Who owns this house?

Foreclosures
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Who owns this house?

Rob Newsom
Realtor · Lander, WY · Member since 2016 · 21 posts · 9 votes

I've found a house that appears to be unoccupied and in disrepair.  I've looked up the owner of record on the county tax records and attempted to make contact, but have had no luck.  I have found legal documents that suggest the owner of record may have been sent to prison about 15 years ago (and has 25 more years to serve).  The tax history shows that the owner of record quit paying taxes about 10 years ago, and since then a bank has been paying the property taxes. 

Is anybody familiar with this scenario??  Why is the bank paying the property taxes?  If the bank had been paying the entire time, I would have assumed it was the way escrow was set up, but the owner was paying the taxes for a while, and then it switched to the bank making payments.

2nd, it still appears to belong to the owner (ie not foreclosed).  Are there any unusual rules that govern properties when owners get sent to prison?  This is in Texas.

Thanks in advance for any help!

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  • Ron S.
    Paradise, CA · Member since 2015 · 1k+ posts · 871 votes
    9y

    got a property address?

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  • Stephanie Ross
    Real Estate Broker · Houston, TX · Member since 2017 · 33 posts · 8 votes
    9y
    The bank would be paying the taxes to protect their interest on the promissory note. State and local property taxes take priority over any other lien (or promissory note.) If the bank didn't step up to pay it, the municipality would foreclose. Foreclosures allow the municipality to recover these unpaid, overdue real estate taxes before the first, secondary or all subsequent lien holders. Now, the laws for banks foreclosing on back paid taxes is tricky. A lot will not foreclose for back HOA dues or taxes that they may have paid to protect themselves. Usually they're going to want to serve the homeowner with a threat of "intent to accelerate." Texas prisoners are notably hard to serve documents to. Plus, document servers that go to prisons are very expensive -- large banks use vendors to fill these document service orders. Sometimes it can be something as simple as the bank nor going through the process to serve the documents correctly. Also, sometimes the default service representatives going through this file won't work the file because they don't understand how to work a subordinating default. The bank just may be waiting for the mortgage to get so far behind that it's a "simple" default. Then things are clear cut. Do you know who holds the promissory note?
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  • Ron S.
    Paradise, CA · Member since 2015 · 1k+ posts · 871 votes
    9y
    Originally posted by @Stephanie Ross:

    The bank would be paying the taxes to protect their interest on the promissory note. State and local property taxes take priority over any other lien (or promissory note.) If the bank didn't step up to pay it, the municipality would foreclose. Foreclosures allow the municipality to recover these unpaid, overdue real estate taxes before the first, secondary or all subsequent lien holders.
    Now, the laws for banks foreclosing on back paid taxes is tricky. A lot will not foreclose for back HOA dues or taxes that they may have paid to protect themselves. Usually they're going to want to serve the homeowner with a threat of "intent to accelerate." Texas prisoners are notably hard to serve documents to. Plus, document servers that go to prisons are very expensive -- large banks use vendors to fill these document service orders. Sometimes it can be something as simple as the bank nor going through the process to serve the documents correctly. Also, sometimes the default service representatives going through this file won't work the file because they don't understand how to work a subordinating default.
    The bank just may be waiting for the mortgage to get so far behind that it's a "simple" default. Then things are clear cut.
    Do you know who holds the promissory note?

    "Subordinating Default"? What is that?

    "Simple Default"? What is that?

    "Bank nor going through the process to serve the documents correctly"? 

    While it appears you may have a broad general idea of the process, there are a lot of holes in it. I'm not trying to be hostile or combative Stephanie but I would disagree with a few of your points and I believe that some clarification might be warranted. 

    • MANY lenders foreclose for back taxes whether the lender advanced to pay them or not. Failure to pay taxes is a material breach of the loan covenants and subject to acceleration of the note.
    • The law for foreclosing on back paid taxes is not tricky at all. Foreclosures happen either judicially or non judicially. By a power of sale clause or by suit and judgement. Texas affords both options.
    • Foreclosures that are non judicial require posting, not service so regardless of how difficult it may be to serve a prisoner in Texas, service may not be necessary in a non judicial foreclosure, thus eliminating an "expensive process server" and no matter how expensive a document server is, it's pennies as it relates to the big picture.
    • a "default service representative" won't work the file because they don't understand how to work a "subordinating default" (Whatever that is) is not a valid statement for any servicer/lender except maybe a single asset owner, mom and pop landlord trying to do their own foreclosure (God help that person). Attorneys and trustees (Depending on whether its judicial or non judicial) are trained on foreclosures and many of them need to be designated trustees or counsel that are approved by Fannie and Freddie (assuming its a government loan) before they can engage in a foreclosure. 
    • No, the bank isn't waiting for it to get so far behind that its a simple default. That just doesn't make any sense. What I suspect you mean is that you think a bank would prefer to foreclose for monetary payment default instead of a covenant breach default. While I agree with on that, in either event, the default is simple and both are curable by the borrower (Although monetary default is not curable within a certain time frame prior to sale in many states).
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  • Stephanie Ross
    Real Estate Broker · Houston, TX · Member since 2017 · 33 posts · 8 votes
    9y
    I see your point on about non-judicial and judicial foreclosure. I had forgotten that Texas allows both - and that in this instance should really be making this process go a lot quicker. I worked for BOA & JPMC as a foreclosure specialist and a modification UW. We would get sent spreadsheet books of loans to work through, just trying to push them to the next step in the process. When you'd come across one of these types of files, it would get notated to get it out of the queue but it wouldn't go anywhere for a really long time. In theory, it shouldn't matter whether it's a tax delinquency that has resulted in a forced placed impound escrow or whether their in default due to missed payments. But in reality - agents working 150 files a week didn't always service things in the most efficient manner. Those agents are the ones referring the files to foreclosure attorneys and trustees. If the servicer is not doing their job, than the attorneys can't do the work they need to either. You don't need to worry about me feeling like your being hostile -- I told people that they were losing their homes everyday. Let's just say it would take a lot more to get under my skin. Lol. I'd also like to say perhaps all of my experience is purely anecdotal. Surely not every servicer was working things like they were. I hope to god they were not. My take away from my time working with mortgage servicers is this- if you feel like your daily work life is an exercise in futility... get out.
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  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    9y

    @Stephanie Ross

    No actual service is necessary to foreclose in Texas so that is not the issue. Just a Notice of Intent to Accelerate and a public notice of the Foreclosure Posting is all that is necessary 

    Could be a multitude of issues as to why the bank hasn't foreclosed that would not be public record 

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