HOA foreclosure situation debitor/creditor

17 Replies

heres the situation, about 4 years ago due to of course unforseen circumstances we walked away from our home, we did talk with a bankruptcy attorney at the time and he suggested we walk away from the home because at that time the home was not worth what we had paid for it(home is in Hawaii). He did say that if the mortgage company comes after us then we will deal with it then. Heres my dillemma:

when we walked away from the home,, it was during that time the HOA foreclosed on property, however the Lender is still saying that I because they have mortgage I still own the property and for the past 3 years are wanting to work with me on saving the home. I keep telling them that the HOA has foreclosed on it and that I dont own it anymore. The Lender keeps insisting I do and has even sent me paperwork readjusting my mortgage payments, the lender continues to pay taxes and insurance on the property. My husband and I are in a better financial situation now and we would like to buy another home within the next year or so, but this mortage keeps coming up? I guess my question is:

1. is there a way for me to get back this home? even with the HOA already foreclosed on it about 3 years ago.

2. the lender has not foreclosed on me and still wants met to save the home.

3. what are my options at this point, because this is the only thing thats holding my credit up?

so confused at this point...

the bidder was an LLC, and Im assuming because hawaii is a super Lien state, the HOA would be first at the time?

if by super lien you mean the lender's position is wiped from the property, that is not true for Hawaii. the lender is contacting you because there is still a mortgage and promissory note attached to the property in your name. the HOA foreclosure allowed someone (the winning bidder) to take title to the property. the only options you have are working out a deal with the LLC to gain back your interest to the property, or allow the bank to foreclose. DO NOT work out a deal with the bank until you gain back your interest in the property. any deal you make with the bank will not gain you title to the property. what's the name of the LLC that won the auction?

The super lien statute just says that the HOA dues included in the lien have priority over everything other than taxes and the mortgage(s).

The bidder LLC owns the property... and has apparently not been paying the mortgage.

Sounds like you still "own" the mortgage, but not the property. That's causing your credit problem.

I would figure out what the LLC's end game is and see if there is any opportunity to slide in before the lender forecloses... because they will. The credit wounds will take years to repair as I understand it.

If that doesn't work another option is to file BK and the debt goes away along with the calls and letters. Consult with a debtor's rights attorney.

Thank you Elijah...I have tried to talk with the LLC and no response which im not surprised about...so basically there are no other options to this property but I will need to file something because the lender is not willing to foreclose yet and Ive been dealing with this for a while now and i want it done. just a hypothetical though if the home is paid off by new owner would that wipe out the title of the LLC or would that be another issue to take up or would all that be taken cared of in Escrow?

thanks Tom well i think the LLC is waiting it out and milking it, the home is definitely worth more than what I owe in mortgage so the LLC is sitting pretty for right now, I just need this situation done so that I can get back on track..

Originally posted by @Kailani Tom :

thanks Tom well i think the LLC is waiting it out and milking it, the home is definitely worth more than what I owe in mortgage so the LLC is sitting pretty for right now, I just need this situation done so that I can get back on track..

If you eliminate personal responsibility for the Note by filing BK, the lender will have no recourse other than the property... and yes they will foreclose.

If the LLC is alerted to the fact that you're planning to file BK and that the gravy train is coming to a stop, perhaps they'll negotiate with you... and you could conceivably negotiate with the lender at the same time.

An interesting twist to this is who would be entitled to the surplus following the lender's foreclosure.

Anyway, keep BP posted.

Originally posted by @Kailani Tom :

Thank you Elijah...I have tried to talk with the LLC and no response which im not surprised about...so basically there are no other options to this property but I will need to file something because the lender is not willing to foreclose yet and Ive been dealing with this for a while now and i want it done. just a hypothetical though if the home is paid off by new owner would that wipe out the title of the LLC or would that be another issue to take up or would all that be taken cared of in Escrow?

paying off the mortgage will NOT wipe out the LLC's deed. the only way to do that would be for the bank to foreclose. if the LLC decides to payoff the mortgage because the unit has lots of equity, they could do that, and they would still own the house. the only way you get the house back is by purchasing it from the LLC or buying the unit at the foreclosure auction. also, if the bank has not filed for foreclosure, it will take YEARS to complete the process. this could drag on for a long time. look at the foreclosure section in the Advertiser and you will see court cases from 2015 and 2016. what is the LLC name? perhaps i know them. you can PM if you want.

Originally posted by @Tom Gimer :
Originally posted by @Kailani Tom:

thanks Tom well i think the LLC is waiting it out and milking it, the home is definitely worth more than what I owe in mortgage so the LLC is sitting pretty for right now, I just need this situation done so that I can get back on track..

If you eliminate personal responsibility for the Note by filing BK, the lender will have no recourse other than the property... and yes they will foreclose.

If the LLC is alerted to the fact that you're planning to file BK and that the gravy train is coming to a stop, perhaps they'll negotiate with you... and you could conceivably negotiate with the lender at the same time.

An interesting twist to this is who would be entitled to the surplus following the lender's foreclosure.

Anyway, keep BP posted.

 indeed interesting. but based on my experience with these, my money is on OP getting surplus, unless they have debt and there are other parties to the action.

Originally posted by @Tom Gimer :

The super lien statute just says that the HOA dues included in the lien have priority over everything other than taxes and the mortgage(s).

The bidder LLC owns the property... and has apparently not been paying the mortgage.

Sounds like you still "own" the mortgage, but not the property. That's causing your credit problem.

I would figure out what the LLC's end game is and see if there is any opportunity to slide in before the lender forecloses... because they will. The credit wounds will take years to repair as I understand it.

If that doesn't work another option is to file BK and the debt goes away along with the calls and letters. Consult with a debtor's rights attorney.

not only that, if escrow is paying the property tax, the LLC isn't paying that either.

@Elijah F. sorry I don't know how to PM you on this anyway it's Kapolei Parkway Properties LLC

Originally posted by @Kailani Tom :

@Elijah F. sorry I don't know how to PM you on this anyway it's Kapolei Parkway Properties LLC

 we are now colleagues. i sent you a message.

Originally posted by @Elijah F. :
Originally posted by @Tom Gimer:
Originally posted by @Kailani Tom:

thanks Tom well i think the LLC is waiting it out and milking it, the home is definitely worth more than what I owe in mortgage so the LLC is sitting pretty for right now, I just need this situation done so that I can get back on track..

If you eliminate personal responsibility for the Note by filing BK, the lender will have no recourse other than the property... and yes they will foreclose.

If the LLC is alerted to the fact that you're planning to file BK and that the gravy train is coming to a stop, perhaps they'll negotiate with you... and you could conceivably negotiate with the lender at the same time.

An interesting twist to this is who would be entitled to the surplus following the lender's foreclosure.

Anyway, keep BP posted.

 indeed interesting. but based on my experience with these, my money is on OP getting surplus, unless they have debt and there are other parties to the action.

Yes, the mortgagor would get the surplus. Perhaps it wasn't possible but addressing a positive equity situation differently changes the outcome.

This is identical to a strategy here when houses were upside down with mtg.s and the foreclosures took forever.

It’s quite simple; a bidder buys at the HOA auction purely with the intent of making money by renting the property out until the bank forecloses, and the LLC may intervene at some point to simply delay the foreclosure to collect more rent.

The llc IS the owner, although the Property is subject to the mtg they are not responsible for it. And if your statutes are like ours, any surplus from the mtg foreclosure goes to The Owner Of The Property at the time of the sale, regardless of who the original mortgagor/Owner was in the past.

@Wayne Brooks Yes this is that exact situation. But it should have been nipped in the bud earlier if there was equity...

Hawaii (HI Rev Stat § 667-31 (2016))

(b) From the sale proceeds, after paying all liens and encumbrances in the order of priority as a matter of law, after paying the foreclosing mortgagee's attorney's fees and costs, after paying the fees and costs of the power of sale foreclosure, and after paying the moneys owed to the foreclosing mortgagee, the balance of the sale proceeds shall be distributed by the foreclosing mortgagee to junior creditors having valid liens on the mortgaged property in the order of their priority and not pro rata. Any remaining surplus after payment in full of all valid lien creditors shall be distributed to the mortgagor.  (emphasis supplied)

@Tom Gimer Well, at least the mortgagor would get any surplus, not the hoa buyer.  Here, with an hoa foreclosure the owner gets any surplus, Not the mortgagee, which I think is a little whacked.  In a bank foreclosure, or tax deed auction, the Curren owner at the time of the sale gets any surplus, after all lien holders.

I'm hoping they sale the home so that it will take care of my mortgage on it...its crazy how in 5 years this house went from not having any equity to having close to 200,000.00 in equity. I don't care about any of that I just want to be done with this mess and move on from it. the court process has started already and hoping that it will be foreclosed within the next year, I still don't understand why the LLC is holding on to it when they would make more selling it.

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