Surrender please! take the house back! the discharged was ordered! When!

[jedbmw]

I received my Chapter 7 discharge (New Jersey). I called the bank (Wells Fargo) to surrender the home as specified in the Chapter 7. I have negative equity and a second mortgage on the home, all has been discharged.
I spoke to the liquidation department regarding a Deed in Lieu of Foreclosure. The bank insisted that I list the home again and to try to sell it. I am out of the house and have moved on. I simply want to return the home legally. I do not want to be responsible for taxes or any other liability moving forward. The Tax bill is now due! I informed the bank the keys to the home are under the door mat and suggested that they come winterize the home, as utilities will be turned off. They said their process prevents them from a DIL because the home has not been currently listed for 30 days. I want to legally turn over the property so that I am no longer responsible. I fear the home will sit for years under my name with me being responsible for $5000 in taxes annually.
Should I comply with the banks request to try to list and sell the property? What should I do to close this out quickly and as painlessly as possible? Seems like the bank does not what the house back given the current market conditions. The mortgage is only 4 payments behind.
Please help!

[Chowder]

Thought you were off the hook after discharge........

[LimpDisc]

I fear the home will sit for years under my name with me being responsible for $5000 in taxes annually.

The bank fears the house will sit for years in their name and they will be responsible for the taxes. Probably the very reason they are in no hurry to take back the house.

[helpmeout]

I live in NJ. If the trustee doesn't take my house (I'm not upside down, supposedly), then the bank will have to foreclose. I did ask my attorney about the taxes. And was told that the taxes attach to the property, not the owner and that I didn't have to pay them. My understanding is that the bank will probably foreclose before the town moves to take the house to pay the taxes.

[jedbmw]

thanks for your response.
How does law define the owner, bank holds the mortgage, I have and hold the deed; so I believe that legally makes me the owner. What is the normal process for deed transfer in this type situation?

[JRScott]

The bank is trying to engage in shadow inventory, so long as it is in your name its not in theirs and they don't have to list it ......

I'd suggest going and getting the keys though and taking them to the nearest office of the bank with a copy of the discharge letter and talk to the bank manager or loan officer and turn over the keys and a copy of the discharge letter.

[Chowder]

The bank is trying to engage in shadow inventory, so long as it is in your name its not in theirs and they don't have to list it ......\.

Let's be fair. They're doing more than trying.........

[HakunaMatata]

You are not responsible for property taxes. They attach to the house, not you. It's recommended to keep insurance on the property (for liability purposes) until the deed transfer occurs.

[catleg]

There is a complicated tango between borrower (you) , servicer (who you make payments to) and investor (who owns the mortgage note).

Here is a good link discussing these issues: Mortgage servicing for uber nerds

It is complicated but realize that: the mortgage servicer is on the hook to the investor for the interest on the mortgage for the first 90 days after non payment. In addition the mortgage servicer then continues to be responsible for property taxes and insurance.

So it's important to realize that nobody is coming after you to pay the taxes and insurance. More likely Wells Fargo is both the owner and servicer on the note and simply doesn't want to recognize a loss yet.

In some other cases non-WFC, like if your mortgage was sold to Fannie/Freddie, it's possible the note has been securitized and nobody knows who owns it, except it is likely that the Federal Reserve has bought the paper.

Still it doesn't seem like the servicer is at much risk, at foreclosure they should get paid back for the taxes and insurance in arrears, with the remaining balance going to the note holder.

[Amy26]

You cannot force them to take the house back. I have been discharged since Sept 09 and I stopped paying my mortgage in April 09. I still own my condo. There are people here 1-2 years out from their BK and they still own their homes. It sucks, but there is really nothing you can do until they get off their asses and foreclose. You can harass them and call them constantly, I dunno if that will help. My mortgage company is still trying to collect from me. I get collection calls all the time. I just got one the other day and (its always the same guy) he was like "hi, I'm calling about your mortgage payment" ... I said yea, what do you want? he said "Are you planning on paying it, its over 9 months behind"... I said hell no. He said "Well ma'am I want to let you know that foreclosure proceedings have begun" ... I said FANTASTIC! He started laughing...he said "That's fantastic?" and I said yea, take the damn thing back already I want you to foreclose. He started laughing again and said "ok, never had anybody happy about that".

So, I wish you lots of luck in getting them to foreclose but DO NOTHING FOR THEM! Do not list your home for sale, do not try to help them out... they are just trying to milk you for what they can. Why should you have to work for something they need to do?

I mentioned something to my mortgage comapny about the deed in lieu thing and the loss mititgation guy said I could send the keys back but it really wouldn't do anything. The foreclosure rate in my state is supposed to be 60-90 days but that's crap!

[Chowder]

More likely Wells Fargo is both the owner and servicer on the note and simply doesn't want to recognize a loss yet.

BINGO!

It gives the facade of strong books, while keeping house prices artificially high.

[momtoroxy]

It's such a waiting game with these mortgage companies! We are due to be discharged this week and included our home. We will have to leave this home and find a place to rent when it comes time, so I am in no hurry! But, if we had moved out already, I can imagine how frustrating this can be! I hope we have as long as possible here, as we will be living rent free and saving, but it's hard not knowing a timeline. I wish I knew if it would be 3 months, 6 months, 1 year!? Makes planning hard!

[DeadManCrawling]

It is very hard to know when lenders will proceed. We moved out last month, and are nowhere near completion, though we stopped paying a year ago.

In my studies of the matter, here is a brief synopsis of what I found. Please feel free to add to or correct any misinformation I unwittingly share, if you know better.

1. Lenders are processing millions of foreclosures per year. Last year 1 in 45 homes received more than one foreclosure filing, over 3 million homes total. A staggering number that may rise to 7 million in 2010.

2. Lenders often do not WANT to foreclose, even when it is obvious they will be forced to eventually. The way lenders actually loan money is through a fractional reserves process. For every dollar they actually are in charge of, they can loan many more dollars. So , they actually loan the money many times. Generally, this has not been a real issue, but now, it is becoming one. When they have a loan go into default, that effectively forces them to "recall" other loans, or fund their reserve account.

Now, if you have a 300k loan, that 300k default may mean they need to not only add the 300k back into the reserve account, but much more. Since they are no longer in possession of those dollars (they are loaned out), they must generate the money somehow. This can be by selling shares and diluting existing shares, reporting less profit, or any number of other ways. But when the numbers skyrocket, and we get into talking about millions or billions of dollars, this could quickly destroy the bank.

If they are in the process of foreclosing 10,000 properties, all at 400k, that equates to 4 BILLION dollars. And that is just part of the way the reserve requirements work. So they would actually need to put far MORE than 4 billion back into their reserves to make it work.

They really, really, do not want to be forced into this situation. The foreclosure problem is probably going to ruin many banks, if not the entire system, unless the government intervenes (further).

Lenders all deny this, and claim far fewer foreclosures than really exist, I think. Their major investors, many from foreign nations or large corporate funds, are not int he habit of driving around neighborhoods like we are. I believe many of them are clueless as to what is really going on. They simply are not in a position to see all the empty homes. Sure, they see the news, but until you see the darkened windows and weed-filled lawns in person, you cannot grasp the scale of the problem.

In addition to the above, many people now have HOA fees. The bank becomes responsible for these once foreclosure is complete. In our above scenario, 100,000 homes each with 100 per month in HOA fees (a very low average, only a guess), would cost the bank 1 million dollars per month. Just in HOA fees. Banks can sustain that number. However, the real numbers at large banks are probably closer to 100,000-500,000 homes in distress. I believe some of the mega-banks are in the million plus range. They cannot, even at their size, sustain a 20 million dollar per month payout to HOA's.

EDIT: Some banks COULD easily sustain those numbers, but it becomes harder to hide it in SEC reports, and so on. Once it crosses into the tens of millions in costs, it gets ugly and easily found.

In the past, HOA's would often wait till a foreclosure was complete and place a lien, which had to be paid off at closing to recover their fee. Nowadays, HOA's are actually suing the lender or foreclosing on the home themselves. Many HOA's have SO many foreclosed properties that they, too, are at risk of going under because so many folks are not paying their fees.

I am sure others will correct or add to this, but it is a general look at what I have found in regards to this issue.

Good luck, I hope things speed up for you-if you want that-and certainly for us.

[Chowder]

It's such a waiting game with these mortgage companies! We are due to be discharged this week and included our home. We will have to leave this home and find a place to rent when it comes time, so I am in no hurry! But, if we had moved out already, I can imagine how frustrating this can be! I hope we have as long as possible here, as we will be living rent free and saving, but it's hard not knowing a timeline. I wish I knew if it would be 3 months, 6 months, 1 year!? Makes planning hard!

Your lawyer should be able to give you the typical minimum for your state.
As stated numerous times in the forum, you'll probably have longer.

[Amy26]

Yea but those typical minmums are not accurate. Like I said in my post, the "typical minimum" for Virginia is 60-90 days but I'm almost to a year now without even a notice of default.

I think it really depends on 1. what type of home you have 2. how much under water you are 3. what kind of loan it was 4. what kind of mood the lender is in.

In my situation, 2 years ago I purchased a 900 sq ft condo for 260k... I had 60k of equity in it when I bought it. Normal loan... not subprime... good deal. Today, the place is worth maybe 100k ...if they are lucky. About 60% of the units in my development have either gone to foreclosure or short sale in the last year. Every unit in my building is empty except 1.

I know damn well my bank does not want that condo... lol. No more than I do.