Foreclose on Property with more than one owner

[Rubitout]

When property is owned by two or more people (not spouses), when only one of them files for bankruptcy can the lender foreclose on that property?

[HHM]

Yes, in the big picture. Bankruptcy only temporarily stops a foreclosure, unless one of the owners is filing chapter 13 bankruptcy and plans to cure the mortgage arrears in the chapter 13 payment plan.

Filing a chapter 7 only delays the foreclosure, it doesn't stop it. However, the automatic stay should temporarily stop the foreclosure process even if the other owner is not filing.

[Rubitout]

Thank you.

[indeep59]

Yes, in the big picture. Bankruptcy only temporarily stops a foreclosure, unless one of the owners is filing chapter 13 bankruptcy and plans to cure the mortgage arrears in the chapter 13 payment plan.

Filing a chapter 7 only delays the foreclosure, it doesn't stop it. However, the automatic stay should temporarily stop the foreclosure process even if the other owner is not filing.

What happens if only one owner is on the mortgage (the bankrupter) and the other owner is title only?
Other owner doesn't want it, or to take over payments.
Does that "other" owner suffer the consequences of a bankruptcy?

[sadandconfus]

just to add to INDEEP59 question, is the other person on the title considered the RECORDHOLDER? because on my notice of default, it shows me as the borrower and the other person as the recordholder?

[HHM]

What happens if only one owner is on the mortgage (the bankrupter) and the other owner is title only?
Other owner doesn't want it, or to take over payments.
Does that "other" owner suffer the consequences of a bankruptcy?

Probably not. If by consequences you mean, does the owner (who is not on the mortgage) have anything reported on her credit report? I wouldn't think so because the credit report is a history of a persons "credit" not a history of property ownership. If the non-filing owner is not on the mortgage, there is no loan that that person is defaulting.

[Mensa1]

When property is owned by two or more people (not spouses), when only one of them files for bankruptcy can the lender foreclose on that property?

Whoa... in order to give an accurate answer here we need to know IF the payments on this property are delinquent? If the payments are current, not in default, then NO, the lender cannot foreclose.

The Debtor and co-owner of the property who is filing for BK may well haver other financial issues and still have this property paid current. Of course any equity in this property if there is such a thing), that would belong to the Debtor filing BK, will be an assets of the BK estate that the Trustee may come after. The property co-owner NOT filing for BK could end up owning this property with the Trustee as co-owner if lots of equity existed.

Depends greatly on what state the property is located and the exemption laws, as well as how that state deals with Tenants in Common property ownership. In other words, lots of variables here both in and out of the BK issue. One more piece of info, are the two co-owners blood releatives, (Brother-Sister, Mother-Daughter, etc) or a close inter personal relationship otherwise, or a more of an arms-length business partnership situation? It will matter a great deal.

[indeep59]

Probably not. If by consequences you mean, does the owner (who is not on the mortgage) have anything reported on her credit report? I wouldn't think so because the credit report is a history of a persons "credit" not a history of property ownership. If the non-filing owner is not on the mortgage, there is no loan that that person is defaulting.

Yes that's what I meant by consequences, as I do not want the other owner to suffer credit wise. The other owners credit report does not show this mortgage now, only mine, and mine shows this mortgage as "individual account" and not joint.

[indeep59]

Whoa... in order to give an accurate answer here we need to know IF the payments on this property are delinquent? If the payments are current, not in default, then NO, the lender cannot foreclose.

The Debtor and co-owner of the property who is filing for BK may well haver other financial issues and still have this property paid current. Of course any equity in this property if there is such a thing), that would belong to the Debtor filing BK, will be an assets of the BK estate that the Trustee may come after. The property co-owner NOT filing for BK could end up owning this property with the Trustee as co-owner if lots of equity existed.

Depends greatly on what state the property is located and the exemption laws, as well as how that state deals with Tenants in Common property ownership. In other words, lots of variables here both in and out of the BK issue. One more piece of info, are the two co-owners blood releatives, (Brother-Sister, Mother-Daughter, etc) or a close inter personal relationship otherwise, or a more of an arms-length business partnership situation? It will matter a great deal.

In my case, payments are 30 days late,there is no equity (underwater), it's in FL, and the other owner is an ex gf. Again, the other owner has washed her hands of it, especially because it's way underwater.

[Mensa1]

What happens if only one owner is on the mortgage (the bankrupter) and the other owner is title only?
Other owner doesn't want it, or to take over payments.
Does that "other" owner suffer the consequences of a bankruptcy?

The co-owner who is title only will not suffer from a foreclosure on this property, or by the BK filing of the other co-owner and debtor on the property. Or I should say that they shouldn't and if anything does show up credit wise it would be easy to challenge that and win, resulting in the record being corrected.

So you plan to just let the property go to sale? Those are taking as long a year, or more in FL these days. What county? Do you know the current backlog>?

[indeep59]

The co-owner who is title only will not suffer from a foreclosure on this property, or by the BK filing of the other co-owner and debtor on the property. Or I should say that they shouldn't and if anything does show up credit wise it would be easy to challenge that and win, resulting in the record being corrected.

So you plan to just let the property go to sale? Those are taking as long a year, or more in FL these days. What county? Do you know the current backlog>?

Thanks for the info, pretty much what I've been reading everywhere.
As for the property, I'm not sure what I'll do. It's a condo in Collier County and the value dropped below 6 digits but I owe twice as much. Since I'm going to BK7, and I have a primary house as well, not sure if they'll let me keep it anyway and fight for a loan mod. I think I might just wash my hands of it anyway. How long is the backlog there?

[Mensa1]

Collier County....... One of my favorite places. Love the area.

Will they let you keep it? Sure, until the lender forecloses.
The Bk Trustee won't want any part of it since there is no equity.
The Lender will likely ask for "Relief from Stay" so they can resume foreclosure proceedings prior to the Bk being concluded. If they do so, the T'ee will grant that, no question. If the Lender doesn't ask for Relief then they are just too snowed under to be on top of it and will just wait until your Bk case grants discharge and closes. Then they can pursue the foreclosure full ahead.

Maybee the T'ee will work a short sale on the property as part of the Bk; it is possible. If not and they discharge you, then you still own the condo and if you can work out a mod, more power to you. I wouldn't in any way indicate your interest in doing so during the Bk case.

[spinner]

Another follow up question:

After foreclosure the lender will send a 1099-C. Will each of borrowers get the 1099-C doc? If so then does it mean we have to file separately and potentially each get taxed?

[Mensa1]

The co-owner who is title only will not suffer from a foreclosure on this property, or by the BK filing of the other co-owner and debtor on the property. Or I should say that they shouldn't and if anything does show up credit wise it would be easy to challenge that and win, resulting in the record being corrected.

So you plan to just let the property go to sale? Those are taking as long a year, or more in FL these days. What county? Do you know the current backlog>?

Not exactly sure what I was drinking on the nite of the above answer, (if I am understanding this correctly at this moment, as I did just a quick re-read) but both owners of record will be named in the lawsuit for foreclosure; (public record lawsuit). The gf who is NOT on the note will not suffer from a credit report standpoint, except that credit bureau's pick up lawsuits from public record and the fc lawsuit could also show up on her credit report that way too. In order for her to have it removed she would simply challenge that she wasn't liable for he mtg debt, and it should go away. The point I am trying to make her is that SHE will be part of the lawsuit... A way around that would be for her to Quit Claim her interest in the property to you, prior to any foreclosure suit beginning, which would eliminate her from being named in the lawsuit to foreclose. BTW, the foreclosure is how the lender gets clear title to the property so they need to name her too in order to transfer he interest to them, unless she does the QC deed in advance.

Thanks for the info, pretty much what I've been reading everywhere.
As for the property, I'm not sure what I'll do. It's a condo in Collier County and the value dropped below 6 digits but I owe twice as much. Since I'm going to BK7, and I have a primary house as well, not sure if they'll let me keep it anyway and fight for a loan mod. I think I might just wash my hands of it anyway. How long is the backlog there?

Theoreticlly you could keep it in Bk, cause the TT sure doesn't want it; no equity to latch onto. So after the Ch 7 is discharged you could strike a mod with the lender, if they are interested in doing so, which could lower the pymts and maybe allow you to rent out the condo. Years from now it could be worth more than what is owed... or a short sale could be worked out now with the lender, or maybe a cash for keys. There is little motivation for you to do any of the above unless it puts some scratch in indeep's jeans.

Another follow up question:
After foreclosure the lender will send a 1099-C. Will each of borrowers get the 1099-C doc? If so then does it mean we have to file separately and potentially each get taxed?

Depends a bit on type of ownership interest. Assuming partnership interest, and Tenants in Common ownership, then the loss should be allocated to each of you based on your ownership interest... so if you each own half, then you should each document half on your taxes... but this is a great question, and it somewhat outdistances my knowledge here w/o doing quite a bit more research... so if I learn more on it I will post back later.

The only other thing that I will mention in any partnership is that you are each responsible for 100% of the mtg debt, not half. It is what is called "Joint and Several Liability', and this could also come into play with the debt forgivness too; not sure. Maybe someone else will see this and be able add some lightning to the equation.

[spinner]

Depends a bit on type of ownership interest. Assuming partnership interest, and Tenants in Common ownership, then the loss should be allocated to each of you based on your ownership interest... so if you each own half, then you should each document half on your taxes... but this is a great question, and it somewhat outdistances my knowledge here w/o doing quite a bit more research... so if I learn more on it I will post back later.

The only other thing that I will mention in any partnership is that you are each responsible for 100% of the mtg debt, not half. It is what is called "Joint and Several Liability', and this could also come into play with the debt forgivness too; not sure. Maybe someone else will see this and be able add some lightning to the equation.

So if the cancellation of debt is lets say $50k .. both borrowers will be taxed individually? Meaning double tax? To add another twist - basically the borrowers are my father and I. House bring foreclosed on is my father's primary residence. It was also my primary residence for about 6 years. What does this mean as far as the Mortgage Debt Relief Act that states principal residence not being taxed?

I really appreciate any inputs.