HSBC: Duh!

[doni49]

I have family that filed BK7 in Jan '14. They let the house go to the lienholder (HSBC). They were discharged in June '14. HSBC finally got the deed transferred in Sept '14. Now here it is Nov '14 and HSBC sent letter stating that they have been informed the insurance has lapsed and that they (HSBC) were going to purchase insurance and bill them for it.

What an intelligent bunch! NOT

[justbroke]

Personally, I would contact my BK attorney and see if there are some issues. Perhaps the foreclosure was cancelled and the ownership has not changed. I can't say for sure what issues are there, but you can't tell if a new deed was recorded unless you check the official records. A foreclosure final judgment does not change the deed it only authorizes the sale.

Or, it's quite simply that their records still show them as owners.

[bcohen]

A foreclosure final judgment does not change the deed it only authorizes the sale.

Yes, this is true, however regardless of whether or not HSBC is now the legal owner of the house, I fail to see how they are legally entitled to charge for "force-placed" insurance after the mortgage has been discharged in bankruptcy. Of course, the letter may very well have been issued in error simply because the department which handles foreclosure and loss mitigation is separate from the department which handles bankruptcy. Sending a copy of the discharge order will likely make HSBC cease further contact.

Also, if the house is located in a HOA, it is extremely important to understand that "surrendering" the house in bankruptcy does not magically make the lender take it back, and that liability for post-filing HOA dues will continue to accrue until the deed is changed. If the lender did not actually take title to the house, your family member(s) could owe a lot of money for HOA dues/fees/penalties, and could even be sued for it.

[justbroke]

I agree with the fact that they are not legally allowed to charge for FPI when they have the title to the home. I was wondering if the title had not been changed. Then, they would have legal rights to put FPI on the property since they would not be the owner.

Also, from experience, a discharge in bankruptcy will not prevent you from receiving FPI letters either. In fact, you are likely to still receive informational mortgage statements as well.

I too think this may just be an error or oversight, but it did make me wonder if the title has actually changed hands.

[doni49]

I personally checked the official records at the county recorder of deeds. Official ownership was transferred 9/15/14.

[justbroke]

I personally checked the official records at the county recorder of deeds. Official ownership was transferred 9/15/14.

Then HSBC has surely made a mistake. I would make sure that I contacted HSBC to inform them that they violated the discharge injunction (in writing, CMRR). If, after sending the letter, they send more correspondence demanding or asking for money, then you should seek a contempt order (and possibly sanctions).

[doni49]

That's what I advised them to do. I was only sharing another example of HSBC's incompetence.