Can a foreclosure on a property I somehow inherited affect me?

Question

My father passed away in April of 2017. My 2 brothers and I were not interested in taking ownership of the home because even though he owned it outright in 2015 he ended up with another mortgage on the home when he passed.

Two years later, we are still getting notices from the mortgage company saying they are owed "finder's fees" and other administrative charges, totaling $6k. This doesn't make sense to us since we thought we were free and clear of the home. The tax appraiser website shows my brothers and I as somehow being responsible for the property - but I cant figure out to what extent, since the bank has barred us from the property.

If this property gets foreclosed on, what kind of impact could it have on my ability to purchase investment properties? I haven't made my first purchase yet, but I don't want my lack of knowledge two years ago and possibly bad advice from the mortgage company and a terrible probate lawyer stop me before I get started.

Any advise or insight would be GREATLY appreciated.

T.

Jay Hinrichs · Answer

I don't think he is describing a tax foreclosure I think he is saying there is a bank foreclosure.. But since the loan in not in your name there is no credit risk to you.. you did not co sign on the loan right ?If your father has passed you want to become the executor of the estate that gives you the right to negotiate with the bank.and they will negotiate.. I have done this for my family.. and usually negotiate debt at pennies on the dollar unless the bank thinks they are in a position to sell at auction and recoup.. now to be fair the ones I did were in 2010 in the middles of the GFC.. and were rural type properties. but no affect on U personally unless your on the note contact loss mitigation and they will have a deceased division.. send in your proof of executor and start hammering away. Private investors are not any help in this arena .. other than they want to steal the property from you.. with the threat of hey your credit is going to be hurt which simply is not the case given the scenario you presented..

Jay Hinrichs · Answer

ya I got that It seemed like you were just thinking back tax's..

William Hochstedler · Answer

The short answer is most likely "no".If you are not the borrower, you are not responsible for the loan or the foreclosure. You are probably receiving the tax notices because the county doesn't have anywhere else to send them.You need to figure out if you are the rightful owner. The county recorder probably can help you with this and a title company certainly can. It's also possible that your father further encumbered the property without your knowledge. You need to talk to the bank. There may be all sorts of opportunities for them to drop the fees and, particularly if you are the owner of record or can demonstrate that through the estate documents, they have to give you access to the home. It is locked up and secured to prevent vandals (not the legal owners) from entering the property.The bank can be negotiated with like anything else: they can postpone the foreclosure; they may reinstate the loan if you want to keep it; If you're upside down you could do a short-sale; and they have the power to waive fees.

Thomas J. Clifford · Answer

UPDATE!I heard back from my co-worker that is an investor who had his lawyer check in on this.The mortgage company lost the original loan paperwork. That's why this process has taken so long! The lawyers fees that are being charged are what he called a formality because the lawyers are able to track which case they handled on behalf of the mortgage company. Because probate ended in Nov, and we stated to the lawyer representing the mortgage company that we have no interest in the property and they can have it, we are not on the hook for the mortgage, the taxes, or anything. If the lawyer decides to follow through with collecting on the fees we can go back to the courts and demonstrate the extended time frame that the entire process took, citing that the probate process for a pretty cut and dried case took nearly two years. I'll post more if there are new developments, but my main concerns have been pretty much put to rest. Thanks to everyone who chipped in!T.

Wayne Brooks · Answer

As @Tom Gimer mentioned, it sounds like the property Did go through probate, and into you and your brother’s name.....this is why the county records would show you as the owners(since you are) and the tax bill would have whatever address was listed in the probate files.Whi,e you have no personal liability for the loan, the foreclosure suit Will by law include the current owner’s as defendants.

Tom Gimer · Answer

If the home was inherited with a mortgage and the mortgage company was not subsequently paid off and is now foreclosing, the named defendant will be the now record owner. There may not be any personal liability for the original note, but a foreclosure lawsuit against the heirs would, in my opinion, show up on credit.If the heirs did not want the property, they could have disclaimed any interest in the asset in the probate process. If they did not do so, and the property passed to them via will or intestate succession, then the mortgage should have been refinanced or assumed or the property should have been sold.

Thomas J. Clifford · Answer

@John Corey:Will definitely provide updates. Thanks for the insight!

Jeremy V. Mayer · Answer

@Jay Hinrichs, that's what I originally said. I added to that, saying whatever is owed. Agreed that he shouldn't just let it go.

John Corey · Answer

Thomas, your credit cannot be harmed for a loan you never agreed to. That does not mean you and your brothers are best served by just ignoring the issue. Some good advice above.If you do reach a conclusion, it would be useful for others if you could share the details of the outcome. So more people can learn about what is possible.

Wayne Brooks · Answer

@Thomas J. Clifford I’m not a probate expert, but.....You were never in danger of being liable for the mtg (loan) no matter what transpired.If the property was transferred to you, yes you’d be responsible, as the owner, for the taxes, not that non payment of taxes affects your credit.Note, telling the bank “you can have it back” doesn’t change any legalities. Unless the heirs take title and execute a Deed In Lieu, and the bank accepts it, the bank’s Only avenue is to foreclose. If you didn’t take title through probate, the bank has no other choice but to foreclose....which would not affect you at all.