All Forum Posts by: Joe Henry

 I don't believe that's quite accurate. As per the servicer themselves, they cannot foreclose because the the military personnel is still on the note. If he were no longer on the note it would be a different story.

As for what @Kevin Sobilo said, perhaps he's right that they could request a court order to foreclose on SCRA protected person, but it's been almost 3 years and they haven't done that either. As of early this year, after having been notified of the HOA sale, they still had the case on hold due to active military status on the note.

I'll make a long story as short as possible:

> House built in 2008, first owners used husbands VA loan to secure (220k loan), stopped paying HOA and bank shortly thereafter (current payoff 500k+). SCRA protections prevented bank and HOA from foreclosing.
> Owners had several kids, divorced, moved out. Tax appraiser accidentally removed the husband from title around 2022, HOA then foreclosed (Florida, HOA can foreclose and first mortgage lien will remain in tact).
> I purchased property from HOA foreclosure auction last year for 40k, not realizing first mortgage cloud (silly, I know).
> Bank is still paying property taxes of 5k a year, and I assume insurance.
> Prior owners want nothing to do with the property, I'm unable to structure any kind of deal with them, or fix issue of husband being removed from title, or undo foreclosure auction (thoroughly checked with attorney).

Recently discovered repairs needed totaling 20-40k which I cannot finance. So my last idea is to sell the property back to the bank - 

The bank cannot foreclose on the house due to husband's military SCRA protections. He just remarried and got another house using new wife's VA loan, has child support to pay for another 10 years, and has been active duty since 2004. The chances the bank will get to foreclose on this house in the next 10 years are next to 0. The note has already stood unpaid for 10 years.

I am hoping the bank may be interested in buying the property from me so they can re-sell it with a clear title. Otherwise they will continue to pay yearly taxes and maintenance costs, and not be able to foreclose the property as it will sit here leaking and falling apart and the mold continuing to spread. The prior owner, the husband, has told me the bank does not plan to pursue a deficiency against him when they do eventually foreclose. So the bank is not getting their money any way you cut it.

My question is how do I get the ball rolling on this? Who would I talk to at the bank - underwriter? servicer? etc... are there professionals who specialize in this sort of deal, talking to the bank, etc... a realtor or lawyer or someone with the right connections to the bank? 

I'd be happy to come out of the deal with the 40k I paid for the property, the bank could sell it in the current market for close to 200k, and a flipper would still be able to make money on it after repairs. 

P.S. I'd like to keep this thread centered around the bank deal. If you have other ideas or questions, I've a previous post about this property here when i was exploring other options: https://www.biggerpockets.com/forums/41/topics/1163859-hoa-f...

Yes, when they foreclose I'll lose the house. My lawyer said that if the past owner (the husband) is not interested in getting the house back it will be next to impossible to overturn the foreclosure based on that title issue. The husband has told me he got the bank to agree not to come after him for deficiency - not sure if that's true or he just didn't know what he's talking about, he seemed pretty out of the loop on a lot of the information, but he's not interested in getting the house back. 

That's unfortunate. You don't think they will want their insurance, which I assume they've been paying out of pocket for many years since the house was build and owners never paid, to cover the cost of a new roof and fix the leak which appears to have been there since the house was built?

Thank you for your warning, however it's not applicable to me. The loan was 220k, and is already at 500k even after the HOA auction. I bought the house for 40k. I will never owe on the loan, and it's not worth it for me to pay it. However the previous owner will be in the military for a long time, he's on the note, and so the bank can't foreclose. I have the property until he exits the military and the bank finally forecloses.

But i can't live here for long if the leak issue isn't fixed so I'm thinking maybe the bank will help because it's their asset.

The original note was for 220k, since the borrowers (previous owners) never paid, it's already at 500k because of interest and fees. But now i am the only one on the title. I'm just thinking it's better for the bank because I might have to move out due to financial reasons, and then the property will be sitting here vacant, leaking and with a developing mold problem that will go from just one wall to the entire house if not taken care of. But I don't know how to pitch this to the bank.

@Kevin Sobilo, in Florida an HOA can foreclose without clearing the first mortgage. I have an excellent lawyer who has looked into every detail of the foreclosure. At this point I just need the repairs done.

Here's a longer form post about my situation, but i'll summarize it below (https://www.biggerpockets.com/forums/41/topics/1163859-hoa-f...)

> Military husband/wife buy new home, divorce, stop paying note and hoa
> Husband is erroneously removed from title by tax appraiser, HOA forecloses on wife, I buy home at auction
> Now I am on title, wife and husband on note, bank cannot foreclose because husband is protected by SCRA 
> (more on this in the above post, but husband does not want the house back)

A while after moving in I discovered water damage inside a wall where rain has been getting in due to needing a new roof. I don't have funds for the roof, or to replace the outside supporting wall frame and stucco.

However the bank has changed the locks on me multiple times to "protect their asset", which got me wondering, would they also put a new roof on it and repair the rot to protect their asset? Haha it might be a reach but I don't have many options at the moment. The roof is from 2008, and I assume the bank is carrying insurance on the property. I'm surprised the insurance hasn't required a new roof yet.

What are my opitons here? I can get in touch with the lender and ask them, or should I try to go to their insurance provider? 

I'm a fish out of water in this situation (this is my home, I don't do RE for income), so any possible approach to the situation is appreciated!

@Ron S., @Chris Seveney

Thank you both for your replies, here's an update. My lawyer did a deep dive and discovered that it appears the county tax appraiser erroneously removed the husband from the title one year when updating the parcel tax record, probably incorrectly reading the divorce agreement and not actually looking up to see if a quit claim had been signed. After that the HOA was able to foreclose because no military personnel were listed on title. The bank cannot foreclose because the military husband is still on the note and still in the military.

I contacted the husband with this news and he had no interest in getting the property back. As of now I am the owner and live in the property, the note from the previous owners is still open.

Well I've got myself into a pickle. It's been a long time since posting here, I hope everybody is well! This is a tough one, I've spoken to lots of investors but this is outside the normal realm of knowledge for most - but I doubt that's the case for bigger pockets members!

Last July I purchased a home from HOA foreclosure auction. It was previously owned by a husband and wife, the husband being active duty military since mid 2000s. It did have a first mortgage of theirs open on it, which they have not made payments on since ~2014, just 6 years after the house was built. A lis pendens from the bank was filed 10 years ago, but the foreclosure was put on hold because of the SCRA restrictions protecting an active duty service member from being foreclosed on. The state is Florida.

I did not consider this first mortgage an issue because I was simply going to live rent and mortgage free in this property myself, rent bedrooms, make good money and recoup my investment in short time (netting 4k income per month if you count not having to pay my current rent). The couple had dragged out the HOA foreclosure for 3 years, and by the time the husband gets out of the military, is served bank foreclosure documents, and the bank foreclosure is finalized, my lawyer said it could be anywhere from probably 3 - 10+ years given all the information.

The catch now is the HOA foreclosure - how was the HOA able to foreclose (beginning 3 years ago) when the husband is active duty? I have been notified that currently the bank is looking into this exact question. But there's more to the story.

What I've gathered from speaking with the previous owners realtors, is that the husband and wife went through a divorce proceeding back around 2014, the husband agreeing to quit claim the property to the wife, in return for her within 1 year refinancing him off the loan.

In a brief conversation with the husband, he seemed to confirm that the quit claim was signed, but by her, because he had given her POA on the house (for which there is public record filed regarding the POA). However, my title search and the cases regarding the divorce and both foreclosures do not contain a quit claim filing at the county clerks office. The bank has also confirmed that he is still on the mortgage, so the wife never refinanced him off.

Stranger still, the HOA foreclosure did not list the husband on the case, only the wife "et al". The bank is informing me that if the HOA foreclosure was done solely against the wife, then the husband is still on the title, and my ownership is subordinate to his. Ouch.

I have my attorney looking into all this, and the ramifications of everything. But bigger pockets I know has combined experience that is not to be topped. 

Some questions:

- What are the ramifications if a quit claim was signed before the HOA foreclosure began, but never filed? Could the wife file it now and have it be valid from the date of signing?
- Is it possible for the HOA to foreclose just on one of the two owners or is this reason to contest the HOA foreclosure? Or was the husband included in the "et al" because he gave the wife power of attorney?
- If the husband still had rights to the home, has the HOA violated SCRA protections by conducting the foreclosure, or did the family need to object for the foreclosure to be halted?
- I've been looking into resale options, however without being in contact with the preivous owners (they are not open to contact) my options are limited. One investor said sometimes you can "pay to sign" and make decisions on someone else's loan, is this really an option? One said I can go direct to the underwriter to get a deal from them regarding the mortgage, since the servicer will not negotiate the payoff (150k+ interest and fees alone) and I don't have the note holders consent to do a proper Subject To deal. I'm unfamiliar with these tactics, it would be helpful to know if there's any avenue there or otherwise any options I'm not aware of.

I know the bank and my lawyer will have their own answers to these questions, but I'm looking for ideas in general. Because of my personal schedule I don't have as much time to fix up the property anymore, so I'm looking for an exit probably as the most preferable outcome. Still, if there's no exit but I can live in the property that would be acceptable too. But if I live there and rent bedrooms, I also don't want the husband to come knocking some time in the future saying "hey, you owe me part of this back rent as I'm a priority owner". 

I'm open to hearing any and all ideas and options that come to mind. Thank you all!