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SkyStillSunny

Trying to Sell House - DiTech has lien, but they are in bankruptcy

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Sorry, this is a little long, but I wanted to try to get as much info as I know for some advice/help.
 
In 2005, a family member purchased a home, then in 2010 she almost foreclosed on it, but was able to get a loan modification after working with the bank for a year on it. During that year, she didn't pay her 1st mortgage or her 2nd mortgage. Since the 1st mortgage was modified, she was able to keep her home. The 2nd mortgage was with HSBC, and they charged it off. That 2nd morgage was around 55k.  
 
Then in 2013, she moved out of state, and rented out her property in FL. She has had tenants in her home for the last 7 years. She wants to sell this home because she's really not making any money from the rental. And this is where we learned (the hard way) about how that 2nd mortgage really came back to haunt her. The title company found that there was a 2nd mortgage, and after some digging, after the charge off, it was sold to DiTech Financial, so they hold a lien to the house. They want 55k to release the lien, and well if we sold the house, then she would be under if she had to payoff the 2nd mortgage too. After all the fees for the real estate agent, closing, etc. and it means she'd end up paying to sell her house. She really needs to offload it because she can't manage the rental any longer and pay for repairs. 
 
Well when we tried to call DiTech, we got the run around and can never get someone to call us back. We want to try to settle, but we just found out that they are going through a bankruptcy!
 
Does anyone have any advice about our best options here? Would DiTech settle a portion of the balance to release the lien, but honestly, would they have any incentive to knowing that we are trying to sell the house? Since the account is charged off, and it's been 10 years, then the debt essentially is not owed, but DiTech still owns the lien. Should we try to get an attorney to help? Would an attorney have a better chance of getting the lien removed? The security instrument states something to the effect of: 
 
"Borrower is indebted to lender... and providing for monthly installments of principal and interest, with the balance of the indebtedness if not sooner paid due and payable on October 1, 2020"
 
So after that date of October 1, 2020, even without a recorded satisfaction, shouldn't the title agency consider the lien expired? When I contacted the title agency, they said that they don't consider it expired until 8-10 years after the maturity date! Does that sound right? I guess she just assumed that since the chargeoff/lien was put on the property in 2010, that it would be expired by now and she wouldn't owe that money. 
 
Anyway, I'm asking because I wanted to see if we had any negotiation power when we try to call DiTech again to settle so that she can sell the house! Since they are in the middle of filing for Ch. 13 bankruptcy, I don't know how willing they would be to negotiate with us, and even if they still own the debt. Maybe they sold it, but she has never gotten a letter about it if so.
 
Honestly any advice, or sharing of similar experiences would be appreciated. This is a close family member, and I need to try to help her.

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If the house is under water, she may have to negotiate a short sale.  With the mortgage and the lien that can get complicated.  
 

A little over a decade ago I had two rental properties that were under water and the tenants were on their way out the door. I tried to negotiate short sales.  It was rough.  The real estate agent took offers to both banks, which were rejected.  Foreclosure judgments on both — the same day.  
 

In one case, after the judgment the bank agreed to a different short sale for the same amount. In the other case, the bank foreclosed, the property was vacant for six months, then they sold it for $10k less than our short sale offer.  
 

I was not allowed to refinance my own home for 7 years afterwards. 
 

In my state the banks rarely go after anyone for the extra amount over what they sell the property for, because they can foreclose in half the time that was.  Other states may be different. 
 

In other words, a short sale may be the best option, but may not be possible. 
 

One alternative is to simply stop paying the mortgage, but still collect the rent, and let the bank deal with the mess.  That kills the credit for 7 years, though.  

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I received notice from Ditech that the mortgage was sold to another company called Shellpoint Mortgage Servicing. Tried calling them, and they were clueless so I was planning on waiting to call them back, but then the Covid-19 hit so we decided to keep the house for another year, and try to sell it next summer. Plans are on hold for now. Her loan actually matures in October of 2020, so I'm wondering if the lien will expire because I have heard of liens expiring after some time. 

 

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There are two types of liens in FL.  A voluntary lien (mortgage) remains in effect for the duration of the contact.  An involuntary lien (judgment) will fall off after 10 years.  Was your mom ever sued over the 2nd mortgage?  If not, it's possible the lien from the 2nd is a voluntary lien, and will remain in effect until the debt is satisfied.

This is one of those things where a local attorney will be indispensable in determining the type of lien, and tracking down the lien holder to negotiate settlement.

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This almost sounds sleezy but if you cannot get a straight answer from whoever you think holds the 2nd mortgage and you can find a lawyer willing to do this (and be able to pay the legal fees), you could always file a quite title action. At least it will get the mortgage holder to take notice that they have to prove that you owe them the money right then and there and might bring them to the table for a settlement. The worse that can happen is that they are able to prove that you owe them the money and the lien stays. The best that happens is that no one can prove that they are owed the money from the 2nd mortgage and the lien is removed by the court. However, you might also want to come up with a reasonable settlement that they can agree on in order to stop the action (such as the home is sold and they get whatever is left over after the 1st mortgage and selling fees are paid in return for releasing the 2nd mortgage).

Again, this is a sleezball move and you would probably need an attorney that you will feel like you need a cold shower after meeting with them to pull this off.

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I hope you were able to deal with this situation. I was almost in the same situation. I have paid off the last part of mortgage last year and I decided to sell the house. It was not profitable to keep it. I was lucky that my friends advised me to contact a company that buys real estate using their own cash facility, and not sell the house itself or with a realtor. thepropertybuyingcompany.co.uk They covered all costs, including solicitor fees and offered me the best price on the market for my house.

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