Property Tax Lien

[Credit Tech]

We filed BK 7 and were discharged 3 years ago. It included our mortgages. For some time, we paid on our first and second, and then stopped on the second per advice we received that if we kept the first on time (same bank), we would be ok. This is because our income has still not recovered and we are trying to keep housing payment as low as possible until things turn around for us.

 

Our house is under water about 100k on mortgage balances vs. value. Of course this is decreasing a bit as the market begins to finally improve.

 

Problem is, we could not keep up on our property taxes either, and they were not included/escrowed in our mortgage.

 

So the city placed a 20k tax lien on our property for 2 years of taxes and interest. So that makes us 120k underwater. In our area, we have 2 years to catch up on the lien, or the city can foreclose. That's about 18 months away.

 

We've decided to just let the home go, as the equity is so far underwater, and based on our income we need to downsize anyway. We continue to occupy, as there have been no notices of foreclosure. We stopped paying on our first mortgage about 6 to 8 months ago. No contact for some time now.

 

Here's our questions:

 

1. Will the mortgage holder pay the tax lien to protect their security/lien position?

2. If they foreclose, are we responsible for the tax lien, or does the property itself cover it?

3. What is our total liability in this situation since we included the mortgages in our BK?

4. We have re-established credit since our BK. Will we be able to buy again right away, or will the impending foreclosure make us wait 3 more years?

5. As to question 4, other than foreclosure, are there things we could voluntarily do now to help us buy again sooner?

 

Any advice appreciated, thank you!

[nekom]

1. Mine does, despite the fact that the house is severely fire damaged, vacant for years, I'm out of it in BK7 and my ex-wife is destitute. Your mileage may vary, but it's not uncommon for them to pay taxes to protect their collateral.

2. The lean is against the property. It will need to be satisfied for the property to be sold. It may show on your reports as a PR though.

3. You might be wise to keep basic insurance, in the unlikely event that somebody gets injured there or something. Other than that, not much liability.

4. The foreclosure shouldn't show up on your credit report, even as a PR, but I've heard of it happening regardless.

5. You could discuss with the bank a deed in lieu or a short sale, but that basically means you're doing their work for them for no gain yourself.

 

Hope that helps.

[Credit Tech]

1. Mine does, despite the fact that the house is severely fire damaged, vacant for years, I'm out of it in BK7 and my ex-wife is destitute. Your mileage may vary, but it's not uncommon for them to pay taxes to protect their collateral.

2. The lean is against the property. It will need to be satisfied for the property to be sold. It may show on your reports as a PR though.

3. You might be wise to keep basic insurance, in the unlikely event that somebody gets injured there or something. Other than that, not much liability.

4. The foreclosure shouldn't show up on your credit report, even as a PR, but I've heard of it happening regardless.

5. You could discuss with the bank a deed in lieu or a short sale, but that basically means you're doing their work for them for no gain yourself.

 

Hope that helps.

Thanks, it does. Its confirmation of what we've been hearing to date.

 

We still live in the property and maintain insurance. The taxes were always outside of our mortgage, so to date, the mortgage company has not paid them, and did not stop the first lien from being put on the property in 8/2012. That started a 2 year clock that will end in foreclosure for tax lien purposes should the lienholder decide to pursue that. The bank may start foreclosure sooner, since they have not received payment in months. However, the house equity is under water which I believe has slowed the foreclosure process.

 

The newest dilemma is that the mortgage holder, ING Direct, was bought by Capital One last year. Last week, Capital One added a new mortgage tradeline to my reports, showing a new account number, a balance, and OPEN 180 DAYS LATE!!! Today I wrote an email to the Cap 1 Executive office for immediate review. Pending their response, I may need to file suit for damages to our credit due to this error.

 

Nothing's easy. Hopefully it all works out!