Mandatory insurance liability after discharge and before foreclosure

[Sweetpea3829]

Our property was discharged in a BK7 in April of 2007. We paid and stayed through August of 2010 when we stopped paying, moved to NY and purchased another property (closed in Sept of 2011). We are STILL waiting for a foreclosure sale on our original property. I'm being told there is a sale date of April 2 of 2012, but have received no paperwork indicating such and the bank is stating they don't show that anything has been sent.

In the meantime, our insurance carrier cancelled coverage because we are no longer living there and the property is vacant. Seterus has placed mandatory coverage on the property and in their notice of such, they are stating that we are liable for the costs incurred. There is a small disclaimer at the bottom of the notification stating that if the property is discharged, then the notice is not an attempt to collect any debt and is for informational purposes only.

I called Seterus to clarify and neither their insurance division or their liquidation division can confirm that we are NOT responsible for the costs of the mandatory insurance coverage.

Any thoughts?

[justbroke]

You do not owe anything for the force-placed insurance since you discharged the home. The insurance is the lender's responsibility at this point. The letter you received is a "form letter" and they are sent to every client where insurance is force-placed.

Your only problem with the old property would be liability.

[Sweetpea3829]

Liability meaning....if somebody is injured on our property, we might be sued? Or if our tree falls on our neighbor's property?

Does that not apply since the lender has placed their own insurance?

[AngelinaCat]

The lender should be the responsible party. However if someone is injured, or a tree falls, you could be sued if your name is still on the deed. This is a real catch22 for people, because you cannot get Homeowner's insurance on a vacant property, yet you can still be liable.

You need to talk with your insurance agent about this, and get a better understanding of the whole process. I literally spent hours in our Insurance Agent's office in Feb. 2009 trying to get our home insured. You need to do this in person. It isn't something you can do over the phone or by computer. I know you are in a new location. Talk with your local agent. That person should be able to give you some answers.

Good luck!

[Sweetpea3829]

Thanks Cat! I'm not going to worry too much about it. There is a large tree, but last I heard, the neighbor was having it cut down (he had long wanted to cut that tree down because some of the branches hung over his roof, but we had always told him to forget about it because it was our shade tree). Nobody else belongs on the property at all, so I'm not going to stress about that.

As the lender has placed their own insurance on the property, hopefully we should be good to go. I just wish they'd hurry up already and get the property foreclosed. Sheesh!

[AngelinaCat]

Well, in this case, I think your former neighbor would be covered by HIS Homeowner's insurance. However, he should only touch the branches that crosses the property line and extends into his property, and cut them at the property line. Now, should an accident occur, he might try to sue you in Small Claims, stating: "I tried for years to get them to cut that tree down before something happened, and they refused..."

I still think I would go talk to your insurance agent, if I were you. But again there isn't a lot you can do. You reside in another state, and the bank isn't in a rush to foreclose. I certainly do understand that you want this chapter of your life closed and behind you.

[drowning123]

I'm still living on the property, and the lender has forced liability insurance, since I cancelled mine. I have not received anything stating that I owe the lender any money. I don't have visitors, so anyone who comes on the property will be at their own risk.