House incl in bk7 - bank abandoned foreclosure. HELP

[florida]

I really need some help...
I did a chp 7 with house incl that was discharged in May 2010. We moved out and assumed the house would foreclose.
Update to now - the bank has added a new line on our credit effective Jan. 2012 - charged off. (We will dispute with credit bureaus to get that corrected.) Here is our issue - I called the mortgage company to see why they did that and they informed me that they are not going to foreclose and the matter is closed. What does that mean for us?!? They said they will no longer pay insurance and we will need to pay the back taxes or it will go to auction for that - but they are not pursuing the house -- at all. I offered a deed in lieu, they said no. They do not want the house period.
Does anyone know what this means for us? Can we rent it out? Can we sell it? Will we ever be able to buy another home????

[tobee43]

we are basically in the same boat. while it's been over 4 years now, the bank has done nothing to foreclose. what you can do, is find out what the statue of limitation is in florida. i know now i live in florida, but our property is nj and the statue of limitation for the bank is 20 years.

i would check with an atty an see what they say about what the florida laws are.

best of luck

[justbroke]

You need to immediately get in touch with your attorney or start researching a case called In Re Pratt. You should be looking at, now, demanding that the bank/creditor release the mortgage. If they refuse, you may have a genuine "cause" of action to bring this back to the bankruptcy court.

You really need to get the release of mortgage from them if they "really" don't want it.

You are still the legal owner and you can rent it if you choose. With the release of mortgage, you could even sell it for really cheap and keep the money. (Please make sure you understand any tax implications if there are any.)

What do you think this property is worth?

[florida]

I talked to my bk attorney as soon as I was told this. Unfortunately...he didn't know what to do. He suggested we contact a real estate attorney. I have made many phone calls and again - nobody knows what to do. I had a consultation for $100 with one - he also was unsure what to do next.
The property is probably worth around $80k.

[mountanddo]

It would be worth it to me to do a little research to get the mortgage released to me for 80k. Even if you only got 10k or 20k it would still be a windfall...however I'm certain that this sounds a lot easier than it is in reality. If you don't pay the back taxes it sounds like it will go to auction. Will the house then be released then? Did they give a timeframe for an auction?

I bought a nice, 3 bedroom home in Minneapolis in a nice neighborhood about 10 years ago for 79k. Are houses worth 80k just not worth it to banks anymore? Is your house in need of repairs that they just don't think they can sell it?

[tobee43]

the problem is, with a situation like this really no one knows, not even most professionals what to do or how to do it.

all these "new" types of situations are beginning to pop up, while these waters have never been tested before. what can you do if a bank refuses to sell a property?, and when you find out, who's going to enforce it, unless you pay a pretty dime for an atty. i would start with the Office of the Comptroller of the Currency, who oversees all the banking institutions, they would most likely be able to at least steer you in the right direction.

i say this, only because after 3 years of our bank not foreclosing nor making any attempt to mitigate any monetary damages associated with our old property, i did seek the advise of a few attys and none of them the first step to take. however, that was 3 years ago or so, so hopefully you will be more successful than i was and find an atty that can help. we are now over 4 years. once again though, i would also contact the Office of the Comptroller of the Currency:

http://www.occ.treas.gov/

[catleg]

Here's a case which isn't so promising about demanding to release the mortgage:

In re: Canning

I particularly like this part:
HSBC also relinquishes possession of the property. In addition, we will no longer
advance any payments for taxes and insurances. You will be solely responsible
for the payment of taxes, insurance, and the maintenance of this property

So it sounds like eventually the town will have to take the property for unpaid property taxes, assuming it does not burn down first.

[cory1848]

I would love for this to happen to me. If it were me, I would rent the place out while figuring out what to do. It will take you a long while to figure this out, why not have some income while you are waiting?

[catleg]

The logic in that In re: Canning decision is very troubling. In Re Pratt is about a bank refusing to repossess an automobile. The court concludes that because a house may someday go up in value, that the lien remains. Neglects the impact on the community of abandoned houses and who shoulders the liability for them.
Dumps the burden on the town and the nominal owner of the property. Crazy pro banker decision.

[florida]

Well, my husband has changed the locks and assessed the home. No damage. I guess we will just rent it out??
Also - will anyone sell us homeowner ins on this home? It is also in a flood zone - so is it required that we have flood ins too? Or is that a mortgage company requirement?

[AngelinaCat]

Well, my husband has changed the locks and assessed the home. No damage. I guess we will just rent it out??
Also - will anyone sell us homeowner ins on this home? It is also in a flood zone - so is it required that we have flood ins too? Or is that a mortgage company requirement?

No insurance company will touch this house as long as it is vacant. You may be able to get a fire/dwelling policy if you truly are going to rent it out. Or, there may be (and probably is) a policy out there for landlords with rental properties. Justbroke would know for sure.

And then, there is the matter of your BK. Some companies require a minimum of five years between your CH7 Discharge, and the start date of coverage. Other companies will not accept a bankruptcy at all.

The flood insurance is a mortgage requirement, although you need to understand the ramifications if you decide not to buy the flood insurance. Insurance companies typically will insure water damage if it comes from the sky or broken pipes. They will NOT cover water damage that comes from water that rises above your threshold. You will be told what you already know, that the house is in a flood zone, and therefore is not covered. (Something like insurance companies refusing to insure Florida homes because we are subject to hurricanes and had 4 in 2004! )

Sometimes you can contest that 'flood zone' ruling, but most times you can't.

I hope this helps some....

[catleg]

If you're not paying the mortgage and they refuse to foreclose, the only insurance you'd need is liability and contents (as if a renter's policy).
Not sure whether I'd worry too much about liability if I was fresh out of chapter 7, and the only policy I could get was high cost for low coverage.

[tobee43]

really, i would not worry about any of it, again because i stress the lender must to something to mitigate their damages. which means they must use reasonable care and diligence in an effort to minimize or avoid further damage to the property. it is their choice NOT to foreclose and the end result of what damages may occur as a result of their unwillingness to do so is certainly no fault of yours.

[justbroke]

I don't think of this as a real estate issue. I think of this as a bankruptcy discharge issue. If they really don't want an $80K home... then there is really something wrong. Unfortunately, it may cost you to fight this in the bankruptcy court.

Did you ask your attorney to research In Re Pratt? Might also look at In re Groth, 269 B.R. 766, 767-68 (Bankr.S.D.Ohio 2001), which looked specifically at releasing a lien if the creditor found the collateral to be "worthless".

If you get insurance for a property that you are leasing, then you need a different policy. It, of course, will not have contents insurance, but will be primarily hazard (fire, loss etc) and liability. There are also policies that may even provide some loss of revenue as well.