Strange deal - 2nd foreclosed but never paid off first

[lost7243]

Hello,
My second mortgage foreclosed on our home. We are still paying the first mortgage. This has been going on for 4 years. Last year I received a letter from the IRS stating I didn't claim $25000 of income from my second mortgage. I can't find a lawyer that can explain what's going on.

anyone else ever had this happen and how did you get out/reclaim your house?

[StartingOver08]

Hello,
My second mortgage foreclosed on our home. We are still paying the first mortgage. This has been going on for 4 years. Last year I received a letter from the IRS stating I didn't claim $25000 of income from my second mortgage. I can't find a lawyer that can explain what's going on.

anyone else ever had this happen and how did you get out/reclaim your house?

This sounds like the IRS received a 1099-C for the amount you owed on your second. You might want to call a CPA to have him explain. Have you filed for BK?
Read this link to get some information so you know what to ask your CPA regarding the 1099 from your second: http://www.irs.ustreas.gov/pub/irs-pdf/p4681.pdf

[lost7243]

further explaination

Hi,
In the summer of 2004 we were behind on our first and second mortgage and had been threatened by the 2nd that they were foreclosing the house. About a month later, out of the blue, a realtor showed up at our house wanting to see if anyone was living at the residence. Naturally, we said yes, why. He said the house had been foreclosed the day before by our second mortgage.
I called a local attorney and he suggested the only thing to prevent the foreclosure was to file an emergency BK. So we did.

We went through all the paperwork, did the meet thing and setup payments with the trustee. They sent payments to the second but all were returned. My attorney sucks and never seemed to do anything, so I spoke with a second lawyer, he placed a call and went to the courthouse to look up the deed and sure enough the home is titled to the second mortgage company. However, the first mortgage was never paid by them.

We have been paying the first for the past 4 years, in addition, the trustee is paying the arrarys we had on the first mortgage.

What do I do to get the title back in my name? Am I just making the payments for the second mortgagecompany to the primary?

House worth ~ $105,000 now
owe first ~$67K
owed second ~ $25K at the time

[StartingOver08]

Wow! I don't know, this is a strange situation. Based on what you describe you are paying on a mortgage for a house you no longer own. The second is in great shape because you are paying down the first (which stands in the way of clear title for the second so why would they stop you from paying???). Very confusing. What does your second attorney say about this situation? Is someone contesting the foreclosure by the second? Maybe HHM or one of the others can jump in a clarify here.

[lost7243]

That is correct. In addition, we are paying the city fees. In fact, they called one day to ask why we were paying on these fees since they're not in our name.

The other attorney suggested I call the second myself to state they made a mistake and need to transfer the deed back in my name. I am afraid to wake this spleeping dog at the moment since I can't some up with the $25K to pay them off immediately.

To top it all off, I recently received a letter from my state tax department, placing a lien on my federal return for the $25K income, mentioned previously. They're now wanting some $2400 for back taxes.

[lost7243]

Strange deal - 2nd foreclosed but never paid off first

Hi,
In the summer of 2004 we were behind on our first and second mortgage and had been threatened by the 2nd that they were foreclosing the house. About a month later, out of the blue, a realtor showed up at our house wanting to see if anyone was living at the residence. Naturally, we said yes, why? He said the house had been foreclosed the day before by our second mortgage.
I called a local attorney and he suggested the only thing to prevent the foreclosure was to file an emergency BK. So we did.

We went through all the paperwork, did the meet thing and setup payments with the trustee. They sent payments to the second but all were returned. My attorney sucks and never seemed to do anything, so I spoke with a second lawyer, he placed a call and went to the courthouse to look up the deed and sure enough the home is titled to the second mortgage company. However, the first mortgage was never paid by them.

We have been paying the first for the past 4 years, in addition, the trustee is paying the arrarys we had on the first mortgage.

What do I do to get the title back in my name? Am I just making the payments for the second mortgagecompany to the primary?

House worth ~ $105,000 now
owe first ~$67K
owed second ~ $25K at the time

Last year I received a letter from the IRS stating I didn't claim $25000 of income from my second mortgage. I can't find a lawyer that can explain what's going on.

In addition, we are paying the city fees. In fact, they called one day to ask why we were paying on these fees since they're not in our name.

The other attorney suggested I call the second myself to state they made a mistake and need to transfer the deed back in my name. I am afraid to wake this spleeping dog at the moment since I can't some up with the $25K to pay them off immediately.

To top it all off, I recently received a letter from my state tax department, placing a lien on my federal return for the $25K income, mentioned previously. They're now wanting some $2400 for back taxes.

Anyone else ever had this happen and how did you get out/reclaim your house?

[HHM]

Hi,
In the summer of 2004 we were behind on our first and second mortgage and had been threatened by the 2nd that they were foreclosing the house. About a month later, out of the blue, a realtor showed up at our house wanting to see if anyone was living at the residence. Naturally, we said yes, why. He said the house had been foreclosed the day before by our second mortgage.
I called a local attorney and he suggested the only thing to prevent the foreclosure was to file an emergency BK. So we did.

We went through all the paperwork, did the meet thing and setup payments with the trustee. They sent payments to the second but all were returned. My attorney sucks and never seemed to do anything, so I spoke with a second lawyer, he placed a call and went to the courthouse to look up the deed and sure enough the home is titled to the second mortgage company. However, the first mortgage was never paid by them.

We have been paying the first for the past 4 years, in addition, the trustee is paying the arrarys we had on the first mortgage.

What do I do to get the title back in my name? Am I just making the payments for the second mortgagecompany to the primary?

House worth ~ $105,000 now
owe first ~$67K
owed second ~ $25K at the time

It's rare that a situation comes along and stumps me, but this one is pretty darn close. I got nothing.
On the one hand, it shouldn't be too hard to figure out the timeline, i.e. when the 2nd actually foreclosed, when did you file your BK. etc....doing so would be helpful.

Since this foreclosure took place in 2004, back then it was certainly possible for the 2nd to foreclose.
1. How certain are you that the first lender was not paid? Have you spoken directly to a rep or attorney for the first lender?
2. Back then, it was common practice for the 2nd mortgage lender to buy out the first before initiating foreclosue.

Does your state have a post foreclosure redemption period? If so, a working theory would be that your BK, if filed right at the start of that redemption period threw the timeline off and no one at the second mortgage caught it.

[lost7243]

I had a second attorney go to the courthouse with me to find out this info. It turns out the foreclosure went through a day before we filled. The house was "sold" on the courthouse steps for $10,000 a day before we filled. We had no idea any of this was going on. There was a notice posted in the newspaper (but we don't receive the local paper) and they showed a certified letter that was mailed that we never received (never signed for it nor ever remember seeing a letter from the Post Office).

I have not contacted the first. However, I receive a 1098 from them each of the past 3 years (including this year) showing how much interest I've paid on the loan.

To further complicate matters, the first mortgage company was purchased by another company. I now have a new first mortgage company. WaMu

How do I find out if I have a post foreclosure redemption period? I'll try Google. The state is WV.

[lost7243]

The state of West Virginia provides for no redemption period, but lenders may allow for a redemption period voluntarily. According to federal law, the IRS as a lien holder has a post-sale redemption period of 120 days.

[lrprn]

Lost, I merged all the responses you've already received about your situation here so everything would be together in one place.

[StartingOver08]

Thank you lrprn for merging the questions/responses can you add hhm's response in another thread?

You have said, elsewhere, that your Ch 13 is going to be finished in the next couple of months. I think you are in a situation that you need to straighten out before you are discharged.

I am worried that since the second actually owns your house, they have no reason to 'deed back to you' without you fighting for it. BK attorney's are not real estate attorney's. It almost sounds like everyone ignored the fact that the house was deeded to the second lienholder prior to your filing BK. The BK attorney should have mounted some sort of action to contest the foreclosure at the time of your filing.

Maybe a good real estate attorney can help you figure out what to do and how to do it. There must be a solution available, I hope.

[lrprn]

Thank you lrprn for merging the questions/responses can you add hhm's response in another thread?

Sure - what's HHM's response url?

[StartingOver08]

It is here: http://www.bkforum.com/showthread.php?t=36140 see post #9

[lrprn]

It is here: http://www.bkforum.com/showthread.php?t=36140 see post #9

Moved both List's post from that thread and HHM's response here - done

[lost7243]

Will I still receive email notifications when someone posts a response?