Insurance on discharged mortgage

[ezgo68]

We were discharged through chapter 7 in July. We didn't reafirm but were going to try to keep the house. We finally decided we couldn't afford it so our lawyer sent mortgage company a letter stating we were surrendering the house and Insurance and utilities would be stopped on Sept. 15.

The mortgage company sent a letter today stating that we would be charged for insurance that they provide unless we get our own insurance.

We no longer live in the house and are just waiting for it to forclose. My insurance man said I could not insure it unless it is occupied and it is the mortgage companies responsibility to insure the house.

Can I just ignore the letter? Can they come after me to get the money for their insurance since it was discharged?

[HHM]

Hmm, I am not sure the answer is cut and dry. Until the deed actually changes hand (i.e. at the foreclosure auction), you are responsible for maintianing insurance. If any insurance premiums come due after you are discharged, technically speaking, I think the bank can charge you for those since it is a debt that came up after your BK was discharged.

However, I am not really sure?

In the end, I would just ignore the letter.

[BassBoy]

I'm not sure that your insurance agent is right about you not being able to insure the property because your not living there. As HHM says, "Until the deed actually changes hand (i.e. at the foreclosure auction), you are responsible for maintianing insurance," so you should be able to insure the property. It is still yours afterall.

[HHM]

I think what the insurance agent means is that...unless the residence is occupied, no insurance company will underwrite the policy (which makes sense).

[kl030505]

If you are already gone, and you just want to surrender the property, why not just sign over the deed to the bank right now? The debt is discharged... it saves them the hassle of forclosure procedures...

[ezgo68]

That's what I want to do but they won't let me. They said I could do a deed in lieu of foreclosure but I would have to list it with a realtor for 90 days first. I have walked away from it and don't want anything else to do with it.

[HHM]

Just let them foreclose and ignore the letter.

But understand, if you do that, you are assuming the risk that if something were to happen to the house before foreclosure is complete, that can complicate things. To at least provide some protection to you, send them a letter saying the house is not occupied and now they are on notice of that fact.

[ssdsco]

I think what the insurance agent means is that...unless the residence is occupied, no insurance company will underwrite the policy (which makes sense).

I had Allstate homeowners insurance. I had to switch to a new company that insured unoccupied homes. Check your policy if your house is empty. It may not be insured. Per my agent Allstate does not insure homes that are not occupied. Must be in the fine print someplace.