Walking Away After Discharge

[calhoun2011]

We have our discharge and case is closed. We fortunately have a place to live which is much cheaper to live in than the current home which we included in Chapter 7. We live in Arizona. Greentree (I believe servicing agent for BOA) has sent us Notice of Default, told us we were not eligible to any modification, and then sent us a temporary loan modification which we are ignoring becaue we never applied for it to begin with. Do we think they know what they are doing? NO! We really want to leave this place. It is insured by us thru September 2012 but we want to get on with our lives. We have paid the HOA dues also thru September. Can we just leave? Give the keys to the bank? How do we get out of here?

[btbeme]

You can bail at any time. You will owe any HOA dues until the house is out of your name (foreclosed, sold, or you do a Deed in Lieu) and that is all. However, if that place where you are going to live will still be available later down the road, you can just stay where you are until the bank tosses you out (likely several months from now). Save your money if you can, and live rent-free!

You can also see if you can try a short sale, stay until it is done, and apply for the $3000 HAFA grant from the feds as part of the short sale.

[MuchTooMuch]

What about the insurance on a house that you walk away from? Are you still liable for keeping the house insured until it is sold?

[calhoun2011]

The "other place" is free to us and we just have to cover the utilities which are far less than current home with pool. If we list the house with realtor for short sale, who pays the realtor's commission? Since we have made no payments since last November, I would think bank has started foreclosure process already but we have received no information on this from the bank.

[AngelinaCat]

What about the insurance on a house that you walk away from? Are you still liable for keeping the house insured until it is sold?

You cannot insure a house that is vacant with a regular homeowner's policy. You may be able to get a fire/dwelling policy to satisfy the lender, but that is iffy. Once an incident happens and the insurance company finds out that the house is vacant, they will drop your policy like a hot rock.

[calhoun2011]

House is insured up to September, we may have to speak with insurance agent and keep insurance month to month or call the bank and tell them we are leaving, insurance is about to expire and tell them to insure it themselves! We have not decided.

[calhoun2011]

Excellent information! I had completely forgotten about the "vacant" house situation with insurance. We will be here for another month so I'll get with insurance agent first before moving out. Thanks for your input. What does "Moderator B/F Guru" mean - it's under your user name and I have seen it other places.

[AngelinaCat]

What does "Moderator B/F Guru" mean - it's under your user name and I have seen it other places.

I am a moderator of this forum. That is what that part of it means, and you will notice that my username is in green. The other moderators' names are also, except for HRx. He is one level above us and his name appears in tan.

The B/F Guru status, means I have a certain number of posts that qualifies me for that level. As you make more posts, and hit a certain number, your status will change. I think you have to make 20 before you will get a status of 'B/F Newbie' and it goes from there. I used to know the different levels, but there have been some modifications in the software lately, and I haven't kept up with that.

One forum I belong to, used to use movie quotes to indicate posts numbers....

[frdfan]

Hi everyone, I'm new to posting on the forum but have been browsing since shortly after my 341 in April. Now discharged woo hoo!! ... getting to calhoun's question, i went through the exact situation..except I had already vacated the property prior to filing. My BK attorney advised me that since I paid my homeowners insurance through escrow, I would be better off cancelling my current policy, get a refund of the unearned premiums (in my case I just didn't renew when it was due just prior to the 341) and let the lender (BOA) force place their own insurance.

[btbeme]

If we list the house with realtor for short sale, who pays the realtor's commission?

In a short sale, you have no costs but receive no compensation, either. Except...

...if you get a good realtor, (s)he will help you apply for the federal HAFA funds, which is a (maximum) $3000 moving expenses allowance paid to you at the close of escrow. It is easy to qualify for the HAFA funding after you did a BK - just some extra paperwork to go with the mound that comes with any sale.

In many areas, there are also investment groups that advertise as home sales specialists. These groups often pay cash to purchase the home, and often offer the HAFA funds as well as a "gratuity" to the owner at close of escrow. Lots and lots of ways to make a few bucks from a short sale...but understand one important thing - the short sale MUST be approved by the mortgage bank, and that isn't always easy or guaranteed.

But, until someone comes with the Sheriff in tow to toss you out, you can stay rent-free.

[Floridagail]

The buyer ends up paying.
We wanted to do shortsale, but no straight answers from BOA. Some banks are makeing the sellers put money toward sale. My sisters both bought terrific homes that were shortsales and the sellers both paid money at the closing. So we are not considering a shortsale at this point. Both my sisters had to pay a neg fee 3000 to the attorney handling the sale for the selling Bank. Of course was not really disclosed until they loved the house. My sister got lucky and her appraisal came back 2000 below her offer. The seller banks would not eat the fees.

[btbeme]

The buyer ends up paying.
We wanted to do shortsale, but no straight answers from BOA. Some banks are makeing the sellers put money toward sale. My sisters both bought terrific homes that were shortsales and the sellers both paid money at the closing. So we are not considering a shortsale at this point. Both my sisters had to pay a neg fee 3000 to the attorney handling the sale for the selling Bank. Of course was not really disclosed until they loved the house. My sister got lucky and her appraisal came back 2000 below her offer. The seller banks would not eat the fees.

Some states use attorneys to handle these transactions; Arizona does not. While a bank might TRY to stick a seller with fees, etc. the seller can still refuse the fees and force others to eat them (lest the contract get killed).

I haven't heard of a short sale in AZ where the occupant is stuck with fees unless they agree to them. In fact, I stopped paying HOA fees for almost 9 months, notified the HOA of my short sale, and the HOA tacked on the fees to the escrow. In a short sale, the selling bank will reserve an allowance for reasonable fees to be included. Fees outside of that allowance, and any other shortfalls in in the selling process fall to the Realtors and banks involved to figure out. The seller's realtor might turn to the seller and ask that they eat the fees (hell no! was my answer) or the buyer might agree, or a split might be negotiated, or the fees taken from the realtors' commission, or...kill the contract.

No way, no how would I pay anything as a seller in a short sale. If the bank and the buyer and the realtors and attorneys involved can't figure it out, screw 'em - I guess the buyer didn't want the place that bad after all.

[laurannm]

You cannot insure a house that is vacant with a regular homeowner's policy. You may be able to get a fire/dwelling policy to satisfy the lender, but that is iffy. Once an incident happens and the insurance company finds out that the house is vacant, they will drop your policy like a hot rock.

This is a good point I hadn't thought of, but does this mean we are still responsible for carrying insurance until the foreclosure completes?

[MuchTooMuch]

This is a good point I hadn't thought of, but does this mean we are still responsible for carrying insurance until the foreclosure completes?

This! I want to know, also. Am I required to carry insurance on the vacant house until it is out of my name...even if that is 2-3 years down the road? I am assuming that lender-placed coverage will only cover losses to the property and the lender is the payee for any claims. But what about liability??

[AngelinaCat]

They may try to coerce you into carrying insurance on your vacant house, but most any insurance company that I know of will not put a homeowner's policy on a house that they know to be vacant. You might be able to get a dwelling policy that will cover fire or theft, and that will be up to the insurance company's underwriters as to whether they will insure the house. Factors, such as neighborhood, value, etc., will determine some of that. And, no, a dwelling/fire policy will not cover liability.

If you do try to get a homeowner's policy, and something happens, once the insurance company finds out that the house was vacant at the time, they will NOT honor that policy. So basically, you would be throwing money away. Also, some insurance companies, but not all, will send someone to inspect your home

Talk to a neighborhood independent insurance agent and see what that person can do for you. An independent agent will have access to many different insurance companies, and based on your answers to some questions he/she will ask, will do their best to come up with a 'best fit' for you and your situation. If you go to a Big Name company, that is all that the Big Name carries.

Good luck to you!