Mortgager won't take rental property after Ch 7

[DadTL]

A little background;
I had 6 rental properties and ended up filing for Ch 7 in June of 2008. We were discharged in March of 2009. Of the 6 rental properties, 4 have been taken back via foreclosure. I have been trying to deal with these last 2 so that we can move on. M&T is telling me that the loan I had on the property that they had financed was backed by Fannie Mae and that Fannie Mae wrote the loan off. There is now a 0 balance on the loan. M&T is saying that because of the write off, they will not foreclose on the property, they will not accept a deed in lieu and they will not release the lien on the property so that I can dispose of it and get it out of my name. The problem is that now I am starting to receive lawsuits from the county for the 3 years of unpaid property taxes. They have already gotten a small judgement against me that has shown up on my credit report. I suppose at this point, I should start renting them out again to pay for the taxes, although that is not my first choice. Any suggestions?

[Drazil65]

Sell it to someone for the amount of the back taxes due? If it is yours to do what you want then fire sale it and sell it for that amount, right? I am surprised it has not been sold for taxes by the county already. Good Luck!

[DadTL]

That was my first thought, but the mortgage company will not release the lien for me to sell it.....

[Drazil65]

Have you talked with an experienced real estate attorney? There has to be a way around it or to have a lien release done at closing to clear title for a sale.

[bcohen]

1) I do not know if this is different in TN, but in most states, property taxes follow the property--not the owner. In the case of default, the only remedy which the taxing authority has is to place lien(s) on the property and foreclose, or alternatively to sell the tax lien(s) to investors, who can eventually foreclose and take possession. There is no provision for personal liability on the part of the owner, so having wages garnished, or liens placed on other property of the owner should not be a concern.

2) See if you can get in writing the fact that the lender has written off the loan to zero, does not want the property back, and will not accept a voluntary transfer of title (deed-in-lieu), etc. If they won't put this in writing, then see if you can at least record them saying this on the telephone. With this information, you will be in a better position to negotiate a lien release settlement, or perhaps you can have an attorney bring an action to void the lien on the theory that maintaining the lien on a property which by their own admission is worthless is an attempt to collect a discharged debt in violation of the discharge injunction. Some attorneys have successfully used this legal theory to get a lien release on a car, so that the owner could (legally) junk it.

[nohoneymoney]

Debts incurred after BK7 are your responsibility, such as the property tax, HOA, etc. If I read correctly, the property has been empty for several years and if someone is hurt on the property, you could be held liable. I strongly recommend that you take action, ASAP. Several suggestions have been presented and I am sure there are others. The banks position sounds very odd, even for a bank, so I would start with them and get their position in writing. I would also contact the property tax board to discuss your situation. If this log jam does not break loose soon, I would find me a good real estate lawyer to see what legal actions to take. I don't think this is time to be passive. I am also trying to disposition rental property and have not come across this situation. Keep us posted and best of luck.