up without the timeshare but still have the joy of paying for it one garnished paycheck after another.
 

Talent312

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Timeshare's are not insured loans and the security on them has very little value. I'd almost bet they'll come after you for the money, even if they foreclose on the property... It's very possible that you'll end up without the timeshare but still have the joy of paying for it one garnished paycheck after another.
... which makes Bankruptcy a necessity in many cases. However, some states have exemptions that protect certain assets+income from creditor claims (debtors may have to affirmatively assert them).
For example, in Florida, a homestead cannot be seized (except for consensual liens on the homestead), the income of the "head of a household" cannot be garnished (but bank accounts can be attached). Thus, some debtors will "hide" their assets by purchasing mansions (with plastic furniture) and put their accounts in relatives' names.
 
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ruthlb

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You need to research what type of note you have- you might also find out that you are paying a unsecured personal debt- that is not tied to the timeshare. Especially since so many timeshares are not tied to real property but are like shares in a corporation or some type of stocks. You may not have anything to "turn in"- They can sue you, on the note- and then be able to garnish your wages- and the bad credit can put an end to your hopes of home ownership. rlb
 

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I appreciate all your comments and I can assure you that I am trying to do my research. The actual deed is located in Oceanside, California. I am not familiar with the laws in California.
I understand that some people, or most, would be embarassed to speak about their foreclosure however there are tons of people out there (like me) that are asking advice about foreclosure on a timeshare. With that said, one would have to assume that those people are close if not already upside down on their loan. One blog specifically states that a FF/WY owner was going through the same hardship as I and she responds a couple of times and then you never hear what happened or what she did.

http://www.tugbbs.com/forums/archive/index.php/t-51068.html

All I'm saying is if your brave enough to talk about getting ready to go into foreclosure, why not finish and let us all know how what the outcome was. Learning experience for them and those of us needing to know.
 

Harry

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Oh, I would talk about it anytime...

....All I'm saying is if your brave enough to talk about getting ready to go into foreclosure, why not finish and let us all know how what the outcome was. Learning experience for them and those of us needing to know.
If you were a member of TUG, you would have read many posts about this subject. Here is what happens the majority of time. You stop paying your obligation, which of course is a breach of contract. You get tons of letters and some may be from good people who get paid for writing them. When you do not respond, the timeshare (in your case an association) wants to get whatever they can out of their interest. A foreclosure has to be filed (in CA a simple procedure). You get notice and more letters. In most cases you do not appear. As indicated above, a summary judgment is filed and the world is noticed that you defaulted. Your credit score goes down substantially and you are considered a risk to everyone who sees your credit rating. Meanwhile, the timeshare gets your interest back and sells it again. You can always put a statement in with the credit rating companies telling your side of what happened. In these times, I would ignore your statement as a creditor.
 

gatkerson

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Harry, thanks for your response. I'm really not too concerned with my credit score, with the money I would be saving from not paying the timeshare mortgage every month I'm quite positive I would not have to borrow any money. I already have a home mortgage with a fixed rate, I have a dependable vehicle that is about to be paid off, and I have two credit cards that have zero balances with high credit limits. So my concern is, after I go into foreclosure, what happens to that loan? I owe $35000 and Wyndham can only sell it for $9000, will I still have to pay the $26000?
 

bnoble

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I think you have two choices.

One: write a letter to Wyn telling them you plan to default. Acknowledge that your credit score will be hurt by this, and inform them that you are reay to accept that consequence. Then, give them a choice: offer to convey the deed back to them, with Wyndham keeping all monies paid to date. Point out that, in the end, this will be the less expensive route for them. See what they say. You might wish to engage legal counsel to write that letter for you---I would.

Two: Learn how to make the best use of what you own. TUG is helpful for that.
 

janej

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I owe $35000 and Wyndham can only sell it for $9000, will I still have to pay the $26000?
I do not know for sure. But I think you would have to pay the $26000 unless they agree to take it from you and let you go. It is like a short sale. Unless you can get court order for bankruptcy protection, you can not walk away from a loan, right? I'd love to default on my condo if it only hurts my credit score. Half of the people in my community would do that actually if you check the purchase price vs. current sale price. I think Wyndham can go to court and get a judgment against you. They can then go to your employer and ask to take the money out of your paycheck.
 

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I agree with you, I just wonder why I can't find a single person (blog) that tells exactly what happens. Someone that has actually been through the experience and is willing to talk about it. It wouldn't bother me in the slightest to tell everyone that has a timeshare and needs to get rid of it for any reason about my experience with a foreclosure. There are probably ten's of thousands of people that need to get out of a timeshare and if a simple credit hit (which I've heard is only about 250 points) is all we'll take then screw it, they can have the timeshare back.....lesson learned.

Let me explain my view on timeshares. I'm not knocking timeshares at all. I think they're great!! DO NOT BUY DIRECT!!! Save yourself thousands of dollars and buy from Timeshare Adventures or EBAY or Craigslist even (there are many more).
 

Talent312

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I agree with you, I just wonder why I can't find a single person (blog) that tells exactly what happens. Someone that has actually been through the experience and is willing to talk about it.
In a past life, I did collections for a bank, including foreclosures. I can tell you that whoever holds the mortgage would most likely obtain a judgment for the $26000, then turn it over to a collections agency or attorney who will hound you with calls+letters, subpoena you for a deposition in aid-of-execution, and try to seize any visible assets and garnish your wages.

How far they go depends on how much they think they can recover. The fewer your unencumbered assets, the more judgment proof you will be. If your car is worth substantially more than what's owed, its likely to be taken.

To enforce a judgment, I had the Sheriff seize a guy's car and considered siezing his three horses, but the sheriff wasn't too keen on having to round them up and the cost of housing+feeding them was too much. But when the guy bought another car to replace the one that had been taken, I had that seized, too. He ended up having to ride his horses to town.
 

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But did you ever deal in timeshare foreclosures where the company owned the mortgage. See, this is what I don't understand. Wyndham owns the mortgage, they did not actually loan me any money, all they gave me was a "right to use" (which I cannot use because there is never any availability). I guess I think about this as I would a magazine subscription. I pay each month and whomever sends me a magazine, I don't pay - I don't get the magazine. I pay each month for the right to use a timeshare, I don't pay - I don't get to use the timeshare. Now I understand that the process is set up the same way as buying a house. But in my situation, the seller is also the mortgage holder and they're not losing anything. They will probably gain from it, selling it for 5 or 10 thousand more then what I owe on it.

Please don't think that I am disregarding what everyone is trying to explain, I appreciate the comments and will continue to read them. I just want to hear from someone with actual experience. I'm hoping that some of you others may be intriqued and want to find out. This might help hundreds maybe thousands of others who are thinking about this exact situation.
 

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Theory vs. practice

we have begun the "experience"... daily phone calls to work, cell and home... I answered a few of them at the beginning thinking that I would work with them but the people are asking me if I have sold my retirement accounts or have people to borrow from. They also gave me a lecture on "responsibility" like I choose to be person who has had family medical issues, job change, and a loss in income since I originally bought it. The "certified" letter mentioned losing the property and the monies paid but it also mentioned "or recover the monies owed." The non certified letter says "by whatever means necessary". When I called them months ago when I was evaluating options they said that after 90 days then we would be turned over to outside collections. Apparently, these must be the aggressive abusive people now calling. I am assuming that this is a loan based on a secured property which would be repossed. I don't believe that I signed anything that gave them rights to my house. With all of the harrasment, I plan to dig up the contract to read it more thoroughly. I too would be interested in hearing the experiences of others.
 

gatkerson

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CHG,
I apologize for all that you have gone through and the upcoming foreclosure you are about to face however I am interested to find out how it goes. Will you please keep me informed through email, gwa6@hotmail.com.
 

dwsupt

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wow I was lucky!

BAck in the early 80's, my wife and I were newly weds and not making much. Yes we were dumb enough to call the number on the post card and bought a TS in Branson after being grilled. Back then I think it only cost 10,000. Which was a lot to some one indebt up to their eyeballs with 2 kids to boot. After a few missed payments they called to see what was going on and I was honest and told them I couldn't do it, but was going to try to get a payment sent off. Well a little while later I was in the same boat again, unable to catch up and they called. Again I explained what was going on the nice person actually said " tell you what, we'll take it back" I had to sign a quit claim and they forgave the balance. Nothing on my credit. It is why I bought a StoneBridge TS 25 years later when I was wiser and a little richer. I appreciate what they did for me, and I bought their unit (although not from them- thats where the wiser part comes in) when I wanted one.
 

Talent312

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... the nice person actually said " tell you what, we'll take it back" I had to sign a quit claim and they forgave the balance. Nothing on my credit...
Decent treatment, indeed! These days, vultures go looking for bad debts to "buy up" (and plenty of creditors willing to sell them), just for the privilege of squeezing blood out of a turnip. Its become a much more greedy world.
 

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Harry, thanks for your response. I'm really not too concerned with my credit score, with the money I would be saving from not paying the timeshare mortgage every month I'm quite positive I would not have to borrow any money. I already have a home mortgage with a fixed rate, I have a dependable vehicle that is about to be paid off, and I have two credit cards that have zero balances with high credit limits. So my concern is, after I go into foreclosure, what happens to that loan? I owe $35000 and Wyndham can only sell it for $9000, will I still have to pay the $26000?
The problem with this plan is that your credit score is used for much more than securing a loan. You say you already have a fixed rate mortgage. That means you own a home, and with a mortgage you are required to carry homeowners insurance. That gets renewed every year, and each year your policy is sent to underwriting. Do you know what will happen to your insurance rates with such a low credit score? Up, up, up they go - on both your house and your car. And that's if they decide to keep your policy. You know the credit card you use to pay for the vacations you want to take - the ones that will no longer be prepaid? If you pay it off, you probably don't care about the interest rate, but what about the credit limit? With a much lower credit score, your credit limit is likely to be reduced.

They may also seek a judgement to collect what you still owe - minus the market value of what they take back. But remember that what you owe will increase by any legal fees involved in the forclosure process. Also, since there is no well-defined market value it's hard to say how much "credit" you will get for the week that is forclosed.

And you analogy to a magazine subscription is specious. This is not a subscription - you own a share of the property, much as a condo-owner owns a share of the common spaces within a condo complex. You inability to use you ownership stems not from their being nothing available, but from their being nothing that interests you available when you want to make your reservation. This suggests that perhaps you are waiting too long to make your reservations, and others are taking the units/weeks that you want. One of the dirty little secrets of a points system is that someone has to end up with the less desireable times.

Consider the points assigned to the full year use of a given unit is 100,000 with 10 weeks costing 5,000 and the remaining 40 weeks being 1,250 points (and 2 weeks unsold). The developer could sell 20 points packages for 5.0000 points, meaning everybody has enough points to secure one of those top 10 weeks. But once those 10 weeks are reserved, the only remaining availability is low-season weeks. If all owners are to use their full allotments of points, half the owners will be stuck with 4 low-season weeks each. Each might think he is entitled to one of those top 10 weeks, but nobody is.
 

dioxide45

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In a past life, I did collections for a bank, including foreclosures. I can tell you that whoever holds the mortgage would most likely obtain a judgment for the $26000, then turn it over to a collections agency or attorney who will hound you with calls+letters, subpoena you for a deposition in aid-of-execution, and try to seize any visible assets and garnish your wages.
If the loan is secured by the TS deed then the only thing they can take is the TS. Their only recourse is that property. If what you suggest were the case, then all mortgage lenders out there would be getting judgements and taking all assets of defaulted homeowners. That isn't happening. A creditor can get a judgement on unsecured debt and garnish wages but secured debt is a different thing alltogether.
 

Talent312

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If the loan is secured by the TS deed then the only thing they can take is the TS. Their only recourse is that property. If what you suggest were the case, then all mortgage lenders out there would be getting judgements and taking all assets of defaulted homeowners. That isn't happening. A creditor can get a judgement on unsecured debt and garnish wages but secured debt is a different thing alltogether.
Not so fast, my fine feathered friend. This is true only if the property was located in one of the few states that proscibe deficiency judgments. In most states, a creditor may return to court after a forced sale for a judgment reflecting the amount by which the debt exceeds the proceeds of the sale (in some states, its fair-market-value). The foreclosure only satisfies the underlying debt only to the extent of the proceeds (or FMV). Thus, a debtor is not necessarily relieved of the underlying debt simply becuz the creditor elected to enforce its lien. Most mortgages contain clauses to that effect.

Look up the term "deficiency judgment." Here's one:
"An assessment of personal liability against a mortgagor for the unpaid balance of the mortgage debt when the proceeds of a foreclosure sale are insufficient to satisfy the debt... In some jurisdictions, deficiency judgments are proscribed in certain situations, while in others, they are limited to the amount by which the debt exceeds the fair market value of the property."

A statement from www.foreclosurefish.com :
Being sued for a deficiency judgment after foreclosure seems to be one of the greatest worries of homeowners in danger of losing their homes. Not only are they behind by thousands of dollars on their mortgage payment and facing a public auction of their house, the ordeal may continue even longer.

If they are sued for a deficiency judgment for the amount that the bank does not recover from the sale, then they may have to pay tens of thousands of dollars years into the future for their one financial hardship that led to foreclosure... Not all states, though, even allow mortgage companies to sue homeowners after the foreclosure process has ended, so homeowners should consult their foreclosure state laws before worrying about the possibility.
 
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dioxide45

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Not so fast, my fine feathered friend. This is true only if the property was located in one of the few states that proscibe deficiency judgments.
While true in theory, there are states that are non-recourse that don't allow the lender to pursue deficiency judgments. Even in those states where they do allow it, many lenders don't bother with it due to the cost and the fact that there probably are not many assets left after a foreclosure. This may be different with a timeshare where the borrower may have a home. Though in this market many people don't have any equity in their home so there isn't much for the lender to go after.
 
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