With the housing bubble bursting a few years ago, many homeowners were left underwater on their homes. Some people were so far under that they strategically defaulted on their mortgages and walked away from their homes. Some filed bankruptcy and “surrendered” their homes only to find out that did not mean they were off the hook. For others still, their lenders or servicers had commenced foreclosure, obtained a judgment and never executed on that judgment. Meaning they never sold the homes at Sheriff’s sale or trustee sale. Whatever happened, thousands of people are stuck with homes that no one wants. When this happens they find that they are still responsible for housing code violations, condo or homeowners association fees, property taxes until the house transfers, and are liable if anyone gets injured on their unwanted properties.
What to do? These unsuspecting homeowners have some options. The first step may be to attempt to get homeowners insurance to protect yourself from liability. You should then contact that mortgage company that doesn’t seem at all interested in the property. You want to ask them for an application to do a deed-in-lieu of foreclosure. This would basically allow you to transfer the property over to the mortgage company. You may also be able to short sell the home. To do this you use the same application with the bank. Yet another option is to ask the mortgage company if a short payoff is an option. With a short payoff, you offer the mortgage company a fraction of what is owed on the home and they release their lien meaning that you would own it free an clear. I have seen short payoffs for 4% of the amount owed on the loan. If the mortgage company isn’t interested in any of these options, they may be interested in you transferring the property over to a land bank if there is one active in your county.
What if the mortgage company isn’t interested in any of these seemingly rational options? An option that has recently come to light is attempting to vest the property in the mortgage company’s name through a bankruptcy. This option is pretty new and will not work in all jurisdictions. Look around for an attorney who is willing to attempt this. They are out there. You can also contact the CFPB and file a complaint. http://www.consumerfinance.gov/complaint/ If the lender is headquartered in your state, you can also contact an analogous state agency and file a complaint there, or with the state attorney general. Of course all of this can be daunting. If you want help, there are attorneys who specialize in this sort of thing. They will usually help you out upon payment of a retainer fee with an hourly fee agreement.
Now, what do you do in the meantime? If you moved out of your house and it is unoccupied, you may want to consider moving back into it until it is actually sold. Before you do this, contact an attorney to make sure you are following all applicable laws.
Best of Luck and Happy Halloween!
Steven M. Palmer
Licensed in WA and OH
Edited by Justin Vorhees