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Foreclosure questions ASAP please


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Here is out situation, we bought the home in 2009 , the seller agreed to finance the home.So he holds the mortgage...Well now he has dafaulted and the home is up for auction Aug 7th. we just saw the notice in paper.. We have all our records saying we paid him on time since 2009....What is going to happen now? we live in GA

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i'm no expert but i dont get how he could give you a mortgage to a non paid off house. from what you are saying he had a mortgage on the place and stopped paying..that sounds more like you did a lease or rental.

 

is the title of the house in your name?

 

i cannot realy help but others may need this info to help you

 

i do know that my friend was renting a house and it was sold at sheriff sale but she had 90 days to get out per some new law..thats even though she was on month to month lease. bank tried to force her out sooner but she knew the law and they backed down after being pretty vengeful though

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I am no expert, but it sounds to me like your 'landlord' did something illegal.

He cannot legally sell you the house, and maintain a mortgage on it. You would have to do some kind of assumption or something. I don't know if your state is lien or title state, so please do not consider this as any sort of qualified advice.

You are probably in some kind of sale option, or rent to own situation.

Carefully review your docs (I would say sale docs, but I am dubious if you actually bought the house). It is good that you have your payment records, but the critical document is what was used to convey the house to you, typically a sale contract or a deed, then you need to see what was registered in the local clerks office. I am almost certain you are not on any official record as being the owner.

In any case you probably want to consult an attorney, and right away!

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I am no expert, but it sounds to me like your 'landlord' did something illegal.

He cannot legally sell you the house, and maintain a mortgage on it. You would have to do some kind of assumption or something. I don't know if your state is lien or title state, so please do not consider this as any sort of qualified advice.

You are probably in some kind of sale option, or rent to own situation.

Carefully review your docs (I would say sale docs, but I am dubious if you actually bought the house). It is good that you have your payment records, but the critical document is what was used to convey the house to you, typically a sale contract or a deed, then you need to see what was registered in the local clerks office. I am almost certain you are not on any official record as being the owner.

In any case you probably want to consult an attorney, and right away!

Okay we have been to the lawyers, lawyers said we are in the clear since the title/deed is in our name. We talked to the lawyer that was doing foreclosure, he stopped it because the deed is in our name, the bank never knew he sold the house, the foreclosure lawyer had to call the bank and tell them they can not foreclose on something that isn't in the mortgage holders name. So now everyone is confused as to what gets done, but the lawyer did say they cant foreclose.

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I am no expert, but it sounds to me like your 'landlord' did something illegal.

He cannot legally sell you the house, and maintain a mortgage on it. You would have to do some kind of assumption or something. I don't know if your state is lien or title state, so please do not consider this as any sort of qualified advice.

You are probably in some kind of sale option, or rent to own situation.

Carefully review your docs (I would say sale docs, but I am dubious if you actually bought the house). It is good that you have your payment records, but the critical document is what was used to convey the house to you, typically a sale contract or a deed, then you need to see what was registered in the local clerks office. I am almost certain you are not on any official record as being the owner.

In any case you probably want to consult an attorney, and right away!

Okay we have been to the lawyers, lawyers said we are in the clear since the title/deed is in our name. We talked to the lawyer that was doing foreclosure, he stopped it because the deed is in our name, the bank never knew he sold the house, the foreclosure lawyer had to call the bank and tell them they can not foreclose on something that isn't in the mortgage holders name. So now everyone is confused as to what gets done, but the lawyer did say they cant foreclose.

We pay the taxes the bill come in our name and it is also on record in our name on tax assesor and land records

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I am no expert, but it sounds to me like your 'landlord' did something illegal.

He cannot legally sell you the house, and maintain a mortgage on it. You would have to do some kind of assumption or something. I don't know if your state is lien or title state, so please do not consider this as any sort of qualified advice.

You are probably in some kind of sale option, or rent to own situation.

Carefully review your docs (I would say sale docs, but I am dubious if you actually bought the house). It is good that you have your payment records, but the critical document is what was used to convey the house to you, typically a sale contract or a deed, then you need to see what was registered in the local clerks office. I am almost certain you are not on any official record as being the owner.

In any case you probably want to consult an attorney, and right away!

Okay we have been to the lawyers, lawyers said we are in the clear since the title/deed is in our name. We talked to the lawyer that was doing foreclosure, he stopped it because the deed is in our name, the bank never knew he sold the house, the foreclosure lawyer had to call the bank and tell them they can not foreclose on something that isn't in the mortgage holders name. So now everyone is confused as to what gets done, but the lawyer did say they cant foreclose.

We pay the taxes the bill come in our name and it is also on record in our name on tax assesor and land records

 

I'd ask your lawyer specifically how 'in the clear' you are. The lien is on the property, not the owner. Since there is a lien on the property, you won't be able to sell without that lien being paid and cleared. Did you have a title search done and purchase title insurance?

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I am no expert, but it sounds to me like your 'landlord' did something illegal.

He cannot legally sell you the house, and maintain a mortgage on it. You would have to do some kind of assumption or something. I don't know if your state is lien or title state, so please do not consider this as any sort of qualified advice.

You are probably in some kind of sale option, or rent to own situation.

Carefully review your docs (I would say sale docs, but I am dubious if you actually bought the house). It is good that you have your payment records, but the critical document is what was used to convey the house to you, typically a sale contract or a deed, then you need to see what was registered in the local clerks office. I am almost certain you are not on any official record as being the owner.

In any case you probably want to consult an attorney, and right away!

Okay we have been to the lawyers, lawyers said we are in the clear since the title/deed is in our name. We talked to the lawyer that was doing foreclosure, he stopped it because the deed is in our name, the bank never knew he sold the house, the foreclosure lawyer had to call the bank and tell them they can not foreclose on something that isn't in the mortgage holders name. So now everyone is confused as to what gets done, but the lawyer did say they cant foreclose.

We pay the taxes the bill come in our name and it is also on record in our name on tax assesor and land records

 

I'd ask your lawyer specifically how 'in the clear' you are. The lien is on the property, not the owner. Since there is a lien on the property, you won't be able to sell without that lien being paid and cleared. Did you have a title search done and purchase title insurance?

Talked to the foreclosure lawyer he said he couldn't place a lien on the house because it isn't in the mortage holders name, so therefore he can't legally foreclose on something that not the mortgage holders name. So thus is all the confusino between bank and lawyer, how the mortage holder got a mortgage. Bank says that he never told them it was sold, so my thinking is that he just took out a second mortgage on the home.. Yes we did the title search.

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i'm probably misunderstanding this but from reading a few times i'm gleaning

 

1 person has paid off house free and clear

2 that person sells you the house and holds ur mortgage, all is done legit at the title company

3. that person decides to get a mortgage on the house he no longer owns?

4. he then decides to stop paying on the 'fraudulent' mortgage?

 

this cannot be right. no one is that stupid but i do wonder how he got a mortgage on a house he didnt own..i'm sure civilly he's in some hot water

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i'm probably misunderstanding this but from reading a few times i'm gleaning

 

1 person has paid off house free and clear

2 that person sells you the house and holds ur mortgage, all is done legit at the title company

3. that person decides to get a mortgage on the house he no longer owns?

4. he then decides to stop paying on the 'fraudulent' mortgage?

 

this cannot be right. no one is that stupid but i do wonder how he got a mortgage on a house he didnt own..i'm sure civilly he's in some hot water

When he sold us the house he still had a mortgage on it, he did what was called a WRAP around mortgage, which basically is a second mortgage.

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i'm probably misunderstanding this but from reading a few times i'm gleaning

 

1 person has paid off house free and clear

2 that person sells you the house and holds ur mortgage, all is done legit at the title company

3. that person decides to get a mortgage on the house he no longer owns?

4. he then decides to stop paying on the 'fraudulent' mortgage?

 

this cannot be right. no one is that stupid but i do wonder how he got a mortgage on a house he didnt own..i'm sure civilly he's in some hot water

When he sold us the house he still had a mortgage on it, he did what was called a WRAP around mortgage, which basically is a second mortgage.

 

I didn't think anyone offered wraparounds any more. If his mortgage company recorded their lien, then that lien will need to be repaid when you sell the property.

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i'm probably misunderstanding this but from reading a few times i'm gleaning

 

1 person has paid off house free and clear

2 that person sells you the house and holds ur mortgage, all is done legit at the title company

3. that person decides to get a mortgage on the house he no longer owns?

4. he then decides to stop paying on the 'fraudulent' mortgage?

 

this cannot be right. no one is that stupid but i do wonder how he got a mortgage on a house he didnt own..i'm sure civilly he's in some hot water

When he sold us the house he still had a mortgage on it, he did what was called a WRAP around mortgage, which basically is a second mortgage.

 

I didn't think anyone offered wraparounds any more. If his mortgage company recorded their lien, then that lien will need to be repaid when you sell the property.

Yes they still offer them, it was a small community bank that did it. We never defaulted, the seller did..We have all the recipts

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i'm probably misunderstanding this but from reading a few times i'm gleaning

 

1 person has paid off house free and clear

2 that person sells you the house and holds ur mortgage, all is done legit at the title company

3. that person decides to get a mortgage on the house he no longer owns?

4. he then decides to stop paying on the 'fraudulent' mortgage?

 

this cannot be right. no one is that stupid but i do wonder how he got a mortgage on a house he didnt own..i'm sure civilly he's in some hot water

When he sold us the house he still had a mortgage on it, he did what was called a WRAP around mortgage, which basically is a second mortgage.

 

I didn't think anyone offered wraparounds any more. If his mortgage company recorded their lien, then that lien will need to be repaid when you sell the property.

Yes they still offer them, it was a small community bank that did it. We never defaulted, the seller did..We have all the recipts

 

You may want to either ask for this to be moved to the mortgage forum or start a new thread there, I suspect you'll get more concrete answers. As I understand wraparounds, it doesn't matter who defaults. In order for you to sell the property, all liens must be paid. The property has been pledged as security on their loan. You purchased knowing there was already a lien on the property. You may want to discuss the option of a civil case against the seller.

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wiki is about as far as you can get from legal advice but i thought this sentence interesting if true...but it did give me a nice laymans description of the wrap around and it sounds risky

 

As title is actually transferred from seller to buyer, wraparound mortgage transactions will violate the due-on-sale clause of the underlying mortgage, if such a clause is present

 

http://en.wikipedia.org/wiki/Wraparound_mortgage

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  • 2 weeks later...

wiki is about as far as you can get from legal advice but i thought this sentence interesting if true...but it did give me a nice laymans description of the wrap around and it sounds risky

 

As title is actually transferred from seller to buyer, wraparound mortgage transactions will violate the due-on-sale clause of the underlying mortgage, if such a clause is present

 

http://en.wikipedia.org/wiki/Wraparound_mortgage

Thanks for all the input everyone... Spoke to the bank, they met with their foreclosure lawyer. They have nothing about the sale of the home as a WRAP mortgage, our contract says its WRAP closing sale documents with cost breakdown have it as New note and New loan.. Just one jumbled mess.... Now we have to retain a lawyer even though none of this is our fault.. We followed everything the lawyer said at closing

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wiki is about as far as you can get from legal advice but i thought this sentence interesting if true...but it did give me a nice laymans description of the wrap around and it sounds risky

 

As title is actually transferred from seller to buyer, wraparound mortgage transactions will violate the due-on-sale clause of the underlying mortgage, if such a clause is present

 

http://en.wikipedia.org/wiki/Wraparound_mortgage

Thanks for all the input everyone... Spoke to the bank, they met with their foreclosure lawyer. They have nothing about the sale of the home as a WRAP mortgage, our contract says its WRAP closing sale documents with cost breakdown have it as New note and New loan.. Just one jumbled mess.... Now we have to retain a lawyer even though none of this is our fault.. We followed everything the lawyer said at closing

 

I think that it is smart to retain the lawyer....even though you followed everything that the lawyer said at closing, there obviously was something missed. Everything I have heard about unique cases like these is that it can go either way. I would certainly be prepared for the possibility that you will ultimately have to vacate the property and sue the seller (who will likely file bankruptcy to avoid the bank and your lawsuit). You said in your first post that the owner held the financing which sounds like what we call here in Kentucky - a land contract, but others consider a lease to own contract.

 

So when you closed on this property - did he own it free and clear? And if so, did your name immediately go on the title/deed/etc.? When did he get this wraparound mortgage? After your closing? I would think that the liability falls on the bank that did the wraparound mortgage because they would have had to do a title search and would have found the property in your name, not his. Therefore, it would be a bank error, and I would think they couldn't even legally have a lien on the property.

 

Have you went to the courthouse to see how the lien is filed? You could see if the house had a lien on it by following the records. All of this is going to boil down to the contract you had with the seller, and the way the paperwork was filed. I'm so sorry you are going through this!!! If things start to look like they are not going in your favor, maybe you can negotiate something between you and the bank - cutting the seller out completely. Hang in there!!!

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I am sorry this happened, but more than likely the original lender has a valid lien on the property and should be able to foreclose in the future. However, there is a chance that they might be able to work with you and reach a compromise that allows you to keep the house.

 

The problem that I see without being an attorney is that you were aware of the existing mortgage. Since you were aware of that mortgage, you were relying on the seller to use the money that you paid him to keep that mortgage current, and you must have known that if the seller failed to do that the lender would have recourse against the property.

 

This is all the fault of the seller by pocketing your money and not paying the bank loan. I would also be surprised if there wasn't a "due on sale" clause on his note, which he failed to honor.

 

There is always a small chance that the sale was known to the bank and they did not act on a timely basis. The fact that there was an attorney involved means little, but if a representative of the bank signed off on any of the wrap around paperwork there might be something you can grab onto. Also did you at any time get title insurance? Whose attorney is the one that you followed instructions during the purchase? Was it the seller's attorney?

 

/Not an attorney

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  • 3 weeks later...

Not to be construed as legal or financial advice.

 

I know what happened and I know what you did.

 

I was pitched a program like this as a quick way of making money, (won't go into details).

 

The person that sold you the property basically took his loan and added a percentage points to it and had you pay directly to him, this was the wrap you spoke of. The reason why he had you pay him was because he was getting his profit out and making the payment. You knew there was a loan and didn't pay the bank directly.

 

The fact that you have your name on title only prevents him from selling the property and that is it. So far has bought you some time as all this has done is confuse the bank for a moment, they will get back on track. Talk to a lawyer as many have advised, but the fact that your name is on the title doesn't mean much because the due on sale clause (due on sale means that the entire mortgage is due and has to be paid) that is in almost every loan since the 80's should have voided it. It is true that banks look the other way and very seldomly take action to enforce it, even today.

 

The bank will foreclose on the note and that note says they can take their collateral back, which is in your name. Try to get a loan and buy the property, or try to see if the bank will be willing to make a new note in your name, or truelly asume the payments which is what you thought you where doing. It costs banks a lot of money to do a foreclosure, especially if it is a small bank they may listen.

 

The bank is probably free and clear here it is the person that sold you the property that you have to go after.

 

Good Luck.

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Here is out situation, we bought the home in 2009 , the seller agreed to finance the home.So he holds the mortgage...Well now he has dafaulted and the home is up for auction Aug 7th. we just saw the notice in paper.. We have all our records saying we paid him on time since 2009....What is going to happen now? we live in GA

 

Yes, AITD's, all inclusive trust deeds are quite common in sh!tty markets. Sellers can't sell, so they offer seller financing. Deeds can be recorded to cloud title.

 

I see and hear about these often in origination. Crappy markets bring about AITD's, there are a bunch in recent years. You can refi AITD's. Just don't ask me how! :lol: I do my best to avoid time consuming, tedious underwrites that take extemded amounts of time to underwrite. AITD's are up there with pastor income, could take 4X as long to underwrite versus an simple wage earner/one property/no red flag property. Not good for bonuses when you are paid the same per file bonus regardless of underwrite.

 

I come across an AITD, I throw that file right back in the queue.

 

I advise sticking w/ the lawyer to protect your interests and look into having it refinanced in your name if you qualify, as AITD's are eligible for refi's. Even FHA's have refi's for AITD's.

Edited by cinderella
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  • 2 months later...

We have retained another lawyer yesterday as the first one said there was conflict of interest...There was no due on sale clause... But there was a clause in their that we are entitled to pay if the Seller Defaulted which the bank did not know about...So hopefully now it will get straightned out

Now a couple months later of back and forth with lawyers...It comes down to us , if we can't get a loan we are out, Even though we did everything legally and providing reciepts for every payment.. BUT being the bank refused to take payment from us when we found out about this, the lawyer said they will have to own up to that one..We had a clause in the paperwork that clearly said if the seller defaulted on the loan we could make payments directly to the bank, in which the bank would not accpet payment.

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  • 2 weeks later...

What a nightmare. So is the moral of the story to run away from owner financing? What could have been done tor said to avoid this mess at closing?

 

Not at all.

 

You simply require the owner/seller to furnish proof of a clear title at settlement BEFORE his lien goes on it. IF there is an existing mortgage/lien on the property that is easily determined at the courthouse.

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