Speeding Up Foreclosure

[lodibklaw]

Probably one of the few times someone has asked how to make the foreclosure happen faster.

The issue is this.

Chapter 7 filed and discharged. Client had a 2nd home that they gave up in the bankruptcy. But the bank has not moved to foreclose and the city is coming after the clients for violations (IE unmowed lawn, broken window, etc).

The city says that since clients are still legal owners they are liable.

Pushing the bank to take the property back but they won't foreclose and the short sale process takes months. Offered deed in lieu but they won't do that either.

Anyone figured out a trick to get them to take the house back ?

[justbroke]

None. However, HOAs seem to have figured out how to do a reverse foreclosure in South Florida. I think this option should be available for homeowners.

I would somehow talk the City into foreclosing on the property (in rem) and them doing the reverse mortgage to the first lienholder.

[sofarsogood2]

Just wondering, do violation fines follow the house, or the owner? Could the city/county eventually put a lein on the house for the fines(thereby eventually transfering liability to the bank), or do they follow the discharged owner? May have this problem coming to us eventually.
I read about "quiet" claims awhile back. Some attorney in FL trying to get them done for clients- don't know the outcome. Not that you'd ever get it done, but I wonder if attempting a quiet claim would be a wake up call for the bank to get moving.

[justbroke]

Quit Claims require consideration and acceptance by the person who you are QCing the property. Most lenders don't like QCs because they are not Warranty Deeds nor are they insured with Title Insurance. A QC doesn't guarantee that there are not other encumbrances on the property. This is why banks prefer to foreclose, as that quits the title quite nicely, efficiently and with all the power of the Courts behind it.

As for whether violations attach to the property or are an in personam liability to the registered owner, is a question for your local laws (City, Town, County). Read the ordinance and see what they extent of the fine is. Most civil infractions are punished by fines and the Bankruptcy Code doesn't discharge fines. You could be stuck with the fines.

[Mensa1]

The city says that since clients are still legal owners they are liable.

Anyone figured out a trick to get them to take the house back ?

This is a BIG problem everywhere these days. The answer to the problem to relieve your clients personal liability would to form a shell company, LLC, and client QC's the property to the LLC. That will at least get the city off your clients back for the time being, and what you are seeking here is temporary relief. Then let the lender and the city fight it out.

Cities usually have all sorts of remedies financially that they can maintain the issue, of course it costs them to do so, but then pass along the costs via tax bill. Trouble is cities have no $$$ and your client doesn't have motivation or $$$ to do so. But for 100-200 bucks they could form the entity and have a public transfer, PO Box for mailing address of LLC, and they will all be chasing their tales. Even the lender, if foreclosure hasn't started, to provide notice to new LLC. This is kind of like parking an old unlicences junker on the street, or cutting an old skiff loose to drift at sea.

You may or may not be able to recommend that course of action to a client but I would do it in a heartbeat. I guess it also depends on fees to establish an LLC in your state, but here they are fairly inexpensive.

[sofarsogood2]

Quit Claims require consideration and acceptance by the person who you are QCing the property. Most lenders don't like QCs because they are not Warranty Deeds nor are they insured with Title Insurance. A QC doesn't guarantee that there are not other encumbrances on the property. This is why banks prefer to foreclose, as that quits the title quite nicely, efficiently and with all the power of the Courts behind it.

As for whether violations attach to the property or are an in personam liability to the registered owner, is a question for your local laws (City, Town, County). Read the ordinance and see what they extent of the fine is. Most civil infractions are punished by fines and the Bankruptcy Code doesn't discharge fines. You could be stuck with the fines.

No, this attorney was filing QUIET claims- not quit claims. I don't really understand it yet- trying to research.

The gist of her explanation is that because the banks basically "abandon the property" after foreclosure, by not taking title, not maintaining the property, not forcing occupants out, leaving the titled owner with liability. Filing a quiet claim, if successful, would end the banks rights to take the property back.

I think she was using it as a tactic to force the banks to take title, or risk losing rights to the property altogether.

Of couse, if faced with a quiet claim, the banks most likely will tell the courts that it is their property. To which a homewner could respond by saying- well, then take title. How does a lender explain to a judge "I want to own it, I just don't want the resposibility to maintain and insure it, so for now, I'm leaving title in the plaintiffs name and not filing the neccesary paperwork to take title." I don't think that excuse would fly.

It was an interesting strategy and I wonder if it works. I think the article said it take about 6mos. of no claims by others to get a quiet claim done.

The attorney was in Tampa Fl, I believe.

[Mensa1]

No, this attorney was filing QUIET claims- not quit claims. I don't really understand it yet- trying to research.

The gist of her explanation is that because the banks basically "abandon the property" after foreclosure, by not taking title, not maintaining the property, not forcing occupants out, leaving the titled owner with liability. Filing a quiet claim, if successful, would end the banks rights to take the property back.

I think she was using it as a tactic to force the banks to take title, or risk losing rights to the property altogether.

Of couse, if faced with a quiet claim, the banks most likely will tell the courts that it is their property. To which a homewner could respond by saying- well, then take title. How does a lender explain to a judge "I want to own it, I just don't want the resposibility to maintain and insure it, so for now, I'm leaving title in the plaintiffs name and not filing the neccesary paperwork to take title." I don't think that excuse would fly.

It was an interesting strategy and I wonder if it works. I think the article said it take about 6mos. of no claims by others to get a quiet claim done.

The attorney was in Tampa Fl, I believe.

QUIETING of Title and QUIT CLAIM DEED are two different animals. A QTA is akin to a suit filing for anyone having an interest in the property to state so after proper notice, the QC deed is just that, a Deed conveying away the property. I do understand what the Atty in Tampa is attempting to accomplish but maybe she doesn't really understand it all that well either.

You state that Lender couldn't say they have an interest but that they aren't foreclosing right now indicates that you don't understand this at all either. In a QTA (Quiet Titel Action) that this Atty has filed all the bank has to do is answer the complaint stating that they have a valid mtg interest and that is the end of the QTA. What the Atty is hoping is that the mtg lender will fail to file an answer and after 120-180 days of failure to establish their claim the mtg is gone. That is not going to happen; period. There is nothing in a mtg doc that states that the lender must foreclose until they are ready; notta. That mtg could sit there for years, the property just the same in deteriorating condition, and there is absolutely nothing that would compel the lender to do a thing. Of course that would make a horrible business practice but that in itself describes many of these large lenders with positions in serious default.

A QUIT Claim is a type of deed. It conveys whatever interest the owner has in the property, if any. No warranties as to ownership and if the Grantee (the bank who is accepting the deed) later determines a defect in the title such as lien or other cloud on the title, they have NO recourse back to the Grantor (the former owner of the property who executed the deed).

[AngelinaCatHub]

OK, if the person discharged and has received any paper work of the Mortgage company's intent to foreclose, and drags feet, could the house owner under the risk of foreclosure write a public letter (newspaper, and certified mail as well to the Court) that he defers all interest in the house back to the mortgage company by thus and such date and assumes no responsibility thereafter?

If this is not possible, could the house owner put his own lien on the property for it's maintenance and insurance after the same type of notice? 'Hub

[Mensa1]

OK, if the person discharged and has received any paper work of the Mortgage company's intent to foreclose, and drags feet, could the house owner under the risk of foreclosure write a public letter (newspaper, and certified mail as well to the Court) that he defers all interest in the house back to the mortgage company by thus and such date and assumes no responsibility thereafter?

If this is not possible, could the house owner put his own lien on the property for it's maintenance and insurance after the same type of notice? 'Hub

NO and NO.

Can't dissavow your liability by public notice. Also can't put a lien on your house and even if you could it does nothing to address the real issue here, the City coming after the owner personally.

The solution is to change ownership; albeit a shell game, but it would work temporarily in most venues. Kinda fun to have the City running around like the Keystone Cops looking to enforce and they have no idea who the real owner is.

[AngelinaCatHub]

NO and NO.

Can't dissavow your liability by public notice. Also can't put a lien on your house and even if you could it does nothing to address the real issue here, the City coming after the owner personally.

The solution is to change ownership; albeit a shell game, but it would work temporarily in most venues. Kinda fun to have the City running around like the Keystone Cops looking to enforce and they have no idea who the real owner is.

Well, if it were me under these terms, I would probably sock a couple hundred into the place to fix and clean it up, and then rent it out month to month. Let the renters take care of it and glean a few bucks at the mortgage company's expense. If I'd be stuck with the liability, it would behoove me to make out at their expense. 'Hub

[sofarsogood2]

I see the point in your suggestion 'Hub. However, renting to someone, even if on a month to month basis, feels wrong. They would have to move again, possibly in 3 months, 6 months, who knows? I woudn't want to be a party to another family's hardship.

I guess maybe renting to a single person without children who understood the ramifications and could pack up quickly and leave. You'd be renting it cheaply in return for the possible complications.

Then there's the income taxes to be paid on that income with no expenses to write off on it.

Hmmmm...

Mensa:

The LLC thing is a thought, but eventually wouldn't the bill come back to you?

[sofarsogood2]

What the Atty is hoping is that the mtg lender will fail to file an answer and after 120-180 days of failure to establish their claim the mtg is gone. That is not going to happen; period.

I dunno about that. If the value on the home, due to lack of maintenance and repair issues is low enough, the bank may not bother to claim it right now. It may cause them more liability than it's worth.

Also, banks seem pretty confused and sometimes unable to locate the appropriate paperwork, or get that paperwork to the appropriate person. One hand doesn't know what the other is doing. I bet, in a very limited number of cases, this could slip by them.

Anyway, I'm hoping to see some creative attorney come up with a way to get the banks to take title after they foreclose. It doesn't seem right that they can claim all the benefits of ownership, but not the liabilties. With the right strategy and an empathetic judge, I think we'll see some movement in this arena at some point.

[Mensa1]

The LLC thing is a thought, but eventually wouldn't the bill come back to you?

The bill comes to the LLC, and LLC simply defaults on the obligation. No personal liability to the member of the LLC. It will work.

[sofarsogood2]

The bill comes to the LLC, and LLC simply defaults on the obligation. No personal liability to the member of the LLC. It will work.

AHHH!! Thanx for the info., I may need it. The bank cannot object to you transfering title, even if property is foreclosed or in some state of foreclosure?

[Mensa1]

What the Atty is hoping is that the mtg lender will fail to file an answer and after 120-180 days of failure to establish their claim the mtg is gone. That is not going to happen; period.

I dunno about that. If the value on the home, due to lack of maintenance and repair issues is low enough, the bank may not bother to claim it right now. It may cause them more liability than it's worth.

Also, banks seem pretty confused and sometimes unable to locate the appropriate paperwork, or get that paperwork to the appropriate person. One hand doesn't know what the other is doing. I bet, in a very limited number of cases, this could slip by them.

Anyway, I'm hoping to see some creative attorney come up with a way to get the banks to take title after they foreclose. It doesn't seem right that they can claim all the benefits of ownership, but not the liabilties. With the right strategy and an empathetic judge, I think we'll see some movement in this arena at some point.

Trust me, the chances of a QTA ridding you of a mtg from a comm'l lender are slim and none, and slim just left town. Liability, there is NO real liability to the lien holder for wahtever happens or doesn't happen on that property, period. Sure, something that happens there could affect the underlying value of the home, (meth lab, murder scene, etc) but weeds and general disrepair that the city is complaining about have little impact and can be resolved inexpensively when the lender does accept title (via foreclosure when they get around to it).

Maybe one in a 100K QTA cases would it happen for a lender interest be quieted. The action is way too expensive to just throw it on the wall and see it sticks, or doesn't stick. You're talkin 3-5K for a QTA, on avg. Nobody is gambling that kind of $$$ with such a olow expected return. Yes, Banks are screwed up right now but they have stop-gaps for these type of things.

Oxymoron: Creative Atty. No offense meant, but they aren't paid for working outside the box, they are paid for keeping things inside the box (rule compliance) for the most part.