Deed in Lieu over Foreclosure post Chapter 7 discharge?

[socalsheep]

Hi,

- I discharged Ch 7 around 10/2011, and surrendered property back to JP Morgan Chase
- They have not set a sale date. I have received NOD. Foreclosure has been delayed.
- It's been well over 1 year. I call Chase's foreclosure lawyer and they say they are waiting on paperwork from Chase
- I ask about deed in lieu to Chase who says I have to try to Short Sale again (I did pre-BK) for 30-60 days, then I can apply for DIL, which in CA is 30-60 process.
- I don't understand the implications if DIL+SS after BK
- The reason I am anxious is because it is a Condo in California and I haven't paid the HOA fees. We're going back in forth. They withheld some insurance $ and did some other things. I say I'll come after them if they come after me for fees. No HOA lien has been field
- I've been told by Chase Executive Dept that all HOA fees will be finally handled in foreclosure

What should I do?
1) What are the DIL+SS tax & deficiency implications even if I'm post-discharge CH 7, and have surrendered. There is a 2nd mortgage. It's a Freddie Mac primary loan if that matters.
2) Should I do IDR/ARP with HOA and establish a value on their damages to offset trying to sue me for HOA fees? I don't trust Chase's statement that they take care off them in foreclosure, including past due ones.

Any solid advice would help. I want this thing / title OUT OF MY NAME / FINAL CLOSURE!

-One of You

[Drazil65]

They cannot make you do anything, you are discharged from that obligation. They want you to do their work for them (ie: sell the house), why not if they can get someone to do it right? They go to classes to teach them the double talk they use on people to make it appear that its your problem after the chp 7 discharge. We had our rental property up for SS last year for 6 months, no offer, took it off market on Dec. 31st 2011 (filed for chp 7 12/13). While it was on market we were also pursuing a DIL, they balked at that but I told them that if we rec'd a SS offer we would withdraw the DIL request or visa versa. We were in the middle of the DIL process when we filed and everything halted of course. As soon as we are discharged I will contact the DIL guy again and restart that process. I will not do the SS thing again, been there done that (we are out of state as well). If they will not restart the DIl process I will then contact the HOA people and try to get them to foreclose (have not paid HOA fees since Nov. 2011 and I will even offer to quit claim it over to the HOA people and let them fight it out with BOA. I will make as many waves as possible from all directions to get the thing out of our name faster BUT I will not sell it for them. Hell no...we tried to get help from them for 1 yr prior to use filing with no help or concern so this is what they are stuck with.

If nothing else it will be fun to watch them scramble to try to tell us we cannot do any of this, blah, blah, blah...

[tobee43]

the problem here is whether one decides to to a SS or DIL the HOA fees, dues and late charges are usually NOT dis-chargeable in a chapter 7 ever since they are a superior lien status.

here's some info about calif:

"A homeowner that owns property subject to homeowners association (“HOA”) dues or fees should be familiar with 11 U.S.C. §523(a)(16) if they are contemplating bankruptcy.

Section 523(a) provides that a discharge under Chapter 7 (§ 727), Chapter 11 (§ 1141), Chapter 12 (§ 1228(a) & (b)), or Chapter 13 (§ 1328(b)) does not discharge an individual debtor from any debt–


(16) for a fee or assessment that becomes due and payable after the order for relief (generally after the bankruptcy petition is filed) to a membership association for as long as the debtor has a legal, equitable, or possessory ownership interest in the property subject to the fee or assessment.

The section is not quoted in detail, but the message should be clear: even if you file bankruptcy and receive a discharge, any fees or assessments that become due after the filing of your bankruptcy (post-petition) remain your responsibility as long as you have a legal, equitable or possessory interest in the property. Even if the property is in foreclosure, the post-petition fees and assessments remain your responsibility until the foreclosure sale actually takes place and you no longer own the property. Don’t be lulled into a false sense of security because a foreclosure sale date has been set. The filing of the bankruptcy petition will prevent the sale from taking place until the stay is lifted and foreclosure sales often get continued."

(that is similar to florida were almost everyone is in an HOA).


a similar law exists in California, so debtors who file chapter 13 in California should not expect to discharge post-petition HOA fees as long as they own their homes.

just a note...we also have chase it's over 4 years ago, and we surrendered our house, (no HOA involved) there was no way they would go for a DIL.

also, provided you filed and are discharged from a chapter 7, any deficiency that may occur as a result of either a sheriff's sale or SS, provided your petition listed the mortgage and it was closed prior to the end of 2012 you are covered under the mortgage forgiveness relief act and will qualify under that insolvency clause due to your bk. thereby have no tax liability on the gain.

don't know if this is "solid" but i think it gives you some facts about the situation, i hope.

[nohoneymoney]

If they will not restart the DIl process I will then contact the HOA people and try to get them to foreclose (have not paid HOA fees since Nov. 2011 and I will even offer to quit claim it over to the HOA people and let them fight it out with BOA.

Here is one for the Forum's team of experts. It has already been discussed that the banks will not accept a quick claim deed to themselves from an home owner as a way around the short sale/foreclosure/deed in lieu processes. If the HOA is willing, would a quick claim deed from the home owner to the HOA hold up in court? What are the tax ramifications for the HOA? (As I understand it there would be none for the owner post BK7, assuming they did not reaffirm the mortgage.) What is the down side for the HOA? If possible, I might want to try it on a couple of properties and it could help other forum members in FL and other states where the HOAs have superior lien position laws.

[tobee43]

i'm no expert, however, some banks are accepting DIL, but more are not.

any type of quit claim deed transfer i personally would think would be looked at as a possible fraud situation. now, generally, HOAs are exempt from state and federal income taxes, in most "normal" situations here in florida. but i know, if we as an HOA wanted to move to purchase the properties the entire community would have to be onboard and agree on paying the bank liens and then try and foreclose on the property incurring legal fees etc. i'm certain some of the bigger associates may go for it, but many are too small to want or accept the burden.

hope someone else chimes in with some insight!