Real Estate Investor · Sauk Village, IL · Member since 2015 · 78 posts · 30 votes
I found a homeowner thats is dying to get out of his house.... Here are some quick facts that are verified through the recorder of deeds: Mortgage company released the mortgage on his house for 75k Banks around here sometimes just release the loans instead of foreclosing on them. lol... House has 6k of unpaid real estate taxes. House has about 5k to be fixed up. After the house is fixed up its worth 20k There is a seller carry back mortgage of 6k that was from 2005 and was to be paid off in 2009. The terms were not very descriptive all it says was it had to be paid off in 2009. The owner said he only made 3 payments.
My question is what do I do about this seller carry back? I'm pretty sure the builder that gave the seller carry back went bankrupt, but the seller carry back mortgage is in a personal name.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
11y
A title company may require the loan to be released, but it appears to be a stale note, no collection efforts means the lender walked off and may not be collectible. An attorney would be needed to have the court clear title most likely if the lender can't be located.
Might buy it subject to that seller financed note, if it ever pops up, then deal with it or deal with it later on.
You must have some troubled banks there, didn't know FDIC was giving out free tickets to banks to walk away from collateral loans! :)
Real Estate Investor · Sauk Village, IL · Member since 2015 · 78 posts · 30 votes
11y
First of all, thanks for the lead on the stale note. I did some research and in Illinois, you have 10 years from the last day that the contact was breached. So whenever the owner made the last payment the creditor has 10 years, and this loan started in 2005. So I will have to find out when the last payment was made.
On paper it makes sense for the banks to release the loan. House was purchased in 2005 for 125k. Its currently worth about 15-25k plus 10-15k in repairs and 6k backtaxes. So it makes sense instead of foreclosing, cleaning it up, putting it on the market and so on.
Here is the update... I talked with the owner today and he "claims" that he hasn't paid taxes since 2008 but he filed a chapter 13 and said they were included in the BK but his BK has never was completed. He also said that the county was not able to sell his back taxes because he was in BK. I looked up online and it only tells me that the past two years hasn't been paid for a total of 6k. I have to go down to the treasures office and pay them to do a tax analysis. This should be interesting....
First of all, thanks for the lead on the stale note. I did some research and in Illinois, you have 10 years from the last day that the contact was breached. So whenever the owner made the last payment the creditor has 10 years, and this loan started in 2005. So I will have to find out when the last payment was made.
On paper it makes sense for the banks to release the loan. House was purchased in 2005 for 125k. Its currently worth about 15-25k plus 10-15k in repairs and 6k backtaxes. So it makes sense instead of foreclosing, cleaning it up, putting it on the market and so on.
Here is the update... I talked with the owner today and he "claims" that he hasn't paid taxes since 2008 but he filed a chapter 13 and said they were included in the BK but his BK has never was completed. He also said that the county was not able to sell his back taxes because he was in BK. I looked up online and it only tells me that the past two years hasn't been paid for a total of 6k. I have to go down to the treasures office and pay them to do a tax analysis. This should be interesting....
Its interesting that you say the banks sometimes just release mortgages instead of foreclosing on them. I think banks, almost all banks, have federal guidelines they must follow to participate in government sponsored programs e.g. fannie mae, freddy mac, FDIC Insurance, as well as a plethora of other government sponsored banking platforms.
I'm not a banker, so maybe they can apply for a Mulligan, but it just seems odd in todays highly regulated environment that a bank would be able to walk away from a collectable mortgage, even if the cost of foreclosing was greater than the cost of walking away.