Would bank finance repairs on home with prior owner note still open? (foreclosure)
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2yQuote from @Joe Henry:
Quote from @Chris Seveney:
@Joe Henry
Bank is not going to assist you if they are not getting paid. At some point they will get their money but they are not gonna spend good money after bad especially when you are living there.
Your house your repairs.
That's unfortunate. You don't think they will want their insurance, which I assume they've been paying out of pocket for many years since the house was build and owners never paid, to cover the cost of a new roof and fix the leak which appears to have been there since the house was built?
The amount of red tape they will have to go through to get that approval - not happening. Also now that the property was sold via HOA auction, they do not need to worry about SCRA since that borrower no longer owns the home. They can go to foreclosure at any time because the borrower no longer owns the property.
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15 Replies
- Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes2y
@Joe Henry, LAWYER LAWYER LAWYER! Did I mention you need a lawyer?!?
What you are saying doesn't quite make sense to me, if the HOA foreclosed the banks lien would be gone. With the auction, the government gets paid first (back property taxes etc), then lien holders are paid in order. So, the mortgage would get paid before the HOA etc. So, likely the HOA would not even collect any money unless the mortgage was small.
In any event, if this was a foreclosure auction, the lien from the bank should be gone after the auction UNLESS the auction wasn't run correctly and the lender was not notified or some other flaw in their process.
This is why you need a lawyer!
Its possible that there is just some miscommunication with the lender and with the property preservation company they are using where they keep securing the property. Normally when they are headed to foreclosure they secure the property to preserve the value and keep it from being vandalized etc.
@Kevin Sobilo, in Florida an HOA can foreclose without clearing the first mortgage. I have an excellent lawyer who has looked into every detail of the foreclosure. At this point I just need the repairs done.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
Quote from @Joe Henry:
Here's a longer form post about my situation, but i'll summarize it below (https://www.biggerpockets.com/forums/41/topics/1163859-hoa-f...)
> Military husband/wife buy new home, divorce, stop paying note and hoa
> Husband is erroneously removed from title by tax appraiser, HOA forecloses on wife, I buy home at auction
> Now I am on title, wife and husband on note, bank cannot foreclose because husband is protected by SCRA
> (more on this in the above post, but husband does not want the house back)A while after moving in I discovered water damage inside a wall where rain has been getting in due to needing a new roof. I don't have funds for the roof, or to replace the outside supporting wall frame and stucco.
However the bank has changed the locks on me multiple times to "protect their asset", which got me wondering, would they also put a new roof on it and repair the rot to protect their asset? Haha it might be a reach but I don't have many options at the moment. The roof is from 2008, and I assume the bank is carrying insurance on the property. I'm surprised the insurance hasn't required a new roof yet.
What are my opitons here? I can get in touch with the lender and ask them, or should I try to go to their insurance provider?
I'm a fish out of water in this situation (this is my home, I don't do RE for income), so any possible approach to the situation is appreciated!
Could they. Possibly, but its just gonna get added to the balance of the loan and accrue additional late fees, interest etc. So lets say there is equity in the property. Their late fees, penalties etc. could run out of control and then any equity you thought you had will be gone once they finally come around to foreclose.
7e investments53 Reviews - Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes2y
Quote from @Joe Henry:
@Kevin Sobilo, in Florida an HOA can foreclose without clearing the first mortgage. I have an excellent lawyer who has looked into every detail of the foreclosure. At this point I just need the repairs done.
Of course they can foreclosure without clearing the first mortgage because the auction will pay the mortgage and whatever is left is dead money as the lien is done with at that point even if the amount from the auction isn't enough to pay off the mortgage.
If I am incorrect, you probably need to pay the mortgage anyways since they can now foreclosure since the property isn't owned by a veteran anymore the SCRA shouldn't apply and even if the lender doesn't realize it it won't apply forever and you'll eventually need to pay it PLUS the amount is rising with interest, fees etc. Also consider that if the mortgage isn't being paid they will add forced placement homeowners insurance on top which is very expensive. Eventually you could owe more than the property is worth.
Quote from @Chris Seveney:
Quote from @Joe Henry:
Here's a longer form post about my situation, but i'll summarize it below (https://www.biggerpockets.com/forums/41/topics/1163859-hoa-f...)
> Military husband/wife buy new home, divorce, stop paying note and hoa
> Husband is erroneously removed from title by tax appraiser, HOA forecloses on wife, I buy home at auction
> Now I am on title, wife and husband on note, bank cannot foreclose because husband is protected by SCRA
> (more on this in the above post, but husband does not want the house back)A while after moving in I discovered water damage inside a wall where rain has been getting in due to needing a new roof. I don't have funds for the roof, or to replace the outside supporting wall frame and stucco.
However the bank has changed the locks on me multiple times to "protect their asset", which got me wondering, would they also put a new roof on it and repair the rot to protect their asset? Haha it might be a reach but I don't have many options at the moment. The roof is from 2008, and I assume the bank is carrying insurance on the property. I'm surprised the insurance hasn't required a new roof yet.
What are my opitons here? I can get in touch with the lender and ask them, or should I try to go to their insurance provider?
I'm a fish out of water in this situation (this is my home, I don't do RE for income), so any possible approach to the situation is appreciated!
Could they. Possibly, but its just gonna get added to the balance of the loan and accrue additional late fees, interest etc. So lets say there is equity in the property. Their late fees, penalties etc. could run out of control and then any equity you thought you had will be gone once they finally come around to foreclose.
The original note was for 220k, since the borrowers (previous owners) never paid, it's already at 500k because of interest and fees. But now i am the only one on the title. I'm just thinking it's better for the bank because I might have to move out due to financial reasons, and then the property will be sitting here vacant, leaking and with a developing mold problem that will go from just one wall to the entire house if not taken care of. But I don't know how to pitch this to the bank.
Quote from @Kevin Sobilo:
Quote from @Joe Henry:
@Kevin Sobilo, in Florida an HOA can foreclose without clearing the first mortgage. I have an excellent lawyer who has looked into every detail of the foreclosure. At this point I just need the repairs done.
Of course they can foreclosure without clearing the first mortgage because the auction will pay the mortgage and whatever is left is dead money as the lien is done with at that point even if the amount from the auction isn't enough to pay off the mortgage.
If I am incorrect, you probably need to pay the mortgage anyways since they can now foreclosure since the property isn't owned by a veteran anymore the SCRA shouldn't apply and even if the lender doesn't realize it it won't apply forever and you'll eventually need to pay it PLUS the amount is rising with interest, fees etc. Also consider that if the mortgage isn't being paid they will add forced placement homeowners insurance on top which is very expensive. Eventually you could owe more than the property is worth.
Thank you for your warning, however it's not applicable to me. The loan was 220k, and is already at 500k even after the HOA auction. I bought the house for 40k. I will never owe on the loan, and it's not worth it for me to pay it. However the previous owner will be in the military for a long time, he's on the note, and so the bank can't foreclose. I have the property until he exits the military and the bank finally forecloses.
But i can't live here for long if the leak issue isn't fixed so I'm thinking maybe the bank will help because it's their asset.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
@Joe Henry
Bank is not going to assist you if they are not getting paid. At some point they will get their money but they are not gonna spend good money after bad especially when you are living there.
Your house your repairs.
7e investments53 Reviews Quote from @Chris Seveney:
@Joe Henry
Bank is not going to assist you if they are not getting paid. At some point they will get their money but they are not gonna spend good money after bad especially when you are living there.
Your house your repairs.
That's unfortunate. You don't think they will want their insurance, which I assume they've been paying out of pocket for many years since the house was build and owners never paid, to cover the cost of a new roof and fix the leak which appears to have been there since the house was built?
- Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes2y
Quote from @Joe Henry:
Quote from @Chris Seveney:
@Joe Henry
Bank is not going to assist you if they are not getting paid. At some point they will get their money but they are not gonna spend good money after bad especially when you are living there.
Your house your repairs.
That's unfortunate. You don't think they will want their insurance, which I assume they've been paying out of pocket for many years since the house was build and owners never paid, to cover the cost of a new roof and fix the leak which appears to have been there since the house was built?
They won't have to wait that long to get the house unless they choose. From what I have read they can actually go to court and get a court order granting them permission to foreclose on active duty military personnel. So, it is an extra hurdle and will take longer, but since they are already having a property preservation company monitoring the property it sounds like that is in process.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
Quote from @Joe Henry:
Quote from @Chris Seveney:
@Joe Henry
Bank is not going to assist you if they are not getting paid. At some point they will get their money but they are not gonna spend good money after bad especially when you are living there.
Your house your repairs.
That's unfortunate. You don't think they will want their insurance, which I assume they've been paying out of pocket for many years since the house was build and owners never paid, to cover the cost of a new roof and fix the leak which appears to have been there since the house was built?
The amount of red tape they will have to go through to get that approval - not happening. Also now that the property was sold via HOA auction, they do not need to worry about SCRA since that borrower no longer owns the home. They can go to foreclosure at any time because the borrower no longer owns the property.
7e investments53 Reviews Quote from @Chris Seveney:
Quote from @Joe Henry:
Quote from @Chris Seveney:
@Joe Henry
Bank is not going to assist you if they are not getting paid. At some point they will get their money but they are not gonna spend good money after bad especially when you are living there.
Your house your repairs.
That's unfortunate. You don't think they will want their insurance, which I assume they've been paying out of pocket for many years since the house was build and owners never paid, to cover the cost of a new roof and fix the leak which appears to have been there since the house was built?
The amount of red tape they will have to go through to get that approval - not happening. Also now that the property was sold via HOA auction, they do not need to worry about SCRA since that borrower no longer owns the home. They can go to foreclosure at any time because the borrower no longer owns the property.
I don't believe that's quite accurate. As per the servicer themselves, they cannot foreclose because the the military personnel is still on the note. If he were no longer on the note it would be a different story.
As for what @Kevin Sobilo said, perhaps he's right that they could request a court order to foreclose on SCRA protected person, but it's been almost 3 years and they haven't done that either. As of early this year, after having been notified of the HOA sale, they still had the case on hold due to active military status on the note.
- Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes2y
Quote from @Joe Henry:
Quote from @Chris Seveney:
Quote from @Joe Henry:
Quote from @Chris Seveney:
@Joe Henry
Bank is not going to assist you if they are not getting paid. At some point they will get their money but they are not gonna spend good money after bad especially when you are living there.
Your house your repairs.
That's unfortunate. You don't think they will want their insurance, which I assume they've been paying out of pocket for many years since the house was build and owners never paid, to cover the cost of a new roof and fix the leak which appears to have been there since the house was built?
The amount of red tape they will have to go through to get that approval - not happening. Also now that the property was sold via HOA auction, they do not need to worry about SCRA since that borrower no longer owns the home. They can go to foreclosure at any time because the borrower no longer owns the property.
I don't believe that's quite accurate. As per the servicer themselves, they cannot foreclose because the the military personnel is still on the note. If he were no longer on the note it would be a different story.
As for what @Kevin Sobilo said, perhaps he's right that they could request a court order to foreclose on SCRA protected person, but it's been almost 3 years and they haven't done that either. As of early this year, after having been notified of the HOA sale, they still had the case on hold due to active military status on the note.
Often foreclosures are not done immediately. Sometimes for various reasons they stagnate. For example, it could be a matter of capacity that they dont have time to take on the extrta effort right now for a foreclosure like this or maybe they need to find these people to serve them properly.
So, I would not look at the time that has passed as a reason to believe they won't be doing it in the near future. It could very well start happening at any time. Quote from @Kevin Sobilo:
Quote from @Joe Henry:
Quote from @Chris Seveney:
Quote from @Joe Henry:
Quote from @Chris Seveney:
@Joe Henry
Bank is not going to assist you if they are not getting paid. At some point they will get their money but they are not gonna spend good money after bad especially when you are living there.
Your house your repairs.
That's unfortunate. You don't think they will want their insurance, which I assume they've been paying out of pocket for many years since the house was build and owners never paid, to cover the cost of a new roof and fix the leak which appears to have been there since the house was built?
The amount of red tape they will have to go through to get that approval - not happening. Also now that the property was sold via HOA auction, they do not need to worry about SCRA since that borrower no longer owns the home. They can go to foreclosure at any time because the borrower no longer owns the property.
I don't believe that's quite accurate. As per the servicer themselves, they cannot foreclose because the the military personnel is still on the note. If he were no longer on the note it would be a different story.
As for what @Kevin Sobilo said, perhaps he's right that they could request a court order to foreclose on SCRA protected person, but it's been almost 3 years and they haven't done that either. As of early this year, after having been notified of the HOA sale, they still had the case on hold due to active military status on the note.
Often foreclosures are not done immediately. Sometimes for various reasons they stagnate. For example, it could be a matter of capacity that they dont have time to take on the extrta effort right now for a foreclosure like this or maybe they need to find these people to serve them properly.
So, I would not look at the time that has passed as a reason to believe they won't be doing it in the near future. It could very well start happening at any time.Ok that makes sense, I will be aware.
- Insurance Agent · Norwalk, CT · Member since 2016 · 2k+ posts · 1k+ votes2y
Joe,
I'm just looking at this from an insurance standpoint. From what I see, you have the title on the home. The Error by the Tax Appraiser may have caused you and economic loss. When you talk to your attorney on this, discuss the error by the appraiser. Ask your attorney if It may be worth sending them a letter indicating they should open a claim with their Professional Liability Insurance carrier.
- 2yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesSo, do I understand this correctly? You bought a house at an HOA foreclosure sale and paid $40k, subject to a $500k first mortgage lien. ( Are there property taxes owed or other liens? How much is the house worth in its current condition? ). Your strategy was (is) to make no payments on the mortgage and live there with no monthly mortgage, tax or rent expense until a lien holder foreclosed, which you believe you’re protected against because the borrower on the existing note is in active military service? I don’t believe I have ever heard of this strategy before. How do you come up with this? We’re you friends with the previous owner?
Quote from @Joe Henry:
Here's a longer form post about my situation, but i'll summarize it below (https://www.biggerpockets.com/forums/41/topics/1163859-hoa-f...)
> Military husband/wife buy new home, divorce, stop paying note and hoa
> Husband is erroneously removed from title by tax appraiser, HOA forecloses on wife, I buy home at auction
> Now I am on title, wife and husband on note, bank cannot foreclose because husband is protected by SCRA
> (more on this in the above post, but husband does not want the house back)A while after moving in I discovered water damage inside a wall where rain has been getting in due to needing a new roof. I don't have funds for the roof, or to replace the outside supporting wall frame and stucco.
However the bank has changed the locks on me multiple times to "protect their asset", which got me wondering, would they also put a new roof on it and repair the rot to protect their asset? Haha it might be a reach but I don't have many options at the moment. The roof is from 2008, and I assume the bank is carrying insurance on the property. I'm surprised the insurance hasn't required a new roof yet.
What are my opitons here? I can get in touch with the lender and ask them, or should I try to go to their insurance provider?
I'm a fish out of water in this situation (this is my home, I don't do RE for income), so any possible approach to the situation is appreciated!
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