Who to approach? Bankrupt owner still on title.

Question

A friend of a friend filed bankruptcy over 3 years ago. The house was forclosed and he moved out of the house. The bank that forclosed also filed bankruptcy and was taken over by another bank. Supposedly, THAT bank also filed bankruptcy and was taken over by BofA. (I'm not positive on the story of the banks, but do know the original owner did file bankruptcy and has moved on) However, per the county, the friend of a friend is still on the title. He is getting letters from a bank demanding payment and he is saying it's not his house.

I'm not sure of any of the numbers on the house, but that's irrelevant right now. I'm just trying to determine who I would talk to about possibly getting the house. Since he is still the owner of record, could he try to work out a deal with the bank and sell it as a short sale?

I'm not sure of any of the numbers on the house, but that's irrelevant right now.  I'm just trying to determine who I would talk to about possibly getting the house. Since he is still the owner of record, could he try to work out a deal with the bank and sell it as a short sale?

Michael Lauther · Answer

The Bankruptcy kept the foreclosure form moving forward and under a chapter 7 the owner does not have any obligation on the note. this does not mean he does not own the property. I have been involved with private lenders who had to foreclose and did not because the cost far outweighed the benefit . I was able to buy the note and get the owner to sigh a deed in lieu but it is not easily done with financial institutions.

no legal advice intended.

Dion DePaoli · Answer

It is possible that the foreclosure was not concluded.  This can come from the bank (any of them) only getting a judgement for foreclosure but not sending the property to foreclosure sale.  In a case such as that, the original borrower would still own the house and be liable.

This is not all that uncommon in the midwest where it does not pay for the bank to take the property back.

The Summary Judgement can be found in public record.  There might be some Assignments of Mortgage in public record also which will show you who owns the mortgage.  If that name matches who is calling to collect or has a mortgage servicer on their behalf, they may not have sent it to foreclosure sale.  In such a case, he still owes and frankly could move back in, although I wouldn't do that.

It is also possible that for some reason the foreclosure was vacated for any number of reasons.  Which would also show in public record.

Yes, if he is indeed still on the deed, he could short sell the property.  He  might want to talk with the bank and work with them to get a title abstract to see what happened before he spends a bunch of time on something that just didn't get recorded correctly.

Account Closed · Answer

Dion DePaoli and Michael Lauther  Thanks for your replies.  I didn't have much hope that I could buy the note, but just thought I'd check if there was some in I didn't know about.

Regarding a short sale:  If I get the deed from owner, do lenders have channels set up for me to work a short that doesn't involve the borrower?  I'm confused about this because when dealing with probate/estate properties, lenders have been difficult to impossible to work with...even if you are an heir with a deed and/or court order.  Are you seeing lenders work shorts that don't involve borrower hardship?

Account Closed · Answer

Dion DePaoli:  I have a similar situation with a seller that filed BK and "abandoned" the asset, as she says, 3 years ago.  She still owns it as there has been no foreclosure. There was never any collection activity nor any recorded notice of defaults, etc.   House is upside down by more by 150%.  Lender is HSBC.  Given that HSBC is requiring promissory notes in many short sales, I'd like to avoid the SS and buy the note.

Is there any way to buy the note from HSBC?  Or a way to find out if they sold it?  I've called what seems like every dept., but of course they just keep sending me to the REO dept. no matter how I explain that I want to the buy the debt.  Cust. Service and REO dept and other depts. can pull up the account and send me to Collections. Collections can't access or identify the debt and has no record of it. I'm assuming it's charged off.

Is there any in?  Or is buying it sub2 and/or short sale the only way?

Dion DePaoli · Answer

K. Marie Poe if you get the deed from the owner doesn't make a whole lot of sense.  I think you mean if the owner agrees to work with you to sell the deed to you.  Do lenders have channels for short sales?  Yes.

The deal has hardship as the borrower stopped making payments and it went through some phase of foreclosure, again more often than not some hardship is present.

It is not going to hurt you to contact the lender and see what they would take as a payoff.  The owner can likely do this in a little more timely fashion.  You never supplied to the thread what the actual numbers are so if you don't know...go find out.  If the lender will take less than what they are owed, they will tell you.  To fuss around without addressing the big white elephant in the room is a bit of a time waster.

Good Luck.

Dion DePaoli · Answer

Most of the big banks like HSBC, BOA, Wells, Citi, etc have trading desks on their capital markets side of the business.  It sounds like you are calling into the servicing department which will likely not get you too far.  It is a needle in a haystack to find someone who understands what your asking about and know where to send you.  Most of the "public" numbers will not yield a knowledgeable person.

HSBC in particular does loan pool sales every so often but they are likely not going to take the time to hunt down one note and sell it to you.  The loan could also be locked up in a securitized trust which makes the sale a bit more difficult.  Chances are if it is deadwood to them they will sell it off sooner or later, if you watch the assignments of the loan you might have better luck with the new owner.  Otherwise, you are probably going to have to grind out the short sale channel and stay persistent.

Jeff B. · Answer

Never mind.  I just figured out what I need to do.  Mods can delete this thread if you want...

Who to approach? Bankrupt owner still on title.

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