Abandonment, Discharge, and No Distribution Report

[DAE]

I am a pro se filer. Filed: April 22, 2011. 341 Mtg.: June 1. Report of No Distribution: June 8, 2011.

My mortgage lender began foreclosure on my home before I filed for Chapter 7 protection.

The lender received an Order granting Relief from the Automatic Stay on June 22, 2011. Neither I nor the Trustee objected to this order and I am fully supportive of getting the house back to the bank as soon as possible.

The bank now would like to dispense with the formal foreclosure process (the formal state judicial case is on hold pending the BK discharge) and has suggested that we pursue a Deed in Lieu of Foreclosure.

I am, however, unsure if the property has formally been abandoned by the Trustee and whether I have the legal right to enter into such an agreement. The Trustee did give me verbal approval to sell property (during the 341 Meeting I asked that he allow me to sell some property to provide cash for living expenses), he has filed a Report of No Distribution, and he did not object to the lifting of the auto. stay on the home, but I'm not sure any of these actions provide me with the legal support to enter into a Deed in Lieu agreement.

Typically, I believe that the abandonment occurs with the discharge. Am I okay to enter into this agreement prior to discharge and/or closing of my BK case?

(I have sent a brief note to the Trustee asking for explicit approval for this action, but have not heard back yet.)

Thoughts?

[tobee43]

what did you put on your statement of intent on the property??

surrender, retain, redeem, reaffirm? other...and did you claim the property as exempt?? these are the questions i do think may need to be answered.

if you did mark surrender, i would be on that deed in lieu like a you know what on a you know what!! do not pass go, to not look back...grab it...along with a signed release document!!!

i'm so jealous!

[DAE]

I marked the house as "surrender" on the Statement of Intention. The bank's attorney and I have spoken several times and they understand that I am fully supportive of their repossession of the house. I just assumed it would occur through a judicial foreclosure (they filed a foreclosure action in early April 2011 (weeks before I filed my BK)).

tobee43, can you give me your thoughts on why the Deed In Lieu would such a better process than the judicial foreclosure from my/homeowner's perspective? You sound like you would be very eager to pursue such an agreement if you were in my shoes.

EDIT: the bank's attorney has even suggested that the bank would pay the post-filing HOA fees as an incentive to get me to agree to the Deed In Lieu. I am in arrears on the HOA fees and they are accumulating at the rate of $220/month from April 22 onward. So while the amount is not tremendously high, it would be nice to know they would pay these fees for me. As I understand it, if we continue down the foreclosure road, the bank would be faced with having to pay the HOA fees anyway just to get clean title to the property since the HOA has placed a lien on the home because of the unpaid HOA fees.

[frogger]

I am surprised that the lender would want a Deed In Lieu instead of the foreclosure. Most lenders are going to foreclose in order to have a title that they can be assured is clean.

[tobee43]

I am surprised that the lender would want a Deed In Lieu instead of the foreclosure. Most lenders are going to foreclose in order to have a title that they can be assured is clean.

right!!! i would fall on a sword to get me one of them there deeds in lieu!! that for certain.

[tobee43]

I marked the house as "surrender" on the Statement of Intention. The bank's attorney and I have spoken several times and they understand that I am fully supportive of their repossession of the house. I just assumed it would occur through a judicial foreclosure (they filed a foreclosure action in early April 2011 (weeks before I filed my BK)).

tobee43, can you give me your thoughts on why the Deed In Lieu would such a better process than the judicial foreclosure from my/homeowners perspective? You sound like you would be very eager to pursue such an agreement if you were in my shoes.

EDIT: the bank's attorney has even suggested that the bank would pay the post-filing HOA fees as an incentive to get me to agree to the Deed In Lieu. I am in arrears on the HOA fees and they are accumulating at the rate of $220/month from April 22 onward. So while the amount is not tremendously high, it would be nice to know they would pay these fees for me. As I understand it, if we continue down the foreclosure road, the bank would be faced with having to pay the HOA fees anyway just to get clean title to the property since the HOA has placed a lien on the home because of the unpaid HOA fees.

a deed in lieu can be different types of deeds. you want to make certain you have them make it warranty deed as opposed to a quit claim...here's the difference from one of my previous long time ago posts:

"warranty deed vs quit claim deed

the process of selling property is easier if you understand the basics of the sales process. marketing the property and dealing with buyers and/or the hassles of real estate agents can be aggravating, but the piles of paperwork and all the different forms involved are really the biggest issue. among these many forms and papers are warranty deeds and quit claims deeds, two deeds that are often confused with one another. we'll help make selling property a little easier for you by clearing things up a bit.

a warranty deed is a pretty basic deed that, for the most part, states the seller owns the property and there are no liens (debts, etc) against the property that will be transferred over. it is stating that the property is legally owned and there are no hidden tie-ins the buyer should be aware of. this deed ensures buyers that the property they are buying is actually owned by the person they are dealing with and they won't be met with any surprises later on. furthermore, if another person were to try to claim the property down the line, the warranty deed would legally protect the new buyer and the buyer would be entitled to compensation from the original seller. the warranty deed is used in the majority of property sales.

on the other hand, quit claim deeds are presented to these buyers instead by a person who does not necessarily legally own the property, but instead holds responsibility for that property. such instances where this can occur are upon a death when the property is transferred as inheritance, or when spouses are both on the name of the deed and a divorce is occurring. quit claim deeds, unlike warranty deeds, do not offer a great deal of protection to the buyers of the property. in truth, they should be avoided unless you know exactly what you are doing and have experience in buying and selling property."

botton line is to make certain which type of deed or REQUEST the warranty deed. and, to make certain it is accompanied by a contract of release.

hope that helps a bit and if i missed something, i hope and am certain someone will clime in!

by taking in the deed in lieu as opposed to the LONG neverending story of going through the process of a judical foreclosure, it saves you time, money and plain old stress. it releases any of your responsibilities up front and you simply never have to worry about that house again. it's difficult to get a bank to accept one as opposed to going through the process of foreclosure. i'm certain you have seen all the threads about the worries of who insures the house after you surrender it, who mows the lawn, who takes care of a slip and fall case and so on and so forth. so grab it FAST if you can!

[justbroke]

Since the bank obtained relief from the automatic stay and the Trustee consented, this means that the property has been technically abandoned by the Estate (the Trustee). The bank can actually foreclose or, in this case, offer a deed in lieu. I think I like the DIL better since you can have everything done. The only problem for the bank is if there are junior mortgages or liens. I'm quite sure that the bank did their homework or they would not offer the DIL.

I may be inclined to ask for some sort of "Cash for Keys", asking the bank help you move out sooner. It's worth a try at least. Generally, $3-4K is the going rate for the "keys".

[tobee43]

Since the bank obtained relief from the automatic stay and the Trustee consented, this means that the property has been technically abandoned by the Estate (the Trustee). The bank can actually foreclose or, in this case, offer a deed in lieu. I think I like the DIL better since you can have everything done. The only problem for the bank is if there are junior mortgages or liens. I'm quite sure that the bank did their homework or they would not offer the DIL.

I may be inclined to ask for some sort of "Cash for Keys", asking the bank help you move out sooner. It's worth a try at least. Generally, $3-4K is the going rate for the "keys".

wow...a DIL and money...i'd be in Heaven!!!!

[DAE]

Thanks, everyone. The credit union's (I inadvertently used the term "bank" above) attorney just e-mailed me out of the blue with the offer for the Deed in Lieu. Up until that time, I just assumed we'd go through the judicial foreclosure. Other than a lien for the unpaid HOA fees, there are no liens other than those of the credit union itself related to the 3 mortgages (all with the same credit union). The attorney explained to me that the credit union would save money doing it this way and it would avoid the long delay between foreclosure and actually getting the title transferred to the bank's name (which is Prince George's County, MD can take months I'm told).

I will broach the subject of cash for keys ... although, I think the credit union believes that by paying the $660 in unpaid (post-filing) HOA fees, they are throwing money my way already. But it's worth a shot to ask. As I mentioned above, it seems that banks and credit unions are already paying these post-filing HOA fees off for debtors anyway just so they can get a clean title.

[tobee43]

Thanks, everyone. The credit union's (I inadvertently used the term "bank" above) attorney just e-mailed me out of the blue with the offer for the Deed in Lieu. Up until that time, I just assumed we'd go through the judicial foreclosure. Other than a lien for the unpaid HOA fees, there are no liens other than those of the credit union itself related to the 3 mortgages (all with the same credit union). The attorney explained to me that the credit union would save money doing it this way and it would avoid the long delay between foreclosure and actually getting the title transferred to the bank's name (which is Prince George's County, MD can take months I'm told).

I will broach the subject of cash for keys ... although, I think the credit union believes that by paying the $660 in unpaid (post-filing) HOA fees, they are throwing money my way already. But it's worth a shot to ask. As I mentioned above, it seems that banks and credit unions are already paying these post-filing HOA fees off for debtors anyway just so they can get a clean title.

best of luck with this!! i somewhat agree with you in light of the $660. i would just grab that deed and run asap. but, as jb as more gutts than me..LOL!!!!

[tobee43]

best of luck with this!! i somewhat agree with you in light of the $660. i would just grab that deed and run asap. but, as jb as more gutts than me..LOL!!!!

oh, and please make certain to update us on your progress! once again, best of luck to you!X

[DAE]

The entire agreement proposed by the credit union (minus the notary signature block) is below.

Three problems:

1. I suspected that I would see reference to a warranty deed or quit claim.

2. I notice that, despite the verbal agreement I had with the credit union that they would waive any deficiency (despite the fact that my BK would wipe this out, I want it in this agreement too), there is no language to that effect.

3. Despite our verbal agreement there is no language providing for the credit union to pay outstanding arrears on HOA fees.

The credit union's attorney also sent to me a Statement of Indebtedness that attests to the accrued debt on the first mortgage (which is then plugged into the agreement below).

Thoughts?




DEED OF GRANT AND SALE

THIS DEED made this _______ day of July, 2011, by and between _____, Grantor, and the _____ FEDERAL CREDIT UNION, Grantee.

WHEREAS, by a Deed of Trust dated July 5, 2005, and recorded on October 31, 2005 in Liber _____ at Folio ___ among the land records of Prince George’s County, Maryland (the “Deed of Trust”), _____ conveyed his interest in the property commonly known as _____, MD 20707-5526 and more specifically described in Exhibit A which is attached hereto and incorporated herein by reference, to Hugh _____ and Scott _____, Trustees, for the benefit of the Grantee and to secure that certain Note and Disclosure Statement (the “Note”) dated July 5, 2005 in the original principal amount of Two Hundred Six Thousand Four Hundred Dollars ($206,400.00); and

WHEREAS, default was made in the payment of the Note secured by the Deed of Trust, and in accordance with the terms of the Note, the holder thereof declared all sums represented thereby to be immediately due and payable, and directed John _____, Holly _____, and Erin _____, the Substitute Trustees who had been appointed in the place and stead of Hugh _____ and Scott _____, to invoke the power of sale contained in the Deed of Trust,

and to execute the terms and conditions thereof; and

WHEREAS, the parties hereto have agreed that the Grantor will convey the subject property to the Grantee in lieu of foreclosure.

NOW, THEREFORE, in consideration of the foregoing, receipt of which is hereby acknowledged, the Grantor does hereby grant, convey and assign unto the Grantee, in fee simple, the following real property commonly known as _____, MD 20707-5526, which property is located in Prince George’s County, Maryland, and is more specifically described in Exhibit A attached hereto.

TOGETHER with all improvements thereupon and the rights, alleys, ways, waters, easements, privileges, appurtenances, and advantages belonging or appertaining thereto.

To have and to hold the property hereby conveyed unto the Grantee, its assigns, survivors, and heirs, in fee simple forever.

The Grantor covenants to warrant specially the property, and to execute such further assurances as may be requisite.

IN WITNESS WHEREOF, the Grantor has executed these presents on the day, month and year first above written.

[tobee43]

DAE:
The entire agreement proposed by the credit union (minus the notary signature block) is below.

Three problems:

1. I suspected that I would see reference to a warranty deed or quit claim.

2. I notice that, despite the verbal agreement I had with the credit union that they would waive any deficiency (despite the fact that my BK would wipe this out, I want it in this agreement too), there is no language to that effect.

3. Despite our verbal agreement there is no language providing for the credit union to pay outstanding arrears on HOA fees.

The credit union's attorney also sent to me a Statement of Indebtedness that attests to the accrued debt on the first mortgage (which is then plugged into the agreement below).

Thoughts?

1. first i think i would want to understand exactly what a grant deed is as opposed to a warranty or quitclaim deed...

"A warranty deed is a legal document that helps you transfer title to property with the guarantee that you have legal rights on it and no other person has any rights on it unless stated on the deed.
If it's a general warranty deed, then the guarantee it offers extends for an indefinite period of time. As such, being a grantor, you will be held liable for defects in title existing even prior to his ownership on the property. However, if it's a special guarantee deed, the liability of the grantor extends only for his period of ownership."

"On the other hand, a grant deed assures that the title has not been conveyed to any other individual except the buyer and that the grantor has not encumbered the property with any lien."

"when you're selling or buying a property, it's better to use either general or special warranty deed depending upon the type of guarantee you're looking for. for any other kind of property transfer, a grant deed may be used."

let's go one step further about understand a "grant" deed:

In a grant Deed the grantor is promising that they haven't sold the property to anyone else and that they haven't encumbered the property with any liens.


2. and 3. i would ask for and require a" contract of release" for any liabilities, and making certain that the deficiency issue and HOA issues are clearly outlined and NOT in legalese. that is a separate document that should accompany the deed document.

hopefully someone will chime in with another option or two, or three?????

[DAE]

tobee, since your last post I've received a Settlement Agreement outlining the agreement between the credit union and me related to items #2 and #3 above. I think the agreement is acceptable. I just need to get my head around the types of deed you discussed and determine what's in my best interest.

[tobee43]

tobee, since your last post I've received a Settlement Agreement outlining the agreement between the credit union and me related to items #2 and #3 above. I think the agreement is acceptable. I just need to get my head around the types of deed you discussed and determine what's in my best interest.

i'm glad to hear they covered numbers 2 and 3.

personally, just IMO....it would be worth a few bucks to have an atty take a look at the agreement. once you sign it, you bought it. and, it may very well be perfect for you situation, but once it's done it is done. i would just want a "fresh" pair of eyes to review it before you sign it.