Intent to Surrender Property, Lender Process

[bsgreek]

Hello,

Live in Florida and filed Chapter 7 on 4/17/09. Surrendering the House. There is a Co-Owner on the deed, he is not part of the BK, not on the note, just on the mortgage. He agrees to surrender the property. The house insurance has expired. Must leave in a few weeks to take care of family in California. So far no indication that a motion to lift the automatic stay has been filed by Secured Creditors so they can start foreclosure proceedings.

?1. Anyone know the process that will occur with the Lender considering the Co-Owner is on the deed?

?2. Does my filing of the INDIVIDUAL DEBTOR'S STATEMENT OF INTENTION to surrender the house mean anything in relation to Deed ownership still in our names? Is there liability with this situation I should be concerned with?

Thanks so much for any responses

With Gratitude

Bob

[justbroke]

1. Anyone know the process that will occur with the Lender considering the Co-Owner is on the deed?

Since it's the Note which makes you financially responsible for the debt, and the co-owner is not on the Note, then the Lender would just name the co-owner as a co-defendant in the foreclosure lawsuit, as required by underlying State non-bankruptcy laws.

2. Does my filing of the INDIVIDUAL DEBTOR'S STATEMENT OF INTENTION to surrender the house mean anything in relation to Deed ownership still in our names? Is there liability with this situation I should be concerned with?

You would surrender the property and the lender would proceed to enforce it's security interest in the property by foreclosing (or exercising its rights under a power of sale clause). The foreclosure lawsuit will require them to notify all owners, which would include the co-owner (who is not on the Note so has no financial responsibility).

In the end, you are surrendering "your" particular interest in the property. Whether the lender has any recourse against the co-owner would be based on what's in the Mortgage (Deed of Trust). Generally though, this recourse is a foreclosure action or a "Power of Sale" clause in the Mortgage or deed of trust.

As always, I'd consult an attorney.

[bsgreek]

Since it's the Note which makes you financially responsible for the debt, and the co-owner is not on the Note, then the Lender would just name the co-owner as a co-defendant in the foreclosure lawsuit, as required by underlying State non-bankruptcy laws.

You would surrender the property and the lender would proceed to enforce it's security interest in the property by foreclosing (or exercising its rights under a power of sale clause). The foreclosure lawsuit will require them to notify all owners, which would include the co-owner (who is not on the Note so has no financial responsibility).

In the end, you are surrendering "your" particular interest in the property. Whether the lender has any recourse against the co-owner would be based on what's in the Mortgage (Deed of Trust). Generally though, this recourse is a foreclosure action or a "Power of Sale" clause in the Mortgage or deed of trust.

As always, I'd consult an attorney.

Thanks so much for the response. I do have a BK attorney but getting answers is like pulling teeth.

Any idea what the lender will require to transfer title (like a quick claim deed, etc.) or is a Summary Judgment accepted as part of the foreclosure suit adequate to transfer title.

I checked the Mortgage and regarding the Co-Owner it says this:

Any Borrower who co-signs this Security Instrument but does not execute the Note (a "co-signer"): (a) is co-signing this Security Instrument only to mortgage, grant and convey the co-signer's interest in the Property under the terms of this Security Instrument; (b) is not personally obligated to pay the sums secured by this Security Instrument; and (c) agrees that Lender and any other Borrower can agree to extend, modify, forbear or make any accommodations with regard to the terms of this Security Instrument of the Note without the co-signer's consent.

So this indicates to me that the action by the Lender would be conveyance of his interest in the Property. Am I reading that right?

Also, any concern with surrending the property before any foreclosure suit is filed?

Much Thanks

[OhioFiler]

You filed in April and you're not discharged yet? What is the delay?

[justbroke]

Any idea what the lender will require to transfer title (like a quick claim deed, etc.) or is a Summary Judgment accepted as part of the foreclosure suit adequate to transfer title.

If this is Florida, and they proceed with foreclosure, you'll get a lis pendens notification. That's basically the foreclosure. The lis-pendens (Latin for pending lawsuit) would name your co-owner as a co-defendant, as well as any HOA or unnamed renters residing there (anyone over 18).

I checked the Mortgage and regarding the Co-Owner it says this... So this indicates to me that the action by the Lender would be conveyance of his interest in the Property. Am I reading that right?

No, conveyance is what the Mortgage did when it was signed. Your co-owner (who signed the Mortgage) and you have conveyed your rights to be governed by the Mortgage (Deed of Trust). This makes your interest subordinate to those of the Mortgage holder as governed by the Mortgage (Deed of Trust). (This is what allows them to foreclose on the property. In other words, you basically signed to agree that the Mortgage or Deed of Trust, controls ownership. You never actually lose an ownership interest in the property unless and until the Mortgagor forecloses on the Mortgage or exercises a power-of-sale clause in the Deed of Trust.)

The lender would exercise it's right to accelerate and foreclose upon the Mortgage by a different clause in the Mortgage (Deed of Trust). The lender would just pursue foreclosure.

The Mortgage was well written and designed to not obligate anyone who signed the Mortgage (Deed of Trust) with the Note.

That's all it means.

[bsgreek]

If this is Florida, and they proceed with foreclosure, you'll get a lis pendens notification. That's basically the foreclosure. The lis-pendens (Latin for pending lawsuit) would name your co-owner as a co-defendant, as well as any HOA or unnamed renters residing there (anyone over 18).

No, conveyance is what the Mortgage did when it was signed. Your co-owner (who signed the Mortgage) and you have conveyed your rights to be governed by the Mortgage (Deed of Trust). This makes your interest subordinate to those of the Mortgage holder as governed by the Mortgage (Deed of Trust). (This is what allows them to foreclose on the property. In other words, you basically signed to agree that the Mortgage or Deed of Trust, controls ownership. You never actually lose an ownership interest in the property unless and until the Mortgagor forecloses on the Mortgage or exercises a power-of-sale clause in the Deed of Trust.)

The lender would exercise it's right to accelerate and foreclose upon the Mortgage by a different clause in the Mortgage (Deed of Trust). The lender would just pursue foreclosure.

The Mortgage was well written and designed to not obligate anyone who signed the Mortgage (Deed of Trust) with the Note.

That's all it means.

Thanks justbroke, I appreciate your time.

[bsgreek]

You filed in April and you're not discharged yet? What is the delay?

Filed 4/17/09
341 meeting 5/27/09
Trustee objected to exempt personal property value 2 weeks later.
Appraiser valued personal property 6/19/09
Judge entered order substaining trustee's objection 6/22/09
Notice fixing deadline to file a proof of claim on 6/22/09 with a deadline of 9/24/09

[justbroke]

So how much are we talking (in non-exempt personal property)?

[bsgreek]

So how much are we talking (in non-exempt personal property)?

I don't know for sure, as I am waiting on a copy of the appraisal report from 6/19/09.

Also, the Trustee objected to the value of my car (2000 Camry which I own outright). Trustee put value at $8,000 (NADA). I have a car appraisal of $5,700 which was submitted to the trustee.

Waiting on Trustee now.

My total exemptions in Florida are $1,000 for vehicle and then the wildcard exemption of $4,000. So if the Trustee accepts the car appraisal then it will be $700 plus the personal property appraisal.

I would estimate around $1,500. I plan on surrendering most of my personal property except the car.

[justbroke]

Also, the Trustee objected to the value of my car (2000 Camry which I own outright). Trustee put value at $8,000 (NADA). I have a car appraisal of $5,700 which was submitted to the trustee.

If you have an appraisal from some bonafide car auction or dealer (like CarMax), then you should be fine.

My total exemptions in Florida are $1,000 for vehicle and then the wildcard exemption of $4,000. So if the Trustee accepts the car appraisal then it will be $700 plus the personal property appraisal.

Since you're surrendering your home...

First, you have a $1,000 vehicle exemption. Second, you have a $1,000 wildcard exemption (Florida Constitution Title X, Sec. 4).

Third, since you're surrendering your home, you also get another Statutory exemption of $4,000 (F.S. 222.25(4)). (Note: the actual sections of code may be different as I'm doing this from memory.)

I would estimate around $1,500. I plan on surrendering most of my personal property except the car.

I venture that you have $1,000 for the car, plus $5,000 in wildcard exemptions (since you're giving up the home).

So, it may be $500 or less that is non-exempt!

[bsgreek]

If you have an appraisal from some bonafide car auction or dealer (like CarMax), then you should be fine.

Since you're surrendering your home...

First, you have a $1,000 vehicle exemption. Second, you have a $1,000 wildcard exemption (Florida Constitution Title X, Sec. 4).

Third, since you're surrendering your home, you also get another Statutory exemption of $4,000 (F.S. 222.25(4)). (Note: the actual sections of code may be different as I'm doing this from memory.)

I venture that you have $1,000 for the car, plus $5,000 in wildcard exemptions (since you're giving up the home).

So, it may be $500 or less that is non-exempt!

Yes the car appraisal was done by a licensed auto appraiser so I think the Trustee would have no objection.

And I see that I missed the Art. 10, 4(A)2 wildcard exemption for $1,000.

Thanks for all your responses. Much appreciated.