How to stop foreclosure of old owner's mortgage on my FL home?

22 Replies

A lis pendens was filed on 12/13/17 to seek foreclosure on a mortgage for my property in Gulf Breeze, Florida. I do not have a mortgage on this house. The complaint says the previous owners have not made payments on their mortgage since December 2012 - five years ago. Bank of America tried to foreclose on the previous owners back in 2010, but it was dismissed in 2013 because the bank failed to produce the original promissory note at the judge's request. Bank of America has now provided proof of that promissory note some four years later. The previous owners also declared bankruptcy in 2011, but since the house was underwater, it was not sold.

Wouldn't the 5 year statute of limitations prevent the bank from trying to foreclose again for those non-payments?

I purchased this property at a foreclosure auction in March 2017. The reason for that foreclosure was because the previous owners did not pay their HOA dues since 2011 (when they filed bankruptcy). I have title to this property and don't want to lose this house. I invested a lot of money to update and fix it up and currently have renters in place. (That is how I found out about the threat of foreclosure when they were served).

Furthermore, the court paperwork filed by the bank doesn't even address the current owner of the property, which is the LLC I created. I still have not been served any papers. I thought in order to even begin a foreclosure case, that all parties had to be listed and served?

**Before you criticize my poor judgment for not knowing that there is a clouded title, know this:  Yes, I did a title search before purchasing the property and there were two documents from 2014 and 2015 implying there was no longer a mortgage. In December 2014 a Release of Lien/Satisfaction was filed from Mit Lending/JP Morgan Chase. And then February 2015 a Release of Mortgage Property Lien from Chase was filed in the Bank of America foreclosure case that was dismissed. The title company would not offer me insurance, but advised me to get a consultation from an attorney, which I did. The attorney was baffled by the documents and said the documents implied there was no lien for a mortgage, even though the search still showed a mortgage lien in the records. He said it could just be a case of needing to file to quiet title. The previous owners did a 80/20 loan, so they had two mortgages (that were each sold a number of times to different lending institutions). So given this confusing situation, there was one plausible conclusion - that this was a "zombie" property that the bank had let go and stopped pursuing after the case was dismissed and the property was underwater. 

I would really appreciate any advice and guidance for how to fight this foreclosure suit. What can I file to dismiss this case? What motions can I make? If there is no hope of saving this house, then how can I hold onto it for as long as possible to protect me and my tenants?

I believe you need to take this to an attorney to get good qualified information. There are a lot of questions as to the scenario you've provided.

John Thedford, Real Estate Agent in FL (#BK3098153)
239-200-5600

It is fairly easy to determine if a particular mtg is released, or not.....the release references the specific book/page where the mtg was originally recorded. A legit title search is always better since they know how to properly search by legal description, in addition to by name (misspellings happen all the time).

If the mtg is legit you have no hope of winning. The famed 5 year SOL does Not apply, and doesn’t apply in 99.99% of cases.....it was misrepresented and promoted back in the day as a way for unethical foreclosure defense attorneys to generate clients.....under false pretenses.

Note: The title co. refusing to issue title insurance is a good clue.

Open up an order with a title company for a refi.. since you probably need to refi to pay this off.. title company will tell you the state of your title as it currently exists and what you need to do to get clear title if anything.

The bank can foreclose on this property if the lien is still attached.  You need a detailed title search to verify any and all liens that are attached to the property. If by chance the lien is not attached then the bank has no right to foreclose. As stated by the others please contact a real estate attorney at once. Good luck.

@Amanda M. A good attorney can file a motion to stop the foreclosure and show cause based on what you stated. Remember, banks are not very efficient in these matters. I have seen some really crazy things that banks have done that supports my opinion that they are great at loaning money, but terrible at real estate.

Originally posted by @Anthony Dooley :

@Amanda M. A good attorney can file a motion to stop the foreclosure and show cause based on what you stated. Remember, banks are not very efficient in these matters. I have seen some really crazy things that banks have done that supports my opinion that they are great at loaning money, but terrible at real estate.

Um...exactly what does that mean? Great at loaning money but terrible at real estate? Do you mean terrible at foreclosing? (Which would have nothing to do with "Real Estate") If you mean terrible at foreclosing, wouldn't you mean the trustee or attorney doing the foreclosure as banks don't do the actual foreclosures? If you mean tracking a loan do establish and determine that its a loan they want to put into foreclosure and refer to counsel/trustee, is that supported opinion of yours backed by any recent/relevant data or example citations?

I'm all for throwing something against the wall to see if it sticks but before I'd go sending this guy down a rabbit hole, I would think one might want to look inward first to see what THEY may have done "not efficiently" instead of making the assumption that a bank that is terrible at "Real Estate" (whatever that means) did something wrong, and that this is just gonna go away because of a TRO that someone got someone to file.

My two cents is...if, after all the poster said, a servicer proceeded with a foreclosure, chances are, they have their ducks in a row and are in a defensible position should their foreclosure be challenged. There is some convincing data to support my assumption. Poster couldn't get title insurance....poster purchased at a HOA foreclosure (subject to the existing mortgage lien). Sounds like another foreclosure is imminent.

On a side note to the OP...the original borrower's BK has nothing to do with anything and neither does this magical, "5 year SOL" that doesn't exist as far as this situation is concerned (At least...according to what was posted by OP).

@Ron S.    this was and is quite common in FLA  and @Wayne Brooks   was being kind..

most of the folks that buy these HOA liens have to deal with this at some time in the future..

Wayne and I conversed on this a few years back when I was unfamiliar with that play ( we don't see that much on the west coast if at all)... and he explained its quite common there and that the play is to get control via the HOA foreclosure but know at some point your going to deal with the senior lender.

its just like buying a second at the sherrifs or trustee sale.. although this one has some hair on it being that there looks to be inadvertent recon's or satisfactions or what have you.

I once bought a courthouse steps property that when researched looked like a first because of a recon.. well ... Wells fargo sued us as soon as we bought it say the recon was done accidently.. well you know how that went 10k in legal fee's later we settled and I had to pay them off.

Originally posted by @Jay Hinrichs :

@Ron S.   this was and is quite common in FLA  and @Wayne Brooks   was being kind..

most of the folks that buy these HOA liens have to deal with this at some time in the future..

Wayne and I conversed on this a few years back when I was unfamiliar with that play ( we don't see that much on the west coast if at all)... and he explained its quite common there and that the play is to get control via the HOA foreclosure but know at some point your going to deal with the senior lender.

its just like buying a second at the sherrifs or trustee sale.. although this one has some hair on it being that there looks to be inadvertent recon's or satisfactions or what have you.

I once bought a courthouse steps property that when researched looked like a first because of a recon.. well ... Wells fargo sued us as soon as we bought it say the recon was done accidently.. well you know how that went 10k in legal fee's later we settled and I had to pay them off.

 Thanks for the refresher Jay. I was being somewhat sarcastic as I'm familiar with the phenomenom. I managed a Florida foreclosure portfolio for quite some time. My point was the blanket statement that banks are terrible at real estate.

@Ron S.   well it was the first I heard of it and @Wayne Brooks was kind enough to explain it to the rookie LOL... should have known you know your way around those deals.

pretty hard to fight the bank when your just a private investor and they dig their heals in they simply out lawyer you   LOL...

Originally posted by @Jay Hinrichs :

@Ron S.  its not the same as this person was the original mortgagor .. they have zero standing the bank can hammer on them with impunity..

We are on the same page there... 

@Ron S. I could write an essay on the incompetence of banks, Fannie Mae, and the VA when it comes to real estate. You managed a foreclosure portfolio? You mean you shuffled papers. I doubt you ever set foot on any of the properties, but I will give you the benefit of the doubt and say that you were the exception. Managing paper in a cubicle is not real estate.

Originally posted by @Anthony Dooley :

@Ron S. I could write an essay on the incompetence of banks, Fannie Mae, and the VA when it comes to real estate. You managed a foreclosure portfolio? You mean you shuffled papers. I doubt you ever set foot on any of the properties, but I will give you the benefit of the doubt and say that you were the exception. Managing paper in a cubicle is not real estate.

 

Anthony, you are flawed in your assessment of what and where I've set my foot. Shuffled papers? That's cute...

I won't even bother educating you on my qualifications or experiences in real estate.

Oh and...the National Enquirer writes essays too.

@Anthony Dooley   Actually @Ron S.   Is pretty sharp on this stuff.

I know to most folks they think banks are not swift but remember half the time its servicing agents that hold the paper down the track or investors who buy the paper and they set their own rules on how to deal with defaults.. bank is long gone many times..

I know being a HML in the day of the crash and I had 460 loans out and 200 went into default a bunch right there in ATL .. all of us in the lending business were un prepared for the magnitude of the situation.. I only had maybe 5 to 10 defaults a year then all of a sudden I have 200.

Wells fargo loss mit department in Oregon had 14 people in it up till 2006 or so.. by 2010 there were over 150.. this is not an easy task on the lenders side of things.. and there are mortgage insurance issues then you had robo signing and and you have some states for its judicial some like GA were it can go really fast to foreclose on your deed to secure debt.. etc etc.. its state specific in many cases.

this is why up in the northeast they are still dealing with the back log it takes years to prosecute those things.. and FLA was middle of the road.

MS GA  were two of the quickest even in the down turn.. maybe TX as well. I foreclosed in 12 states so I got an education in something I never wanted. .:)

@Anthony Dooley   Large lenders may, or may not, be competent at managing properties,  but that's not an issue here.  The OP bought a property at an hoa foreclosure where there seems to have been an underlying mtg......while there were of course many missteps by foreclosing lenders in the past, if there is a remaining mtg on the property, the OP is cooked.  Yes, anyone can file a motion in a foreclosure case but reality is reality, and no motion will change that.

I do admit though, I believe a lender is required to name/serve a subsequent owner assuming they obtained title prior to the LP being filed.  Then again, if the buyer listed the property address as their address they may not have received the service.

The OP has sort of gone dark on this thread....I offered in a PM to look it for her since in Florida the public records are all online and fairly easy to interpret if you're familiar with them, including the case events in a foreclosure case.

When you bought the property at foreclosure auction on realforeclose.com, what popped up when you clicked the blue link on the box to the right? It should pop up the judgement that would tell you the plaintiff. I'm guessing that the HOA was the plaintiff, which means the property (not you) are subject to the first lien. I sometimes serve as an expert witness and Florida and an attorney just brought me one of these. If it's an HOA lien, all you can do is enjoy the property while you can. It's probably not going to end well for you. If you want to PM me with more info I'll try to look deeper for you.

A $35 FL title search would answer this. Nowhere in OP's story is there any reference to the BOA lien that is foreclosing.

Liens don't just disappear. BK doesn't affect liens unless a motion to avoid is granted and the lien is stripped. Title changes don't affect liens. As far as service of process, if people could just hide and avoid service that would slow down the machine. If the tenant occupants have notice, that likely suffices.

Best bet is to read the FC paperwork and find out the balance owed... figure out if it's worth it to pay it off or try to work out some other arrangement.

One more thing I just noticed from OP's summary... bank may need to update its title search to identify the current LLC owner. Sounds like there could have been title changes the bank is unaware of. Yes, the current owner LLC should be a party to the foreclosure action and if not already a party, it would be added. Service would be on the LLC's resident agent, or, if that isn't possible, via other means such as by posting or publication. Point being personal service is not going to be necessary for this to eventually move forward.

@Amanda M.

Your only recourse is to buy the house at foreclosure auction. Hopefully you did not pay a lot for the property and the rental income supersedes what you paid and put into it

In Florida foreclosure can take a while so you can rent it until the foreclosure is final.

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