Judicial vs non-judicial

[Sweetpea3829]

I see....ok...so it could still go non-judicial. Hopefully...either way, it'll not happen until AFTER our closing here in NY. Even better...they modify the loan and buy us more time.

I mentioned the rents because the property happens to be an investment property. When the housing market collapsed, we found ourselves unexpectedly stuck living in the 1st floor apartment while renting out the 2nd and 3rd floors. We had never intended to raise our family there...and as our children began to arrive...all four of them, each within 11-16 months of the other, we began to grow more and more dismayed at our inability to get out.

Well...thanks be to God...we got out. But our 2nd and 3rd floors are still being rented to paying tenants...and 1st floor is actually temporarily occupied by a family who's house burned down the weekend that we moved out. We told them to stay there and get back on their feet...and they are doing that. There's no income from that floor though...they're staying rent-free for now.

Actually...if all goes well and LBPS modifies the loan to a reasonable payment...we'll be happy to keep the place. We'll probably keep the 1st floor vacant (when the family there moves out) and use it as a vacation home for when we come back to RI to visit family. Or...it'll be a place to stay when 2nd or 3rd floor gives notice and we have to replace them.

But we certainly won't be heartbroken if we lose the property...as long as it's not until AFTER our closing here in NY.

[justbroke]

The key for Rhode Island is found in §34-11-22. There is specific language that needs to be in the security instrument (mortgage or deed of trust). That language is found in that section of the law (RIGL §34-11-22). It only needs to be referenced. From what was written above, it is probably "referenced".

[tobee43]

i hear you...this is a really "gray" area, when going into investment properties. i know our personal experience was we dumped ours to one of the other owners before filing bk.

we were able to do that ONLY because we had proofs...dating back over 15 years that the deed clearly listed all parties and that we just didn't quit claim the deed to "hide" or protect the property under someone elses skirt...or shirt.

that's really nice of you to let those people stay there...also the bank can't just throw them out on the street...they will have to go through a eviction procedure.

[Sweetpea3829]

How to handle the tenants has been a sticky part of all of this.

We've not told them yet that the property is in default. If we did...they would certainly stop paying rent and/or seek residence elsewhere. As our intent IS to modify...why would we chance losing two really good tenants when, hopefully, in the end...the loan is modified and they never needed to know?

That said...if the modification goes sour, I will feel REALLY REALLY bad if these folks end up facing eviction and had no clue it was coming. I HAVE told them that we were seeking a modification and had told them that we *may* seek a short sale or even a deed in lieu but that we'd keep them in the loop if it looked like they were going to have to move out. I also explained to the two paying tenants that if it came to that, they would likely qualify for a Cash for Keys type payout from the bank.

I wanted to make sure we were square...especially because when we told them we were moving out of state, the first thing the both of them asked was, "What about this property here?" Our 3rd floor tenant even asked flat out if the loan was current and I could have kicked my husband when he fibbed and said it was. I would have rather have been honest and told him that we had let it go into default to better our chances at a modification...which is actually only partially true...the loan was going to default at the end of 2010 anyways...we knew that in August 2010 when our then 3rd floor tenant vacated. We just chose to let it default right away and prepare ourselves, knowing that in default, there'd be a better chance of a modification. The default was only a matter of time...we just decided to take the timing in our own hands and have better control of the situation.

As for the family on the first floor...hey...there wasn't any reason they SHOULDN'T stay there. We were no longer using it and didn't feel right renting it out until the modification situation was squared away...plus the floor is not yet fully finished and therefore isn't really rentable anyways. They should be there about three months they said...they said they're rebuilding their burned down home. They're actually friends of the young man on 3rd, which is how we heard of them.

Fingers crossed it all works out and in the end we get to keep the property. But if not...eh...what can you do?

[tobee43]

The key for Rhode Island is found in §34-11-22. There is specific language that needs to be in the security instrument (mortgage or deed of trust). That language is found in that section of the law (RIGL §34-11-22). It only needs to be referenced. From what was written above, it is probably "referenced".

i'm present and in class!! i want an A...ok...LOL!!!

Rhode Island Code - § 34-11-22 — Statutory power of sale in mortgage.


The following power shall be known as the "statutory power of sale" and may be incorporated in any mortgage by reference:
(Power)

"But if default shall be made in the performance or observance of any of the foregoing or other conditions, or if breach shall be made of the covenant for insurance contained in this deed, then it shall be lawful for the mortgagee or his, her or its executors, administrators, successors or assigns to sell, together or in parcels, all and singular the premises hereby granted or intended to be granted, or any part or parts thereof, and the benefit and equity of redemption of the mortgagor and his, her or its heirs, executors, administrators, successors and assigns therein, at public auction upon the premises, or at such other place, if any, as may be designated for that purpose in this deed, or in the published notice of sale first by mailing written notice of the time and place of sale by certified mail, return receipt requested, to the mortgagor, at his or her or its last known address, at least twenty (20) days for mortgagors other than individual consumer mortgagors, and at least thirty (30) days for individual consumer mortgagors, prior to first publishing the notice, including the day of the mailing in the computation; second, by publishing the same at least once each week for three (3) successive weeks in a public newspaper published daily in the city in which the mortgaged premises are situated; and if there be no public newspaper published daily in the city in which the mortgaged premises are situated, or if the mortgaged premises are not situated in a city, then (1) if the mortgaged premises are situated in the city of Central Falls, in a public newspaper published daily in the city of Pawtucket; (2) if the mortgaged premises are situated in the town of North Providence, in a public newspaper published daily in either the city of Providence or the city of Pawtucket; (3) if the mortgaged premises are situated in any of the towns of Cumberland, Lincoln, Smithfield or North Smithfield, in a public newspaper published daily in either the city of Pawtucket or Woonsocket; (4) if the mortgaged premises are situated in the county of Providence elsewhere than in the above-named cities and towns, in a public newspaper published daily in the city of Providence; (5) if the mortgaged premises are situated in the county of Newport, in a public newspaper published daily in the city of Newport; but if there be no such public newspaper so published, then in some public newspaper published anywhere in the county of Newport; (6) if the mortgaged premises are situated in any of the counties of Bristol, Kent or Washington, in a public newspaper published daily in the city or town in which the mortgaged premises are situated; but if there be no public newspaper so published, in some public newspaper published daily in the county in which the mortgaged premises are situated or in a public newspaper published daily in the city of Providence; provided however if the mortgaged premises are situated in the town of New Shoreham then in addition to publication in a public newspaper published daily as required above, it shall also be published in a public newspaper published in the town of New Shoreham, and, in the event there is no public newspaper published in the town of New Shoreham, then in a public newspaper distributed in the town of New Shoreham; with power to adjourn such sale from time to time, provided that publishing of the notice shall be continued, together with a notice of the adjournment or adjournments, at least once each week in that newspaper; and in his, her or its or their own name or names, or as the attorney or attorneys of the mortgagor, for that purpose by these presents duly authorized and appointed with full power of substitution and revocation to make, execute and deliver to the purchaser or purchasers at that sale a good and sufficient deed or deeds of the mortgaged premises in fee simple, and to receive the proceeds of such sale or sales, and from such proceeds to retain all sums hereby secured whether then due or to fall due thereafter, or the part thereof then remaining unpaid, and also the interest then due on the proceeds, together with all expenses incident to the sale or sales, or for making deeds hereunder, and for fees of counsel and attorneys, and all costs or expenses incurred in the exercise of such powers, and all taxes, assessments, and premiums for insurance, if any, either theretofore paid by the mortgagee or his or her executors, administrators or assigns, or then remaining unpaid, upon the mortgaged premises, rendering and paying the surplus of the proceeds of sale, if any there be, over and above the amounts so to be retained as aforesaid, together with a true and particular account of the sale or sales, expenses and charges, to the mortgagor, or his, her or its heirs, executors, administrators, successors or assigns; which sale or sales made as aforesaid shall forever be a perpetual bar against the mortgagor and his, her or its heirs, executors, administrators, successors and assigns, and all persons claiming the premises, so sold, by, through or under him or her, them or any of them."

****** Disclaimer: These codes may not be the most recent version. Rhode Island may have more current or accurate information. I and this information source make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site.

[Sweetpea3829]

LOL....in english? Common english?

[tobee43]

here's just a bit more info to share about some standings in RI ...since i had two cups of coffee .


RI: MERS’s Standing to Foreclose Upheld
by Jeffrey H. Gladstone and David J. Pellegrino
Partridge Snow & Hahn, LLP – USFN Member (MA, RI)


"Rhode Island is the most recent state in a long line of jurisdictions to rule that Mortgage Electronic Registration Systems, Inc. (MERS) has standing to foreclose. The Rhode Island court further ruled that MERS, as mortgagee, may exercise the statutory power of sale in its own name.

The name of the case is Bucci v. MERS, C.A. No. PC 09-3888, which was filed in the Providence County Superior Court. The facts of the underlying action are typical of many foreclosure scenarios occurring across the country. A loan was originated and the borrower executed a promissory note made payable to the lender. Contemporaneously, as security for the repayment of the promissory note, the borrower granted a mortgage on the residential property to MERS. The mortgage was granted by the borrower/mortgagor to MERS as nominee for the lender; granting all the rights and privileges of a mortgagee to MERS, including the statutory power of sale.

As with many nonjudicial jurisdictions, Rhode Island’s legislature enacted a statutory process allowing a mortgagee to foreclose on its mortgage following a borrower’s default. Rhode Island Gen. Laws § 34-11-22 codifies the statutory power of sale, which many, if not all, MERS-originated mortgages incorporate by reference.

The borrower eventually defaulted on its repayment obligations under the terms of the promissory note. The loan was accelerated and the borrower failed to cure. Then, nonjudicial foreclosure proceedings were commenced whereby, pursuant to Rhode Island’s statutory scheme, a notice of foreclosure was sent to the mortgagor and foreclosure notices were published in the statutorily prescribed form and manner.

In this case, prior to the scheduled foreclosure date, the borrower filed a complaint seeking injunctive relief to enjoin the foreclosure sale. The complaint alleged, among other things, that: the Rhode Island statutory scheme does not allow MERS to exercise the statutory power of sale in the mortgage because Rhode Island does not recognize a “nominee mortgagee,” MERS, because it is not the lender, does not have standing to foreclose; and MERS is precluded from foreclosing because it is not the owner of the promissory note. The court granted the initial request for relief pending a substantive hearing on the issues. Five days later, a preliminary injunction hearing was held and, pursuant to Rule 65(a)(2) of the R.I. Rules of Civil Procedure, the court consolidated the preliminary injunction hearing with the trial on the merits.

Following the full hearing, on August 25, 2009, the court issued its decision denying borrower’s requests for relief. In so ruling, the court “specifically [held] that MERS, in the case at bar, has standing to and may foreclose the mortgage granted to it by the Plaintiffs utilizing the Statutory Power of Sale referenced therein.”

After a brief description of MERS’s functions, the court first considered MERS’s contractual right to foreclose pursuant to the mortgage document. Citing directly to the mortgage, the court noted that the borrower granted “the Statutory Power of Sale to MERS, as nominee for Lender, its successors and assigns.” The court went on to quote the mortgage, which stated that: “if necessary to comply with law or custom, MERS (as nominee for Lender and Lender’s successors and assigns) has the right to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property” (emphasis in decision). In addition, the court, rejecting certain of the borrower’s other contentions, found that the “fact that paragraph twenty-two of the mortgage states that the Lender ‘may invoke the STATUTORY POWER OF SALE’ does not negate the previous language in the Mortgage directly granting MERS, as mortgagee in a nominee capacity, the right to invoke the Statutory Power of Sale.” Accordingly, MERS has the contractual right to exercise the statutory power of sale because it is the named mortgagee and nominee of the lender, and its successors, and assigns; and MERS was acting on behalf of the beneficial owner of the promissory note.

Next, the court tackled the borrower’s assertion that MERS does not have the statutory authority to foreclose. First, the court determined that there is no express statutory prohibition impacting MERS’s ability to foreclose. Next, citing to the statutory power of sale, the court determined that because the “mortgagee or his, her or its executors, administrators, successors or assigns” can exercise the power of sale, so too can MERS as the mortgagee. Simply put, the court found that MERS “is the mortgagee because the mortgage executed by the [borrower] so states.” “The fact that MERS acts in a nominee capacity for the lender ... does not diminish MERS’s role as the mortgagee nor is there created a new legal term ‘nominee mortgagee.’” Therefore, not only is there “[n]othing in the Rhode Island statutes prohibit[ing] MERS, as mortgagee in a nominee capacity, from foreclosing under the Statutory Power of Sale,” MERS “may invoke the Statutory Power of Sale as the mortgagee.”

In the clearest language, the court’s decision addressed the challenges to MERS authority to foreclose under Rhode Island law. As a result, the multitude of pending cases seeking to enjoin Rhode Island foreclosures by attacking MERS standing will most likely be resolved in a perfunctory and consistent manner in favor of MERS."

[Sweetpea3829]

OK...this makes more sense and for the record, MERS is definitely referenced in our mortgage instrument.

When we defaulted, our loan was transferred by CITI to LBPS within two months. I wonder if LBPS is kind of a dumping ground for bad mortgages? It took them several months before they did anything...but now that they've sent the note of acceleration, it would appear that they are ready to move. Hopefully, the modification request we sent them will delay anything further. We just need about 2-3 months of time.

[tobee43]

OK...this makes more sense and for the record, MERS is definitely referenced in our mortgage instrument.

When we defaulted, our loan was transferred by CITI to LBPS within two months. I wonder if LBPS is kind of a dumping ground for bad mortgages? It took them several months before they did anything...but now that they've sent the note of acceleration, it would appear that they are ready to move. Hopefully, the modification request we sent them will delay anything further. We just need about 2-3 months of time.

i'll be keeping my fingers and toes crossed that you'll have that much time. it will once again, depend on how the bank decides to proceed.

[tobee43]

LOL....in english? Common english?

LOL!!! sorry missed this...if i get an A+ i'll translate..LOL!!!!!!!!!!! i hope the MERS explanation was clear enough ...i mean english enough..LOL!!

[Sweetpea3829]

Tobee...the MERS case was clear enough...sometimes the legalese they use is really confusing for me to comprehend...lol. But by the time this is said and done, I swear I'll speak enough legalese to pass off as a lawyer.

Ahhh...my mom always said with my tendency to argue and debate, I ought to have been a lawyer. I chose education instead...and then decided to use that background to homeschool our Fantastic Four. Maybe when they're grown I'll get into law...we'll see.

Thanks for all of the help and info...when it is all said and done...I'll post an update. Praying hard that we can get this single family here in NY. Man...it will be SO nice to have our OWN home without having tenants above us. And it will be SO nice to have SPACE! I swear I was going nuts in our tiny apartment in RI. I couldn't move from the kitchen sink to the fridge without there being a gauntlet of kids, dog, and toys to navigate.

[tobee43]

LOL!! i'm glad, ahhh...many don't understand legalese, i suppose that's why we continue to have judges and the constitution.. what better than to argue the law and make a river flow another direction.

it's called; i think..."change".

best of luck to you and make certain you keep us posted!

[justbroke]

The bottom line is this. Rhode Island is not a very debtor friendly State by any means. It is one of the States with the fastest foreclosure timelines, not too unlike North Carolina. I now fully understand why people with a lot of money (celebrities, professional athletes, finance megastars) all have property in Florida that they have fully paid off.

[Sweetpea3829]

The bottom line is this. Rhode Island is not a very debtor friendly State by any means. It is one of the States with the fastest foreclosure timelines, not too unlike North Carolina. I now fully understand why people with a lot of money (celebrities, professional athletes, finance megastars) all have property in Florida that they have fully paid off.

Apparently not. The irony? It may not be debtor friendly, but it SURE as HECK is tenant friendly. I can tell you from first hand experience...after having THREE different tenants screw us royally in a 9 month period of time. And we actually had one of the best landlord lawyers in the state...well-known and regarded. He had us on tight leases with these folks and STILL...when it came down to it, we won judgements against our tenants easily. But collecting? Yeah...that was a whole different ball game.

We even had all of the information we needed to legally garnish wages. But the judges won't let you actually garnish wages unless the tenant had been particularly egregious. Well...I'll tell you...not one specific tenant could have been termed egregious...but the three of them? In such a short span of time? It ruined us...destroyed our 800+ credit scores and is STILL hurting us today.

I'll never forget that three week period of time...a 14 month old, and a 3 month old and not more than $30 of cash to get us through until our income tax check arrived. All of our other money was earmarked.

BUT!!! I WON'T be bitter! I refuse! God allowed that time in our lives for a purpose...several purposes. And I can tell you without a shadow of doubt...we'd NOT be in the situation we are in now had that bk7 not happened. We wouldn't have had the flexibility to walk away from that property in RI and at the time, nobody could foretell just how bad the market would get. That property is so severly underwater, had it's loan not been discharged, I'm fairly certain we would have never gotten out from underneath it.

Doesn't mean it didn't suck to go through. Cause it did. And it still hurts. But we've worked gosh darn hard to rebuild and I swear, when this bankruptcy falls off our credit report in, what, three more years...we will have glowing credit again! AND, with any luck, we'll have a 3500 sq ft home, newly remodeled (mostly finished...we can do the rest of the work) for around $450 a month. A far cry from the 2k a month we've been paying for the 700 sq ft of living space we had in RI.

And with much luck...we'll be able to keep that property too, along with the good tenants we have there.

[justbroke]

Ironic, yes. Standard for Rhode Island politics, absolutely! In Florida, evictions are pretty easy to get done. It may purely be because Florida's tenancy laws were done in 1973, and Rhode Island's not until 1987. It could also be a regional thing as well. In any case, and as a former landlord myself, I have seen this problem in multiple States. My friends own multi-unit residences in RI and have had similar issues with evictions. The longest one took 11 months.