how to PROPERLY turn over (to the bank) your foreclosed home.

[JustFileSuit]

I would respectfully disagree with the analysis of "JustBroke" (above). Here's why:

Remember that the subject property has been "foreclosed", not just is upside-down with no litigation or other problems. There is a foreclosure judgment and the debtor wishes to move out and move on. BUT the creditor wants to have it "both ways:" have a foreclosure judgment and defer, perhaps for years, the title of ownership.

The reason the lender does this is to avoid property liability issues. If someone gets hurt on the property or (gasp) if criminals start using the abandoned house as a "safehouse" for major criminal activity, like hiding captured immigrant girls for forced prostitution, then the Owner on record can be sued for civil damages. The bank is a "deep pocket." Since they have foreclosed the house, and do nothing with it, they have a liability exposure. So (aside from buying insurance, which may not be enough), they avoid the liability by holding the foreclosure judgment and not doing anything further to take title until they are ready to sell. YOU, the debtor, end up with no house and all the liability.

But foreclosure sets the stage for transfer, whether the lender likes it or not. I see no need to make the "consideration" the receipt of $1 (which they will not send you ) or your "payment" of $1 or anything else, as payment to a lender to induce them to take a quit-claim makes no sense. "Consideration" has to flow the other direction. So what is the Consideration? It becomes the avoidance of further tangible liability, namely the tax claims or the condo fees (if a condo).

And yes, that can be a document without the signatures of the parties. A Quit-Claim in Connecticut only requires the signature of the party abandoning the claim.The beneficiary dos not sign the quit-claim.

[justbroke]

I never mentioned anything about signatures, as I know you don't need both parties. However, I wonder how many times a QC has worked to give title to a lender.

But foreclosure sets the stage for transfer, whether the lender likes it or not.

Actually, it legally make anything obvious. A lender who wins a foreclosure lawsuit has only won the right to exercise its rights under the Mortgage and Note. That's all. Many cases have concluded that you cannot force a lender to actually complete the foreclosure, by suing to force the lender to take the home. That tells me a lot!

Do you know why a lender doesn't want the QC? When you QC it, you would be able to basically pass all encumbrances to the Grantee. I would not want that as a lienholder. You could then be liable for other liens that encumber the property!

This is why the Grantee must actually want the deed/property. Otherwise, we (as Grantors) could all just QC our homes to the Senator we hate the most as an act of defiance. (Not a bad idea, if you ask me... or how about all the homeowners in foreclsure just QC them to the U.S. President?)

QC'ing without the Grantees involvement is a legal disaster, if you ask me.

[JustFileSuit]

Actually, it legally make anything obvious. A lender who wins a foreclosure lawsuit has only won the right to exercise its rights under the Mortgage and Note. That's all. Many cases have concluded that you cannot force a lender to actually complete the foreclosure, by suing to force the lender to take the home. That tells me a lot!

Do you know why a lender doesn't want the QC? When you QC it, you would be able to basically pass all encumbrances to the Grantee. I would not want that as a lienholder. You could then be liable for other liens that encumber the property!

If the lender files suit to undo your fait accompli of the Quit-Claim, then you have major grounds for a massive lender-liability suit. they sued you and the property in remfor the express purpose of foreclosing the property; that is, taking away your property rights and substituting their own. So if they fail to do so, then you sue them for what they put you through. And (since that goes to a jury which is made up of folks fed up with the banks) they lose. Big time. that is entirely predictable.

I would respectfully disagree with your analysis that the lender does not take title because of the "liens". In a foreclosure, the junior liens are stripped away. If there is a more senior lien, that lien stays, but only against the property. The original signatory of the Note that generated that encumbrance remains the Obligor nonetheless. No Court can force a Holder of a Note to have the Obligor substituted. But that is only the case where a junior lienholder forecloses the further subordinate liens. Either way, the superior liens remain in place on the property.

[justbroke]

If the lender files suit to undo your fait accompli of the Quit-Claim, then you have major grounds for a massive lender-liability suit. they sued you and the property in rem for the express purpose of foreclosing the property; that is, taking away your property rights and substituting their own. So if they fail to do so, then you sue them for what they put you through. And (since that goes to a jury which is made up of folks fed up with the banks) they lose. Big time. that is entirely predictable.

Sorry, but suing the lender because they don't foreclose has failed every time I have read that it was attempted! The reason is as stated above. They are not bound by any law to actually complete the foreclosure. They sue you to have the ability to pursue the sale. Simple as that.

I would respectfully disagree with your analysis that the lender does not take title because of the "liens". In a foreclosure, the junior liens are stripped away.

You are mixing the two. In a foreclosure, the lien issue is settled. In a quitclaim (QC) they absolutely are not! This is why you pay for a Title Company to issue a Warranty Deed.

If there is a more senior lien, that lien stays, but only against the property. The original signatory of the Note that generated that encumbrance remains the Obligor nonetheless. No Court can force a Holder of a Note to have the Obligor substituted. But that is only the case where a junior lienholder forecloses the further subordinate liens. Either way, the superior liens remain in place on the property.

Nothing I mentioned stated anything about any obligations under any Note. I was talking specifically to yoru notion that you can just QC and be done. No person in their right mind should ever accept a QC deed (as Grantee) without having a lawyer or Title Company inspect the note. The problem isn't the obligation of the Note... the problem is that the property is still encumbered by the liens pledged as security.

As anyone who has QC'd a deed to a Grantee. Then the Grantee tries to sell or otherwise encumber the property, and you find the liens still there. This is the problem.

Again, hats off for theorizing, but I haven't seen this done cleanly and successfully.

[JustFileSuit]

[QUOTE=justbroke;360495]

Sorry, but suing the lender because they don't foreclose has failed every time I have read that it was attempted! The reason is as stated above. They are not bound by any law to actually complete the foreclosure. They sue you to have the ability to pursue the sale. Simple as that.

True enough, but then, what was the debtor's suit premised on? Typically, to force the lender to take the property (e.g. if it was a commercial property and turned out to be a superfund mess). I suggest a different tactic: not to sue to force the foreclosure, but for damages for bringing the suit in the first place when it becomes apparent that the purpose of the lender'sw suit was not to take the foreclosed on property. And that is actionable!

See, a Lender has two options: one, to "sue on Note" and demand money, and not refer to the security; two, to sue in rem against the property and foreclose. If he sues on Note and then does not enforce the Judgment, there is nothing that you do (or probably can do). the matter just "sits." BUT if he sues against the property, as is the case here, and then does not take over the property, then I would warrant that you have a great claim for lender liability issues. [I invite commentary to this analysis.]

You are mixing the two. In a foreclosure, the lien issue is settled. In a quitclaim (QC) they absolutely are not! This is why you pay for a Title Company to issue a Warranty Deed.

Agreed. However, in our poster's situation, there is already a Judgment of Foreclosure. What I am suggesting is a QuitClaim AFTER the Judgment to force the transfer of title. The only lien issues that remain are those of the superior liens that were not foreclosed. [I invite commentary on this tactic and analysis.]

No person in their right mind should ever accept a QC deed (as Grantee) without having a lawyer or Title Company inspect the note.

the Grantee (the lender) may not have a choice. You ram it at them. Then the counter would be to file suit against you to undo the QC Deed. That should be interesting.

The problem isn't the obligation of the Note... the problem is that the property is still encumbered by the liens pledged as security.

I would respectfully disagree. the liens are vacated by the foreclosure. If a lienholder objects, then they would have to redeem the Note (pay the lender) to preserve their lien position. Otherwise, the lien is history.

As anyone who has QC'd a deed to a Grantee. Then the Grantee tries to sell or otherwise encumber the property, and you find the liens still there. This is the problem.

Again, I would disagree. the liens are vacated by the foreclosure judgment which the lender simply records on the title records.

Again, hats off for theorizing, but I haven't seen this done cleanly and successfully.

Neithe4r have I. But I rather suspect that that is because nobody has thought this one through. Mostly, the debtor is so demoralized that they are in a mental fog and just wander off. the property stays in limbo for years. If there is a property claim, e.g. slip-and-fall, then the victim cannot find anyone to sue, and in any event the debor has no money. So now you see the lender strategy of not taking over the title on the land records.

[justbroke]

I would respectfully disagree. the liens are vacated by the foreclosure. If a lienholder objects, then they would have to redeem the Note (pay the lender) to preserve their lien position. Otherwise, the lien is history.

Actually, (in Florida) liens are not extinguished by a judgment of foreclosure. They are not extinguished until the property is sold.

I do think we're getting some definitions mixed up and it's causing problems with our positions on this.

In this particular case, and I hope we're still talking about the Original Poster's (OP) case and about a foreclosure judgment being awarded, the OP never claimed that the lender actually completed the foreclosure by having the sale! Until there's a sale... there is no "completion" of the foreclosure, and the liens are still in force and in full effect.

If this were as easy as you suggest, there would be mortgage defense companies using this tactic. As I have written, I haven't seen it successfully utilized. Now, I'm pretty versed in Bankruptcy Law now... but I do concede I haven't practiced... except on myself. There's a case in Florida's Middle District (FLMB) that goes right to the heart of your argument that a mere judgment of foreclosure extinguishes the lien. That case was In Re Neely, Case No. 00-01819-BKC-3F3, Middle District of Florida.

In an Adversary Proceeding (AP) -- 00-184 (2000) -- the debtors tried to contend that the lien was extinguished upon the judgment of foreclosure in favor of the lender. Ooops... not so fast. The Judge in this case wrote that "[o]nly the issuance of a certificate of sale extinguishes junior mortgages".

I base my opinion on what I have seen and read and the aforementioned case. I will concede that the Statutes in your State may in fact "extinguish" subordinate liens upon a Judgment of Foreclosure. (Noting that even in Florida, a Judgment of Foreclosure can, if it's within the Order so awarding the Judgment, extinguish junior liens, but I haven't ever seen one that does positively do so. The default is... the junior liens are unaffected by the Judgment.)

[JustFileSuit]

Let the readers remember that there are two generic types of foreclosure litigation: "strict foreclosure," where the lender asserts that the property is underwater and in the absence of homeowner equity the title to the property should vest in the foreclosing lender absolutely; and "Foreclosure by sale," where the property presumably has equity and the Judgment is that the property shall be sold to satisfy the judgment.

In the "Sale" case, then the Court typically appoints a "Committee of Sale" that acts as an agent of the Court to complete the process, hold a sale, get a high bid and deposit, go back to the Court for approval of the sale, consummate the sale with the new buyer, and take the money and distribute it according to the Court's direction.

Typically, that is outside the ability of the lender to control. The Committee reports to the Court. If your State leaves that up to the lender to do, and he does not, then you do have a stalemated situation. I would then sue the lender for unfair trade practices and see if that gets some traction.

Now in a "strict foreclosure" the title is ordered passed to the lender foreclosing upon the termination of the "Law Date" which is the date of redemption of the various parties, including of course the original owner. After the law days run, then the title rests absolutely with the lender.

What you are suggesting is something outside the scope of "court foreclosure" where the lender retains control of the property but simply fails to enter the Judgment upon the land title records. The Court has ordered that the title rests absolutely in the lender, yet the lender simply refuses to register the Court's imprimateur on the Land Records. That puts the original owner, who has been foreclosed on (and stripped of his property rights) at risk, at least in theory. I fail to see why that action, or lack of action, is not an actionable tort.

Further, given that the Court has Ordered the foreclosure by issuing Judgment, the borrower so condemned could (in theory) simply go purchase a copy of the Certified Judgment and go record it himself on the Land Title Records. Or he could create a "QuitClaim" and go file THAT on the Land Records. Either way, the borrower forces the issue.

I grant that this is not typically done. Why brother - you are broke anyway. BUT - if you are about to inherit, or have inherited, a few million from your rich granddad, then it behooves you to not leave old liabilities out there on the Land Records.

Your recital of the Florida USBC case in Adversary Proceeding is fascinating.. I will look that one up. Thanks for sharing.

[justbroke]

I think we agree that there are two types of foreclosure process.

(Note that the FLMB case did cite other Florida non-bankruptcy cases.)

[JustFileSuit]

We want to be a fully descriptive as possible as other read these posts to gain some insight into how to adapt this to their own particular situations. And that is the power of the Internet. Now the cumulative experiences and ideas of mi8llions are in play.

[DeadManCrawling]

I am tempted to try this and see where it leads.

I want BoA to take back our place asap. They are not interested. Quit paying a year ago. NOD in November.

Filed Dec 7 or so.

No motion to lift the stay so far.

They appear to have zero interest in proceeding. Who knows, I may give the QC a shot and see what happens.

[hedgecat]

I'll be keeping an eye on this as well. Want to have BOA take the property back after 4 months (as of next week) of non-payment and 6+ months on the market without any offers. BOA said today I don't qualify for DIL - even though I believe that I do, according their own rules. I can't afford the utilities, the insurance, the homeowner's dues, etc. until they decide to foreclose. I'm just shaking my head!

[justbroke]

I think DeadManCrawling will come back here shortly to tell you, that his lawyer didn't like this QC strategy.

[hedgecat]

By the way, I just want to say that I was finally told by BOA that they won't do a Deed-in-Lieu for any property that hasn't been under short sale for less than four months. Had to drag that out of them and then, there's no telling how long after that they'd to a DIL.

[DeadManCrawling]

I have given this a bit more thought.

I will still ask my attorney, but the major concern in my mind is this:

Can you FORCE a lender to take title to the property by QC deed and also claiming you "received" consideration (a fee or equivalent) when no such exchange actually occurred?

I doubt it.

Future expectations of foreclosure or past actions probably do not amount to any sort of consideration. I will ask the attorney, but this is my mind now.

Also, given that we are a year into default, I am concerned we would drag out our case. Victory would be hollow, since we want the place gone and have moved on.

Thoughts are welcome as always, and best wishes.

-dmc

[JustFileSuit]

DeadManCrawling;364506]

Can you FORCE a lender to take title to the property by QC deed and also claiming you "received" consideration (a fee or equivalent) when no such exchange actually occurred?

I doubt it.

Short answer: probably not. Here are the underlying issues (I repeat what I stated in previous postings in various threads, including the "QC Gambit," so that it may become clearer to Readers.)

1. Has the Lender filed suit in foreclosure? If all he has issued you is a default, and then done nothing at all, I would suggest your QC maneuver is premature.
2. If suit has commenced, then has the lender demanded the sale of the property (In Connecticut and Vermont, just the actual property in the event of strict foreclosure, no the situation here in Florida) as his remedy?

NOW, if the lender has, then the gambit is getting ripe for execution. It is not clear from your post that you are at that point yet.

So you just go ahead and do it!! And now what? The lender can do two things: (a) do nothing, in which case you have achieved your objective and moved on with your life; or (b) scream like a stuck pig, and go to Court in an effort to "undo" your Q.C. Deed.

And if he does (b), then he will probably succeed. And now what?

Now you sue his pants off. After all, he put you through all hell and high water with his foreclosure suit, and in the Pleadings demanded the Court order the sale (or surrender) of the property to satisfy his demands, and you just gave it to him in compliance with his wishes - and now he doesn't want it??? So is the lender abusing the judicial system, or what??? And you ask the jury to finance your early retirement. Now do you see how elegant that is? (Yup, zero case law and zero statutory authority for the gambit; that is what makes it such a neat gambit: nobody is expecting it.)

Have a nice day, Lender. Be careful what you sue for; you just might get it.

All readers further Note: I have been sanctioned by Guru HHM for suggesting these gambits, and he declares me to be persona non grata on this forum. Having been summarily expelled, do use your own considered wisdom in weighing your course of action. If you find Guru HHM is the fount of all human knowledge, then by all means just go listen to his words of wisdom; undoubtedly better tuned than anything I could suggest.