Jump to content

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


SkyStillSunny
 Share

Recommended Posts

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.
Link to comment
Share on other sites

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.  

Link to comment
Share on other sites

  • 1 month later...
  • 3 weeks later...

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. 

 

Link to comment
Share on other sites

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.

Link to comment
Share on other sites

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.

Link to comment
Share on other sites

  • 2 months later...

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.

Link to comment
Share on other sites

  • 7 months later...

Always, always deal 

On 4/5/2020 at 9:29 PM, WhoCares1000 said:

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.

Ditech is a sleezball and so is Shellpoint, I would not feel the least bit guilty. OP should have done it before it was transferred and while Ditech had it, it would be like karma. 

Link to comment
Share on other sites

On 4/4/2020 at 10:34 PM, SkyStillSunny said:

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. 

 

Never call a mortgage company, send a qualified written request instead. If they don't answer and answer correctly, and you can show damages (holding up the sell of the house would be) then you have a lawsuit.  https://www.consumerfinance.gov/ask-cfpb/what-is-a-qualified-written-request-qwr-en-207/

  • Like 1
Link to comment
Share on other sites

  • 6 months later...

Thank you for sharing your experience, my friends had a similar situation, and I know how stressful it is. I now want to buy myself a house, as I have long wanted to have many children, but my wife and my apartment are not large enough to provide a comfortable life for children. I am also currently analyzing the market for exemplary services for the sale of housing since I would not like to stumble upon scammers who will leave me without housing and money. So far, the only acceptable option seems to me to be the option of house and lot for sale in the Philippines, since this is what many people advise me as a proven and safe company, so I think if I don't find anything better, I will use their services.

Link to comment
Share on other sites

  • 3 weeks later...

 Real estate in the U.S. is one of the most guaranteed areas for investment.  Demand for the purchase of American real estate has increased enormously in the past few years. The price of real estate is growing by 1-2% a year, which means that it can be sold at a profit after a few years. Return on investment is relatively high, and the asset itself practically does not lose value. Possible risks of buy as much as possible reduces the purchase of a real estate in the secondary market. The disadvantage of investing is that the maintenance and upkeep of the house costs a rather large sum. And the yield from the rental of residential property is not high. Usually, it does not exceed 3%. So it would be best to look for people who can tell you that we buy houses wilmington and sell them their real estate.

Link to comment
Share on other sites

I work in the mortgage industry and will tell you that if there is a lien on title - the owner of that lien will want to be paid before releasing it. Many of these 2nd mortgages from the bust of 2008 got charged off - but if they weren't bumped off title by a foreclosure or a sale of the property - they are still there and usually must be paid before any new refinance or sale can transpire. Many liens were purchased at rock bottom prices and held. Real estate goes up and down but one thing is certain - prices always retrace and exceed their previous highs. 

Link to comment
Share on other sites

On 9/10/2021 at 9:58 PM, Uncle Reggie said:

I work in the mortgage industry and will tell you that if there is a lien on title - the owner of that lien will want to be paid before releasing it. Many of these 2nd mortgages from the bust of 2008 got charged off - but if they weren't bumped off title by a foreclosure or a sale of the property - they are still there and usually must be paid before any new refinance or sale can transpire. Many liens were purchased at rock bottom prices and held. Real estate goes up and down but one thing is certain - prices always retrace and exceed their previous highs. 

If companies are bankrupt and a homeowner cannot get a straight answer from anyone, you can do a quiet title proceeding to force whoever the lien holder is to put up or shut up, so to speak. I would figure someone in the mortgage industry would know about quieting a title.

Link to comment
Share on other sites

3 hours ago, WhoCares1000 said:

If companies are bankrupt and a homeowner cannot get a straight answer from anyone, you can do a quiet title proceeding to force whoever the lien holder is to put up or shut up, so to speak. I would figure someone in the mortgage industry would know about quieting a title.

From what I saw on Google it takes about 2-3 months to finalize a quiet title.  Whether the time frame is the same with COVID is another question. 
 

If I were the OP, and working with a real estate agent, at the minimum I would discuss this with a real estate agent.  It might be wise to discuss the issue with a real estate lawyer.  

Link to comment
Share on other sites

2 hours ago, BackFromTheDebt said:

From what I saw on Google it takes about 2-3 months to finalize a quiet title.  Whether the time frame is the same with COVID is another question. 
 

If I were the OP, and working with a real estate agent, at the minimum I would discuss this with a real estate agent.  It might be wise to discuss the issue with a real estate lawyer.  

It will probably take longer with COVID depending on how backlogged the courts got. Certainly talk to a real estate lawyer.

The problem is, how long as the OP been trying to talk to someone from the lien holder and getting no answer. By getting an address and serving the lien holder with a quiet title suit, it will at minimum force the lien holder to come to the court to prove their lien. Then, the OP would have someone to talk to about getting the matter settled. If the lien holder does not answer or show up and you can prove they have been properly served, then the lien is cancelled by the court. It would be a win/win for the OP in either case because they finally can settle the issue for once and for all.

In fact, I am paying off my mortgage in a couple of months and may save up in 2022 and discuss with an attorney on doing a quiet title in regards to the initial mortgages I got because I purchased my home just before the housing bust of 2008 and I heard from really bad things that were uncovered during the fallout. In fact, one of the companies refused to return the mortgage note to me marked as paid (but they did file a release at the county recorder).

With property, sometime it takes the carrot and sometimes it takes the stick.

  • Like 1
Link to comment
Share on other sites

12 hours ago, WhoCares1000 said:

If companies are bankrupt and a homeowner cannot get a straight answer from anyone, you can do a quiet title proceeding to force whoever the lien holder is to put up or shut up, so to speak. I would figure someone in the mortgage industry would know about quieting a title.

Quieting a title may work if you are trying to sell a property to someone who is paying cash - but someone who is looking to finance a purchase will need a title insurance policy - and if I read the above posts correctly - the company who ended up with the lien wasn't in BK - they sold it. It was an asset - so in a BK proceeding, it was sold to whomever picked the bones clean. If the title cannot be insured - no new mortgage.

Now a consumer may have trouble getting someone in customer service to locate the loan after it was bought in a fire sale - but a title company should be able to validate the lien. Just because it hasn't had a payment posted for a decade doesn't mean the debt is waived - but the lender might take less if the only other option was a foreclosure - because that proceeding would eat up equity. Something is better than nothing.

And that cash buyer? The lien holder can come back after the fact and reassert their lien under certain circumstances. He won't have a title insurance policy to protect him. Quieting may be a tool for some liens - but there is a paper trail for the big ones. 

I have had loans stall because the the title couldn't be insured - even when we had proof the liens were paid - companies never released the liens. Now they can't prove to themselves they were paid. Eventually they were removed - but it takes time. There is still a lot of wreckage from 2008.

Link to comment
Share on other sites

 

Let's go over the facts of the case:

1) The property the OP is referring to is in Florida which is a judicial foreclosure only state and one of the most expensive and time consuming states to do a foreclosure

2) DiTech (or whoever owns the paper today) is asking for the $55k without 11 years of interest and they have not foreclosed. This is because they know they are in a bad position to begin with. If the OP stops paying on the first mortgage or stops paying the taxes, they get nothing. If they foreclose, the 1st gets all the funds and they get nothing. That is why they have sat on this for 11 years.

3) The OP wants to sell but DiTech is insisting on getting paid in full which the property will not bring if sold after costs and the first is paid off. The OP has tried to call DiTech or whoever holds the note at this point and no one has tried to contact her back.

At this point, what a quiet title action will do, at a minimum, is bring a lawyer or someone to the table who has negotiating power so that the OP can get the sale done. Yes, if they lien holder does attend the hearing with the correct papers (which in Florida in and of itself is a hit or miss), then they action will fail BUT the OP has an attorney they can call to jump start negotiations for a short sale. If the lien holder does not attend the hearing or they don't have the paper work, the judge orders the lien to be removed and it will be very hard for the lien holder to get is added back to the property. In fact, Florida is a tax certificate state (which means the local governments sell unpaid taxes to investors and the quiet title action is used all of the time to strip the liens after the tax certificate holder forecloses on the property for back taxes so the judges are very familiar with the process as are most real estate attorneys.

The OPs other option would be to stop paying on the 1st mortgage and let the 1st mortgage holder foreclose. The 2nd lien will be stripped after the foreclosure and will be an unsecured debt which is easily bankruptable. Since the OP already sent a cruise missile to her credit with the foreclosure, the nuke that will be caused by the bankruptcy will simply be to clean up collateral damage.

So whoever holds the lien for the 2nd mortgage is in a really bad position here unless the property has gone up in value enough in the past year that the OP can now sell and settle both liens. The quiet title action will do one of 2 things:

1) Force the lienholder to the negotiating table to come up with a reasonable short sell plan which will allow the OP to sell

2) Remove the lien and allow the OP to sell

In either case, it is a win/win. The OP has already spent enough time trying to get someone to negotiate with. The time the quiet title action will take is simply the OP stepping up the game to the next level.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share

×
×
  • Create New...