Confused about foreclosure

[jjones227]

I surrendered my house via ch7 bankruptcy. The mortgage was discharged and the bank started the foreclosure process when I first filed bk. A piped burst in the house about 4 monthes before I filed bk causing extnsive damage. I began repairs and in the middle of repairs, the bank changed the locks to the house (two weeks after the pipes burst and three mothns before the started the foreclosure process), before I had a chance to have loss mitigators to come in and dry the place up. I assumed they were foreclosing since I was 5 months behind on the mortgage. Now, a year later there has been nothing done to the house (according to a neighbor) and you can imagine how moldy everything is. I just received documents from the mortgage attorneys stating they are dismissing the foreclosure without prejudice. What does this mean. Is the house mine - clear of a mortgage. What about the title? Can I sell it to an investor?

[justbroke]

Unless they filed a "Satisfaction of Mortgage", then your property is still encumbered. The simple fact is, you are always the owner unless and until a new title is issued for the property. that can only happen if you sell the property, quit claim (QC) it to someone else, and/or there is some sort of foreclosure/lawsuit which awards the title to someone else -- or forces the sale of the property to satisfy the terms in a mortgage/deed of trust allowing such sale.

If you check the county/city records of real property ownership adn your name is still listed, then you still own it. The reason many banks have filed dismissals in these cases is due to the "Robo-signing" debacle. Basically, the banks were using some unscrupulous attorneys and/or doctoring up fraudulent paperwork so that they could proceed with foreclosure. To fix this problem, most banks -- especially in Florida -- stopped foreclosing October 2010. They just started up again now that their paperwork is straight.

The problem is, that if they filed false or incorrect paperwork to start with, the foreclosure lawsuit may be "void ab initio" (or simply void from the beginning). It's easier for them to just start over by dismissing the existing case.

Can you sell it? Not "free and clear of liens" and certainly you won't get a warranty (or special warranty) deed which most buyers want. In order to get that, you'd need to "satisfy" the liens and that means selling for at least the value of the existing mortgage(s) on the property. You could also short sell it, but you'd still need the bank's permission.

The "Satisfaction of Mortgage" is the key document. Unless that has been filed -- erasing the Mortgage/Deed of Trust and obligation under the Promissory Note -- then the property is still encumbered and it is still collateral for the bank(s).

[jjones227]

Thanks. I believe they should not have changed the locks before the place was properly dried out. Now that the property is almost unrepairable, they don't want anything to do with the property. And I will be stuck with all kinds of health violations and unable to sell it. This is a nightmare.

[mountanddo]

Is there ever a situation where BK, or any action, actually gives you a house free and clear? I can't imagine that even if you discharged the mortgage that if you didn't pay it that you could just keep it for free in any scenario.

[Fallonedward]

But if you included the house in your BK7 then this is not your responsibility or something you need to worry about...Am I missing something?

Thanks. I believe they should not have changed the locks before the place was properly dried out. Now that the property is almost unrepairable, they don't want anything to do with the property. And I will be stuck with all kinds of health violations and unable to sell it. This is a nightmare.

[jjones227]

The mortgage (the debt) has been discharged. However in my state the banks have to go through the foreclosure proceedings to get the tilte out of my name. They started the proceeding but stopped it. So technically the title is in my name and I owe nothing on the house. However, I can not sell it because of liens.

[HHM]

The mortgage (the debt) has been discharged. However in my state the banks have to go through the foreclosure proceedings to get the tilte out of my name. They started the proceeding but stopped it. So technically the title is in my name and I owe nothing on the house. However, I can not sell it because of liens.

Not just your state, in every state...just FYI

But as has been pointed out, the legislature of every state, and the federal government, never contemplated what to do if a lender chose not to foreclose. There are some attorneys in BK courts trying to get quit claims accepted by the court, but that strategy, in my opinion, is doomed to fail on jurisdictional grounds, BK court cannot force the "state." But in the hardest hit states, we are seeing this limbo phenomenon whereby the bank isn't foreclosing, and the homeowner is trying to move on with their life.