On day discharge was due- Trustee filed to sell/lease home

[saralee]

Long story short- We filed Chap 7 in Aug, we did not use exemptions on our home as we decided to surrender it as we were already 1 yr+ behind in payments. As I checked Pacer over and over last week- a posting finally hit and I was hoping it was the good news we were waiting for (Discharge!). Low and behold..on "Discharge day" The Trustee filed a motion to sell/Lease our property, with sale happening in 21 days. Looks as he is selling to an Investor for $2,500, who our Lawyer said in turn will rent it back to us until it forcloses. This completely blindsided us, as our ATTY NEVER even mentioned the possibility of this happening when we decided to use exeptions on our 2 cars and income taxes..we knew the day was coming- but never expected it to be so soon as our forclosure process had just started when we filed.

My question is- If the Investor legally aquires the property in 2 weeks, how long do we have to then vacate the property? We are ready to just move on, and get settled- if we are going to be paying rent, we have no interest in staying in a place we may need to be out of in 4-6 months anyway. However- I would prefer to move after christmas! Also- will the forclosure now not be in our name if this Investore buys the property? (Silver lining?)

[Drazil65]

Hi, I think silver lining may be the name transfer....most of us that waited 2 plus yrs to foreclose probably would have taken that over the waiting (although we saved a lot of money in the mean time)....maybe toss up but a quicker name transfer would have been better for us....interesting

[justbroke]

Forget your attorney never mentioning this! I have never heard of this in my life! A Trustee colluding with an "investor" that would throw $2,500 at the Trustee so they can claim title and hold the property until the lender forecloses. That is typically what an HOA would do to force a lienholder's foreclosure. I always marveled at the "carve out" but this must be the most backhanded way to run a District. Can you mention which District you are in (you can send it private to me). I'm just wondering if it's those guys in the Middle District - Orlando Division.

I just can't believe they are still doing this; although it has been quiet lately.

At this point, I suppose it's strategic. Speak with your attorney. Find out what is more beneficial. It may be "cheaper" to amend your exemptions to claim Florida Article X Section 4 constitutional homestead exemption and pay the Trustee $4,000 towards assets, than lease the property from an investor who is certainly going to (attempt to) charge you market rent. It's really strategic at this point. Which will last longer? Which is lease costly? I had to make the same decision when I previously filed and I chose the homestead exemption to block the Trustee from any "carve out" deals.

Flori-duh. (Shakes his head in shame...)

[saralee]

We are in Middle District- Tampa. At this point, we are discharged- which posted a day after the motion! While I was furious with our Lawyer for never explaining this possibility, she seemed as blindsided by it as we were. Said that they used to do this- then got in trouble for a while with something to do with Doc stamps or something? (I could have misunderstood that- I was pretty much in shock at that time).

Can we amend if we have been discharged? I think at this point, as much as we wanted to hang out in this house and build a savings cushion, we would just rather find a rental and get situated, without worrying about some shady investor that will be our landlord. Not to mention I feel like throwing a big FU back at them...they are going to need to invest some cash to fix repairs needed for anyone that rents if we were to just leave. I'd say a good 10k! I have a feeling the Investor is somehow tied to the Trustee- why in the eleventh hour would this just pop up? (Day 62!) We "bought back" hubby's truck- you would think that would have kept the Trustee somewhat happy as we went in as a no asset case, but were slighly over in exemptions on the truck. (I know..I know..it's their job to find $$)
My big fear is what is going to happen 2 weeks from now when this investor buys the property? Can he get us evicted within a matter of days? We are looking at a house on Fri w/ a move in on Jan 1- I just am scared to death this guy will come in and evict us the week of Christmas since we dont want to rent from him. Legally, How much time do we have to vacate the propert once he becomes the "owner"...considering we don't even have a lease with him, how on earth will this even work? I just don't want to be homeless for Christmas!!!

[justbroke]

I don't think all the paperwork and an eviction hearing can all happen in 3 weeks. The order would need to be approved and then a bunch of paperwork to have it recorded. Then the new owner would need to file an eviction, but they are unlikely to do that since they don't want the property itself... they want to lease it back to you. Otherwise, they may make no money.

I actually think this practice, which only seems to be in the Middle District of Florida and mostly just Orlando and Tampa divisions (just a couple of Chapter 7 Trustees seem to o this), is horrific. I don't understand why a judge allows this or why the debtor's attorney don't defend the debtors from this action. I do understand that this is a creative way to get money for the Estate, but the Trustee gets 25% of that $2,500 so it's really all about the Trustee making a few hundred bucks. Otherwise, what a waste of time.

[despritfreya]

Absolutely mind boggling but. . . nothing surprises me when greed plays a role.

Just out of curiosity, do you have a HOA? If so, the "sale" to some investor might just get you off the hook for post petition HOA fees/dues/assessments. However, 523(a)(16) does state that the debtor is responsible so long as he/she has a "legal, equitable or possessory ownership interest".

Des.

[saralee]

No Hoa. The crazier part is this house is about about 70k underwater...I don't see how much will be gained by this move! Despritfreya..does that mean even after it is sold to the investor we are still responsible for it, or only in a HOA type situation?

Justbroke- our Lawyer pretty much in so many words said that there is really nothing they can do...they have tried to object in the past, with no luck. Not sure I totally buy that- they seemed to be helpfull up until they were paid in full...

[LadyInTheRed]

...I don't see how much will be gained by this move!

Lenders can take years to foreclose. The investor can make a good profit on rent in the meantime, especially if they buy enough properties this way that they can absorb losses when necessary.

[saralee]

Lenders can take years to foreclose. The investor can make a good profit on rent in the meantime, especially if they buy enough properties this way that they can absorb losses when necessary.

True...Do the Forclosures not hurt them? They must just buy in cash all of the time?

[bcohen]

I very seriously doubt that this "investor" would be able to transfer ownership of the property, attempt to collect rent (for which you have not signed any contract agreeing to pay), and then attempt to evict you for nonpayment, all within a month, let alone 3 weeks. In fact, the "sale" hasn't even happened yet, and apparently will not happen for at least another 2 weeks. Also, the "investor" is gambling on the fact that you would rather pay market rent to stay in the house, than pack up and move. The last thing they want to do is have an empty house, which they will not be able to rent to someone else, because there is an unpaid mortgage which will eventually foreclose.

So you can relax, and not worry about having to be out anytime soon. Most likely, by the time the "investor" is able to have the deed transferred to their name, and contact you to arrange for the payment of rent, it would already be mid-to-late January anyways. The first rent payment would presumably be due on February 1. It would therefore be well into February before they could have you evicted if you didn't pay. Since you are planning to move at the beginning of January, there is no need to worry.

[LadyInTheRed]

True...Do the Forclosures not hurt them? They must just buy in cash all of the time?

I don't think the foreclosure hurts them because they are not a borrower on the loan. They very well may invest in cash and not care about their credit rating anyway.

[LadyInTheRed]

The last thing they want to do is have an empty house, which they will not be able to rent to someone else, because there is an unpaid mortgage which will eventually foreclose.

I really doubt many renters check on the ownership history and foreclosure status of a home before they rent it. There is nothing to prevent an owner from renting a property destined for foreclosure. Yes, the investor is hoping saralee will stay in the home and pay rent. But, if that doesn't happen, they still have the potential for profit by renting to somebody else. It very well could be that they won't bother.

I do agree that the investor will not be able to evict anybody before January.

[saralee]

Thank you for putting my mind at ease..I am sure my husband is thankful as well, lol...He always trys to be the voice of reason, and I am miss doom and gloom lol On that note- I guess it is time to decorate for one last Christmas in our house. Thanks for all of the advice and insight...very much appreciated.

[justbroke]

The last thing they want to do is have an empty house, which they will not be able to rent to someone else, because there is an unpaid mortgage which will eventually foreclose.

Actually, the rent is not the biggest part of their scam... I mean... "investment" opportunity. They get a carve-out when it actually forecloses! The carve-out could be as much as $10,000.

As for HOA dues, the investor could be "jointly" liable on the HOA dues unless, as Des wrote, the "possessory" interest in the property is a gotcha.

[LadyInTheRed]

Actually, the rent is not the biggest part of their scam... I mean... "investment" opportunity. They get a carve-out when it actually forecloses! The carve-out could be as much as $10,000.

So, you are saying the bank holding the mortgage is also in on it?