Help! My mortgage is underwater

I owned originally at St. Augustine. It was paid for and I was quite content. Then they talked me into "upgrading" by trading in my St. A for two Vistana timeshares. One is at Lakes, the other Fountains.
Well, my maintenance fees are crazy! They want $500+ for each and I only own EVERY OTHER YEAR. When you figure in trading fees, it costs even more! And I've moved to Kissimmee- which is down the road...So, with all the trades etc. final result - One is paid for, the other I owe $8000 on. I tried to get a deed back and they blew me off. they said I could sell it. If I sell the paid-for one, I would be lucky to get 2K, and the new one 2K which still leaves me $4000 in debt with no timeshare. My job was outsourced and I am living on $1200 a month and my home rent is $500!

I even considered declaring bankruptcy, but that is pretty extreme.

If they take it back they can sell it again to someone else, so what is their problem? My latest plan is to get a lawyer to huff and puff and threaten them. But, I think I should sell the one that's paid for FIRST and use that money to pay off some debt. That way they can't seize it as payment for the other one!
Any suggestions?

I hate to be the bearer of bad news, but SVR Lakes and Fountains have no resale value, because the Staroptions will not transfer upon resale.

I don't think an attorney can help you, unless you are ready to declare bankruptcy - it sounds like you might want to have a consultation about that.

I agree with DeniseM. Neither is worth anything on the resale market. Sorry.

The best advice is to get a lawyer and ask his/her advice. Certainly try to use the VOI that you've paid off as a sweetener to get them to take them both back. Just hearing from a lawyer may make Starwood realize that you're serious.

If that doesn't work, then I'd work on giving away the one I've paid off asap. It's not worth anything, but it's possible you'll be able to find someone willing to take it over for the cost of the transfer fee.

Then if I absolutely couldn't afford to keep it, and the lawyer doesn't know of any other better options, I'd notify Starwood of my intention to abandon the 2nd one. This will come at a cost. Expect to have bill collectors harrass you and your credit score to take a hit. It's a legimate debt and walking away is not to be done lightly.

Starwood should be ashamed of themselves for allowing some unscrupulous salesman to talk you out of the VOI you already owned outright, and into not one, but two additional contracts, which meant tens of thousands of dollars in additional debt. That was an incredibly bad deal. But you have to take some responsiblity here. You signed the contract, and let the recission period pass, all without doing even a minimum amount of research, which would have shown you that the resale value of these VOIs is almost zero. And while I don't care that Starwood will lose out on that $8k, I do feel badly for other Vistana owners. Because Starwood will simply bill them for your uncollected MFs.

Sigh.

To the OP, dont for one second feel bad about other owners. Youre talking cents per owner while you are in fiancial distress. Worry about your own situation.

An attorney is unlikely to help, unless its to file for bankruptcy which might be your best option if the resort wont accept the deed back. Defaulting on maintanence fees is one thing but defaulting on a loan is a different story. I would consult with a bankruptcy attorney to see what options you have in that regard.

Whatever you do, don't fall victim to the companies who claim they have a buyer for your timeshare and all you have to do is send them some cash upfront. They do not have a buyer, no matter how much they insist they do. Never pay an upfront fee to sell a timeshare.

As others have mentioned. You would be VERY unlikely to be able to sell a paid off week for $2000. You would be very lucky to sell it for $500 and more likely would have to give it away or even pay part of the closing costs.

slgibbs1 said:

I owned originally at St. Augustine. It was paid for and I was quite content. Then they talked me into "upgrading" by trading in my St. A for two Vistana timeshares. One is at Lakes, the other Fountains.
Well, my maintenance fees are crazy! They want $500+ for each and I only own EVERY OTHER YEAR. When you figure in trading fees, it costs even more! And I've moved to Kissimmee- which is down the road...So, with all the trades etc. final result - One is paid for, the other I owe $8000 on. I tried to get a deed back and they blew me off. they said I could sell it. If I sell the paid-for one, I would be lucky to get 2K, and the new one 2K which still leaves me $4000 in debt with no timeshare. My job was outsourced and I am living on $1200 a month and my home rent is $500!

I even considered declaring bankruptcy, but that is pretty extreme.

If they take it back they can sell it again to someone else, so what is their problem? My latest plan is to get a lawyer to huff and puff and threaten them. But, I think I should sell the one that's paid for FIRST and use that money to pay off some debt. That way they can't seize it as payment for the other one!
Any suggestions?

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Starwood does do deed backs on weeks where there is a balance due on the mortgage. I'm sure they won't take back the one that is paid in full, but you should contact them about a deed in-lieu of foreclosure for the week that you still own $8,000 on. After all, if they refuse to take it back now, you'll just default on the mortgage payments and they'll be forced to foreclose and take it back later.

gmarine said:

To the OP, dont for one second feel bad about other owners. Youre talking cents per owner while you are in fiancial distress. Worry about your own situation.

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FYI, 2 bdrm lockoff owners at SVV Bella were charged $118.69 this year to cover bad debt. That's 9% of the total MFs. (The budget is printed on the back of your annual dues statement) It well may be higher at voluntary resorts because Bella and Key West are mandatory phases, which gives owners who are in financial straits an option to actually sell it.

So it's not "cents" we're talking here. It's a hundred bucks.

Does that mean she shouldn't put herself first? No. Sometimes people lose their jobs and they have to make tough decisions. But they should also be aware that those unpaid MFs will be borne by their fellow owners, not the big bad corporation. That's why I'd advise anyone who decides to abandon their TS to notify management of that decision, so that they can foreclose immediately (or offer to take the deed back) vs waiting the 12 months to 3 years it takes some of these HOAs to finally foreclose.

That $118 is the amount for ALL defaults, not per default. The amount per delinquent account is, like I said, CENTS.

I find incredible that people come to TUG for help while in financial distress and they are made to feel bad about possibly causing owners a few cents each.
If you want to do something useful, encourage your HOA to accept deedbacks from owners who cant afford to keep the units rather than letting them go into default with unpaid fees for years which end up costing owners more money.
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George - I believe that owners were EACH charged an additional $118 on their maintenance bee bill for defaults - so it actually was $118 per owner, not a few cents per owner.

It sounds like the OP needs some real help, and I don't begrudge him that, but I think the amount owners pay for defaults, is worth noting as well.

[On my own SVR timeshare, I paid $53.11 extra for "bad debt" on the 2015 MF bill for a 2 bdm., and at SDO, it was $113.77 for a 2 bdm. Even at the Westin Ka'anapali there was a charge of $9.93 on my MF bill.]

As far as encouraging the resort to accept deed backs, we all know that Starwood has the BOD's under their control, and they will only accept deed backs if it benefits Starwood. My guess is that they have more inventory than they can sell at the Florida resorts.

DeniseM said:

George - I believe that owners were EACH charged an additional $118 on their maintenance bee bill for defaults - so it actually was $118 per owner, not a few cents per owner.

It sounds like the OP needs some real help, and I don't begrudge him that, but I think the amount owners pay for defaults, is worth noting as well.

[On my own SVR timeshare, I paid $53.11 extra for "bad debt" on the 2015 MF bill for a 2 bdm., and at SDO, it was $113.77 for a 2 bdm. Even at the Westin Ka'anapali there was a charge of $9.93 on my MF bill.]

As far as encouraging the resort to accept deed backs, we all know that Starwood has the BOD's under their control, and they will only accept deed backs if it benefits Starwood. My guess is that they have more inventory than they can sell at the Florida resorts.

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Denise, yes the portion of the maintenance fees for delinquent accounts is $118. But that isnt due to one delinquent account. Its for all accounts which is going to amount to cents for each delinquent account. So the OP themselves might be costing each owner a few cents by not being able to pay his fees.
What I'm saying is it doesnt help to make the person feel bad because they cant pay the bills. I'm sure they feel bad enough without being told that they are costing other owners money.

IMO, the biggest problem is the resorts refusing to accept deed backs and instead letting the units go into default for years before eventually offering to accept the deed back anyway. It ends up costing owners more money yet the vast majority of owners do and say nothing about it to their HOAs.

George - I don't see any post that is trying to make the OP feel bad?

Again - do you really think the Starwood BOD's have any genuine control over the situation? I don't - it is all 100% Starwood driven.

If Starwood wants the units - they will take them back - if Starwood doesn't want the units, they won't.

BTW - If I were the OP, I would do whatever it takes to get out of his TS (legally).

However, that doesn't make me any happier to pay the additional fees on my MF Bill.

YMMV

DeniseM said:

George - I don't see any post that is trying to make the OP feel bad?

Again - do you really think the Starwood BOD's have any genuine control over the situation? I don't - it is all 100% Starwood driven.

If Starwood wants the units - they will take them back - if Starwood doesn't want the units, they won't.

BTW - If I were the OP, I would do whatever it takes to get out of his TS (legally).

However, that doesn't make me any happier to pay the additional fees on my MF Bill.

YMMV

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Denise: 1
George: 0
OP: difficult choice ahead (deed back is best option, IMO)


Sent from my iPad

DeniseM said:

George - I don't see any post that is trying to make the OP feel bad?

Again - do you really think the Starwood BOD's have any genuine control over the situation? I don't - it is all 100% Starwood driven.

If Starwood wants the units - they will take them back - if Starwood doesn't want the units, they won't.

BTW - If I were the OP, I would do whatever it takes to get out of his TS (legally).

However, that doesn't make me any happier to pay the additional fees on my MF Bill.

YMMV

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Read the last two sentences of post 3 in this thread. It tells the OP that Starwood will bill other owners for their fees. IMO there is no reason to say that except to make the OP feel bad that they cant pay their fees.

Have you let HOA management and Starwood know that you think they should accept deed backs because you dont like paying for delinquent accounts ?

I have complained to Starwood and the HOAs of my resorts for years that they should accept deed backs rather than wait years to foreclose.

If everyone walked away - then SVO would be force to deal with them, but until that Hell Freeze... the HOA (Owners... Us) is on the hook and MFs are increased, causing more more to walk away, and then more and more as the MFs get out of control.

IMO
This is a big issue for SVO Resorts that are SVN Voluntary, and have same MF/VOI that is season independent (Silver pay same MF as Plat). It is a very unstable model - especially when MFs increase much higher than the comparable rent, or during economic weakness.
IMO

gmarine said:

Have you let HOA management and Starwood know that you think they should accept deed backs because you dont like paying for delinquent accounts ?

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Unfortunately, I don't think it's that simple:

I am afraid that at some of the older, less popular resorts, there would be an avalanche of deed backs - probably 20-30% or higher.

Who pays the maintenance fee on these deeded back weeks? Not Starwood - owners would have to pay for them.

What does the HOA do with those weeks? Especially off-season weeks like summer at SDO that are going to be difficult to resale.

The problems is that accepting deed backs would dump them right in the HOA's lap - Starwood would cherry pick the best weeks and resale them, but what about the weeks that will sit around forever...

DavidnRobin said:

If everyone walked away - then SVO would be force to deal with them, but until that Hell Freeze... the HOA (Owners... Us) is on the hook and MFs are increased, causing more more to walk away, and then more and more as the MFs get out of control.

IMO
This is a big issue for SVO Resorts that are SVN Voluntary, and have same MF/VOI that is season independent (Silver pay same MF as Plat). It is a very unstable model - especially when MFs increase much higher than the comparable rent, or during economic weakness.
IMO

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DeniseM said:

Unfortunately, I don't think it's that simple:

I am afraid that at some of the older, less popular resorts, there would be an avalanche of deed backs - probably 20-30% or higher.

Who pays the maintenance fee on these deeded back weeks? Not Starwood - owners would have to pay for them.

What does the HOA do with those weeks? Especially off-season weeks like summer at SDO that are going to be difficult to resale.

The problems is that accepting deed backs would dump them right in the HOA's lap - Starwood would cherry pick the best weeks and resale them, but what about the weeks that will sit around forever...

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DavidRobin nails it here. This is the inevitable tail spin I sometimes write about. Any resort that has undesirable weeks that were sold by the developer convincing people that the week they own doesn't matter is going to run into this problem eventually and that day is drawing nearer for many resorts.

As more and more owners can't or don't want to pay MFs and the weeks are so lousy they can't be given to new owners, those resorts will go down in flames.

When many folks bought timeshares they didn't see this problem but anyone who can't see it now and continues to own at these resorts have no one to blame but themselves when they have to pay for the delinquent accounts.

Why would you want to own at a resort that can't be given away? It may be time to get out any way you can no matter how much you love your resort.

gmarine said:

Read the last two sentences of post 3 in this thread. It tells the OP that Starwood will bill other owners for their fees. IMO there is no reason to say that except to make the OP feel bad that they cant pay their fees.

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I've told the OPer, and anyone else who happens to read this thread, the TRUTH. Just like I'd tell someone who paid Starwood $20k for SVR/SVV that they got hosed, even if it makes them feel really, really badly. Being allowed to speak the truth about the good, bad and ugly in the TS industry is what makes TUG a great place to seek advice.

FTR, I told the OPer the truth about what happens when people bail for three reasons:

1) The OPer isn't the only person who will read this thread. Anytime someone talks about bailing, I consider it my duty to let them know the truth, that they're not just sticking it to the developer, but to their fellow owners. Many people honestly don't know this. And while they'd cheerfully stick it to the developer, they might (and should) think twice with the knowledge that they're harming innocent people.

2) To give her a very valid reason for notifying the developer of her decision instead of simply stopping payment and waiting for them to foreclose. If you must harm someone, at least do what you can to mitigate that harm. Narrowing that foreclosure window as much as possible is the most ethical thing to do.

3) Since I'm advising the OPer to abandon their TS, on a board frequented by TS owners, I want to acknowledge that I realize that my advice will come at a cost to them. I don't offer such advice lightly, nor would I ever dismiss it as being "just a few cents."

Have you let HOA management and Starwood know that you think they should accept deed backs because you dont like paying for delinquent accounts ?

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Part of the reason that it took me an hour to save my emails from Starwood (because they are switching to a new system and the archived emails would be destroyed) is because I communicate with them frequently about ways that I think that they can improve. My biggest, and most vociferous complaint, is that the HomeOWNERS Association doesn't represent the OWNERS. It is controlled by Starwood, and there's very little we can do about it because they control all uncast proxies. Were it actually controlled by owners, I cannot guarantee that they'd accept deed backs, but I can guarantee you that it wouldn't take three years to foreclose on non-paying owners.

Besides that, putting pressure on the HOA will do nothing to change the OPer's options as her MFs are due now.

LisaRex said:

FYI, 2 bdrm lockoff owners at SVV Bella were charged $118.69 this year to cover bad debt. That's 9% of the total MFs. (The budget is printed on the back of your annual dues statement) It well may be higher at voluntary resorts because Bella and Key West are mandatory phases, which gives owners who are in financial straits an option to actually sell it.

So it's not "cents" we're talking here. It's a hundred bucks.

Does that mean she shouldn't put herself first? No. Sometimes people lose their jobs and they have to make tough decisions. But they should also be aware that those unpaid MFs will be borne by their fellow owners, not the big bad corporation. That's why I'd advise anyone who decides to abandon their TS to notify management of that decision, so that they can foreclose immediately (or offer to take the deed back) vs waiting the 12 months to 3 years it takes some of these HOAs to finally foreclose.

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As you say the other owners are the ones hurt by higher mf in the case of default. The HOA is the other owners. So to my way of thinking the HOA owes it to themselves to craft the solution to the problem of defaults. They need a resale/rental program to deal with defaults.

If an immediate foreclosure is the best outcome for the HOA when someone has no other choice but default, why dont they agree to a deed in lieu of foreclosure, ie just take it back...there going to get it anyway

So, if we owners pay for the defaults and apparently unused weeks, does our HOA rent out those unused weeks or at least cover some of the costs?

Sicnarf said:

So, if we owners pay for the defaults and apparently unused weeks, does our HOA rent out those unused weeks or at least cover some of the costs?

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I think they try but the give it to Starwood to rent. Starwood probably rents their own units first. They take something like 30-40% of the top as a commission for renting the units when they do rent. They can rent as little as 1 day out of the 7. Housekeeping and usually daily housekeeping (since it is rented on a per day basis through the hotel site) is taken out of the rental money and the remaining goes to the HOA.

People are confusing SVO with the HOA... they are 2 separate indenties.
(Other than SVO controls the HOA via puppet members and quorum regulations that cannot be attained due to lack of Owner participation - for multitude of reasons)

Just to clarify. I am current on the Maintenance fees. I am only talking about the original loan.
Good advice about just letting them go back to developer. I am not too worried about my credit at this point in my life, since I am not planning on buying anything in the next 20 years.
And moving to Kissimmee has pared down my living expenses considerably.

gmarine said:

IMO, the biggest problem is the resorts refusing to accept deed backs and instead letting the units go into default for years before eventually offering to accept the deed back anyway. It ends up costing owners more money yet the vast majority of owners do and say nothing about it to their HOAs.

Click to expand...

The biggest problem is people are able to default with little recourse. Other countries defaults follow you for a lot longer then the 7 years in the US if not eventually paid.

Accepting all deed backs would be great but some resorts cannot handle all the inventory.

slgibbs1 said:

Just to clarify. I am current on the Maintenance fees. I am only talking about the original loan.
Good advice about just letting them go back to developer. I am not too worried about my credit at this point in my life, since I am not planning on buying anything in the next 20 years.

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Thanks for coming back. I've heard reports that more companies are planning to start hiring again this coming year, so I hope that 2015 finds you fully employed again.

Be sure you fully understand the impact to your credit rating. Some employers run credit checks on prospective employees before they hire. A low score will certainly impact your ability to lease or borrow for a car, and it may significantly increase the interest rate you'll pay on credit cards. Most landlords check credit scores these days, too. (Don't know if you own or rent.)

Not trying to scare you here, but I do want you to be fully informed about the consequences of abandoning these timeshares.

re MFs: We're talking about MFs on the TS that you will abandon. MFs will remain unpaid until Starwood actually forecloses on the property and finds a new buyer. In some cases they are taking years to do this. (If you have time, please come back and let us know how long it took Starwood to foreclose, or whether they offered a deedback when you informed them of your decision to abandon it.)

Also, if you plan on keeping the already paid VOI (and paying its MFs), be sure that there isn't language in the contract that designates that any funds received will be used to satisfy delinquencies first. IOW, make sure that if you pay $$ towards Augustine's MFs, that those funds won't be redirected towards paying your delinquent loan on Fountains. I'm not certain that they legally do this across one contract, let alone two, but I cannot be certain that they can't, either.

Your cleanest option would be to find a taker for the paid VOI BEFORE defaulting on the loan OR MFs for either.