Notice from Court re: Foreclosure Judgment??

[DeadManCrawling]

On the QC deed thought?

For this to work, legally, and have a chance at success, there has to be consideration. This is my concern.

I can QC to the lender, but what consideration have they given me for the deed?

BoA wont send me so much as a penny.

I could easily add your above language to a QC to YOU. Would it still have any effect? In discharge of any FUTURE liability I QC deed this to JustFileSuit, and so on . . .

Seems a dead issue.

[DeadManCrawling]

Just reread your "party to the suit" post.

Will run this past my attorney and see what he thinks.

I think this may be a workable solution, but not in all districts, and not with all judges. Will let everyone know if we decide to try this.

[Lajazz947]

Strange days, indeed.

best,

-dmc[/QUOTE]

"Most peculiar mama, whoa".

John Lennon (if you know the song)

[LookingFrwrd]

Well, this thread has veered somewhat off my original post but in case anyone is interested in my original question, "Will I receive notice of the judgment of foreclosure from the court?", I finally have my answer. Again, this is in the State of Illinois.

I spoke with the paralegal for our Association's attorney who was a WEALTH of information for me. She said the court does not send notice of judgment, although I could request a copy from the court or even from the Plaintiff's attorney (we were not represented by an attorney as we are not contesting the foreclosure.) She said some Plaintiff's attorneys are better than others in being accommodating but most will at least give you information on the case via phone call -- i.e., whether or not a judgment was entered at the court hearing. She said the next notice we will receive will be notice of sale 30 days to 2 weeks prior to sale date, and that via regular mail.

So in my case, judgment was entered on 9/22, my redemption period ends 3/6/10 (ironically, my birthday!) and our sale is set for 3/24/10.

As I stated, we have kept our HOA fees current following our discharge and as a result, the Assoc. attorney did not have to attend the 9/22 hearing which saved us $500 in legal fees. We have incured some legal fees on their behalf for document review, letter preparation, etc. and can anticipate a few more fees (approx. $300) before all is said and done. So if you do have an HOA and are wondering whether to continue paying fees until foreclosure is complete, in our case, doing so has been to our benefit and saved us additional legal fees.

[JustFileSuit]

[QUOTE=LookingFrwrd;362426] Well, this thread has veered somewhat off my original post but in case anyone is interested in my original question, "Will I receive notice of the judgment of foreclosure from the court?", I finally have my answer. Again, this is in the State of Illinois.

I spoke with the paralegal for our Association's attorney who was a WEALTH of information for me.

She said the court does not send notice of judgment, although I could request a copy from the court or even from the Plaintiff's attorney (we were not represented by an attorney as we are not contesting the foreclosure.)

From this, I gather you did NOT file an "Appearance" with the Court. You do not have to file a Defense or even an Answer just because you file an Appearance; but filing an Appearance should automatically put you on the "mailing list" of all Court proceedings, and the Judgment Notice.

I would always recommend filing an Appearance unless you were never served, you know the service was defective (e.g. you examined the return of Service filed with the Court and it says you were served at abode at Laurel Street and you live on Beech Lane) and for some tactical reason you want to be able to contest the jurisdiction of the Court at some later point in time. If you were properly served and you want to keep abreast of what happens, just file an Appearance.

[JustFileSuit]

[QUOTE=DeadManCrawling;362290]

I could easily add your above language to a QC to YOU. Would it still have any effect? In discharge of any FUTURE liability I QC deed this to JustFileSuit, and so on . . .

As a "stranger" to the matter, you never would have any "future Liability" to me, so that is why there is no Consideration. Would only work to someone a "party," but I gather you have figured that out from your follow-up posting.

Do let us know the reaction of your counsel. I suspect nobody has done this because nobody has thought of it.

[justbroke]

Do let us know the reaction of your counsel. I suspect nobody has done this because nobody has thought of it.

It has been tried and does not work. (Caveat that you may find wiggle room in your particular State... but the list of States addressing this is growing, and finding that you can't do this.)

See Phillips v. City of South Bend, 2007 Bankr. LEXIS 1503 (N.D. Ind. 2007). Finding that a borrower simply can’t unload its real estate-based problems onto a secured lender without some kind of agreement or consent.

See In Re Tyler, 09-60916, W.D. Mo. 2009. Debtor, in a Chapter 13, asked the court to allow her to file a Quit Claim to BAC (the creditor/lender) since BAC didn't / wouldn't foreclose. The Judge wrote, in his Order, that "I simply find no authority, under either Missouri law or bankruptcy law, to do what the Debtor asks me to do here. And, as BAC points out, there are counterbalancing policy considerations in these situations as well – forcing lenders to take ownership of property after a borrower defaults exceeds the benefit of the bargain in making the loan."

An unsolicited "deed in lieu" (quit-claim) is legally ineffective. This result is founded on the rule that delivery requires acceptance by the grantee.

To read about problems even with deed-in-lieu of "quit claims" see TAKING A DEED FROM THE BORROWER:
STRUCTURE AND FORM

[JustFileSuit]

=justbroke;362469]

It has been tried and does not work. (Caveat that you may find wiggle room in your particular State... but the list of States addressing this is growing, and finding that you can't do this.)

See Phillips v. City of South Bend, 2007 Bankr. LEXIS 1503 (N.D. Ind. 2007). Finding that a borrower simply can’t unload its real estate-based problems onto a secured lender without some kind of agreement or consent.

See In Re Tyler, 09-60916, W.D. Mo. 2009. Debtor, in a Chapter 13, asked the court to allow her to file a Quit Claim to BAC (the creditor/lender) since BAC didn't / wouldn't foreclose. The Judge wrote, in his Order, that "I simply find no authority, under either Missouri law or bankruptcy law, to do what the Debtor asks me to do here. And, as BAC points out, there are counterbalancing policy considerations in these situations as well – forcing lenders to take ownership of property after a borrower defaults exceeds the benefit of the bargain in making the loan."

An unsolicited "deed in lieu" (quit-claim) is legally ineffective

. This result is founded on the rule that delivery requires acceptance by the grantee.

Yes, that is certainly true. However, in the specific facts of the case of the Poster here, as Posted, it is implied and inferred by the acts of the lender in filing suit in foreclosure against the property, and going to Judgment in that action, that they "accept" the property from the Court. So now they don't want it any more? So you sue them!! [And predictably you are going to have a very nice day].


To read about problems even with deed-in-lieu of "quit claims" see TAKING A DEED FROM THE BORROWER:
STRUCTURE AND FORM

JustBroke and I have gone back and forth on this in a number of posts, and the underlined passages in the case-law cites above point out where I think that he is missing the detail. In the case-law cite "In re Tyler," the debtor wants to force the lender of funds to accept the security instrument in lieu of cash. The Court was quite accurate in noting that that went beyond its powers. The security instrument (the mortgage) merely provides a stop-gap or fall-back to the lender. The first option is for the Lender to sue on Note. The lender advanced money to the debtor against the debtor's signature on a Note, a promise to pay - in cash. The lender can quietly ignore the collateral under the security instrument and stick to forcing payment of the Note.

But that is emphatically not the situation our poster (and others where J.B. and I have this controversy) is in. Our Poster has already endured a suit in foreclosure, NOT a suit on Note, and the Lender has specifically, within his Suit in Foreclosure, asked the Court to "foreclose" the property. And yet, after having done all that, and having received a Judgment of Foreclosure, THEN the lender fails to do anything further.

So the counter-argument, in these very specific circumstances [where the lender has gone after the property as collateral in a foreclosure against the property, and not a Suit on Note for money only], you just say, in effect, "OK, here you go, chum" with the Quit-Claim Deed.

Now, after receiving the QC Deed (and you inform the clerk at the Title Records Office to send it to their address after recording) if the lender starts to bleat like a stuck pig and runs to Court in an effort to, by injunctive relief, have the Court undo the QC and restore the status quo ante, then they have an obvious problem: if you don't want the property, why did you pursue this poor soul through hither and yon to get a Judgment awarding you the property?

And there is no counter-point to that.

Now the lender wants to invoke the equitable powers of the Court to undo the result they first invoked the Court's powers to obtain? So you have two possible outcomes: (1) the Court grants the lender their request for extraordinary relief, and voids the QC - in which case you sue the pants off them in yet another proceeding, as plaintiff, for the harms and losses they have foisted on you; or (2) the Court does not grant them the relief sought, and the QC deed sticks, and you are out from underneath, and you still go sue the pants off them in yet another court for their bad-faith actions in bringing the proceeding to undo the QC deed, and again you collect big-time from the jury; or (3) the Court gets irritated and refuses to disturb the QC and sends the offending lender's attorney(s) to the Statewide Grievance Committee for discipline, including suspension from practice of law for one year (and then again you sue both the attorney [now represented by his insurers] and the lender for their bad-faith actions in the previous matters (and the insurers settle as they are aghast at the prospect of facing a jury under those circumstances) and the lender settles as their new attorneys are more experienced and see that their position is hopeless. And you end up collecting more than the house was worth, and go buy your next place for cash(!!). Always a nice result. Lawsuits; ya gotta love 'em.(!)

So THEN the debtor sues the pants off the lender for putting him through hell and all that misery in the foreclosure suit. And, since the jury is not going to be sympathetic to the lender in those circumstances, he cleans the lender's clock. Moral to lenders: be careful what you wish and ask the Courts for. What do you do if you "win"?

[DeadManCrawling]

JFS,

That last post cleared up a few lingering questions.

Thank you.

Once our FC final judgment is entered, I may attempt this avenue, using the logic you state. I see my attorney tomorrow, and will get his reaction.

Thanks.

[JustFileSuit]

Be sure to let us know his reaction. This is headed for a new avenue for debtors to utilize. And if you end up using it, let us know the results (!!)

Best of luck and our warmest wishes for success. Your chums on the Forum.

[justbroke]

Unfortunately, it's the same issue. The court concluded that it would not issue an Order to allow the party to QC the deed because it would have no affect. JustFileSuit fails to understand that the State Court's interpretation of a QC under a "lien theory" is that a QC without acceptance, does not change ownership.

I purposely listed Tyler, because it was a request in the Bankruptcy Court to do a QC. The Bankruptcy Court opined that a QC is baseless without the "want" of the Grantee. How about the other 10 cases mentioned? Phillips was right on point, and JustFileSuit skipped over that one. I listed that one because it was outside the Bankruptcy Court context and went to the heart of the matter.

Lenders in Judicial Foreclosure States, do not want the property. they want the proceeds of a sale. I would go out on a limb and say that most lenders do not want the property, as JustFileSuit suggests, regardless of whether it's a judicial or non-judicial foreclosure State. So supposition that a foreclosure is pursued because the lender wants the property, is just that... supposition.

Best of luck to anyone willing to attempt what JustFileSuit has written... so I guess that's you DeadManCrawling! All caselaw points to the contrary. As noted, JustFileSuit has presented no caselaw on the matter and I'll just say that pursuing new ground, which JustFileSuit readily admits, is what this is.

I would love to hear of cases and caselaw supporting this "theory" since it could mean making mortgage lenders "Eat Wood" (if I can coin a new phrase). Nothing would go further to help debtors in Bankruptcy with their fresh start. Unless and until I see in the Bankruptcy Code or underlying State non-bankruptcy law that it is possible... I don't see too many lender's chowing down on wood in the near future.

As a housekeeping measure... when I make a post on a topic, I post citations and/or references to the FRBP, FREv, FRCP, and/or State statute, supporting all views and there just are none where JustFileSuit's view has prevailed. For full effect, I also have conceded that underlying State non-bankruptcy law may differ.

I can only bid you good luck. Now would a lender back down and not fight a QC... perhaps; but the cases that I posted, they fought it vehemently.

(I can tell you that in Missouri and Indiana, this is a non-starter.)

[JustFileSuit]

Since there seems to be so much confusion over the tactic of the QC that I have set forth, I will be opening a New thread under the Heading: Using a Quit-Claim as a Gambit. I will try to set it forth in detail so that everyone can understand the possibilities. See you there.

[BCA2009]

I was told by my attorney that the only thing that I had to pay for was the insurance. Taxes attach to the house, not the owner. I don't have HOA as it is a single family house so I don't have to worry about those. But since I can be held liable for any damage done if I left it vacant, I plan on living here rent free (and tax free) until the bank forecloses. Which will probably be just before the town does for the property taxes.

I been reading alot on this forum and have learned alot. But the above quote seems to contain contradictions. I am certianly not knowledgable enough to dispute them, BUT it appears that the point is, if you still have the title/deed in your name you are responsible. So I understand (althought think that it is BS) that you would be liable for expenses incurred on your property. HOA fees, utility fees, things like that. But I don't understand why you would pay insurance. Except maybe liability, but you would probably be better off getting some time of personal umbrella policy for that. and how often is someone really sued for a slip/fall type accident on private property.

If the house burns down after it has been foreclosed on, but the lender just didn't want to accept the deed, why should I care? At that point it is still my house, (deed in my name). And I no longer am obligated to pay the lender (debt discharged in BK). So how would this be any different than if I owned a home outright with a clear title and didn't have insurance. If it burned down or was damaged in a storm, I would not be obligated to rebuild it or restore it to the prior condition.

Maybe i'm overlooking something, but I see no fiduciary responsibility to maintain the property.

Next question, What if you quit claimed the deed to a third party for consideration ($10 bucks). I know they wouldn't get a clear title due to the mortgage, but it seems like that would force the lenders hand and make him take action. Kinda, like Justfiledsuit was saying earlier, I don't think it would fly for the lender to try to convince the judge that the deed should be transfered back to me. It would seem logical that they would have to ask for the deed to be put in the lenders name.

Or what if you could quit claim it to the HOA (assuming they would accept) in consideration for forgiving you of your liabilities for HOA dues/fees. They could then rent it out until the leder sued to get the deed.

Just thinking outloud.

[JustFileSuit]

Just to finish up.

[QUOTE=BCA2009;362905]I been reading alot on this forum and have learned alot. But the above quote seems to contain contradictions. I am certianly not knowledgable enough to dispute them, BUT it appears that the point is, if you still have the title/deed in your name you are responsible. So I understand (althought think that it is BS) that you would be liable for expenses incurred on your property. HOA fees, utility fees, things like that. But I don't understand why you would pay insurance. Except maybe liability, but you would probably be better off getting some time of personal umbrella policy for that.

and how often is someone really sued for a slip/fall type accident on private property.

See, that is the issue. The bankers do not take the title and register the judgment in the Land title records because IF some kids break into the vacant house and get hurt, then they are the deep pockets to get sued. So they just leave it in your name - and yes, you retain the legal liability. NOTE: it is not that they think that you in turn have deep pocket (after all, you just got out of BK Court), but more that "they" don't want to end up sued. If they are lienholders, in theory they are not property holders, and the law of liability (in theory) shields the lien holder. [I say "in theory" because a bright attorney could argue with some force that the bank was engaging in a sham. A long shot, to be sure, but hey, that is what makes it a challenge!].

If the house burns down after it has been foreclosed on, but the lender just didn't want to accept the deed, why should I care?

Nope, no need to. That is why the lender has "forced-placed insurance" to cover their interests. Actually, they would be delighted with a total loss; then they have sold the debt to the insurance company. Makes their day.

Maybe i'm overlooking something, but I see no fiduciary responsibility to maintain the property.

You probably do not (if you are not living in it). Caveat: since you are still the registered owner, if it is a free-standing house (not a condo) then the town can go after you for Ordinance Violations and fines. Makes your life miserable. Again, why the banks leave it in your name - they shovel the headaches off onto you.

Next question, What if you quit claimed the deed to a third party for consideration ($10 bucks). I know they wouldn't get a clear title due to the mortgage, but it seems like that would force the lenders hand and make him take action.

Nope. The new "owner" does not have clear title due to the Judgment, not due to the Mortgage. The Mortgage is history; it has morphed into a Judgment. That is why the Lender went to Court in the first place. But yes, with that caveat, sure you can go quit-claim it to anyone, including the HOA.

Kinda, like Justfiledsuit was saying earlier, I don't think it would fly for the lender to try to convince the judge that the deed should be transfered back to me.

In the case where you quit-Claim it to yet another third party, the lender has no Standing to go to court to undo the QC and force the deed back to you. All they can do is File the Judgment and displace the new third party as Owner - which they can do any time they want. They can do that with you, with your successor in title, until the Judgment expires. Typically 20 years.

And, the lender would have some serious credibility problems with the Judge if they tried to undo a quit-claim - which is why I suggested the Gambit. Nothing like putting a lender on the spot!

It would seem logical that they would have to ask for the deed to be put in the lenders name.

And they stall in doing that because they want to shovel the property liability problems off onto someone else.

Or what if you could quit claim it to the HOA (assuming they would accept) in consideration for forgiving you of your liabilities for HOA dues/fees. They could then rent it out until the leder sued to get the deed.

Perfectly viable solution. Except that the Lender does not need to "sue" to get the deed; they already have a judgment. So they can go enforce the judgment any time they want, just by filing it onto the Land Title Records. Sure, the HOA can take it over and go collect rents, and the lender would be quite happy with that; the property gets maintained until the lender finally gets around to finding a buyer with the money and credit to pay them the price they seek. Might take them a while!

The HOA just remains subordinate to the lender's Judgment, that's all. Not much of a position, but yes, then they can rent it out, make improvements, and so forth; except their position can be evaporated in a blink of an eye. Note that under this scenario the new "tenant" would have to be evicted in proceedings; the tenant is not a subordinated Defendant Party in the original litigation. that becomes an interesting wrinkle (although the new tenant would have problems attempting to enforce the lease and remain for the duration of the lease).

Just thinking outloud.

Always worthwhile. that is what makes this forum an interesting place! And you help out hundreds of others - just by raising these issues.