Buying a home with mortgage but is past statute of limitations.

14 Replies

Here is my situation, I did a mail out and got a guy to call me about his home. He is wanting to sell it but the property still has the original mortgage on it. He estimates at about $250,000. The lender started the foreclosure process in 2008 and the homeowner got the case dismissed in 2011 due to the 5 year statute of limitations here in Florida. There is no foreclosure currently being worked. I know if i purchase this home I would be taking ownership of this lien, but my question is: can the original lender then come after me for the loan amount? and if so would I be able to still use the statute of limitations as a reason to not pay it?

I have been reading that if the lender would take a quite claim deed it would get the lien off of the title. How exactly does this process work? and would I be able to do it after purchasing the home?

Lots of questions I know. This is a complicated deal.

Thank you in advance for all your help.

@Eric Renney

 I do not have an answer to this at all but I am fascinated by it.  I'm very interested to hear what people have to say.

@Eric Renney

  generally speaking a mortgage does not sunset on its own because of time..

It could be as simple as the bank just needs to start the process all over again and just declined to do that.

If you take title subject to the loan and the bank starts the foreclosure again.. unless you have written authorization from who ever the banks client is you will play heck trying to communicate with them.

from what you posted the lien is there its valid and the lender is just not doing anything with it..

Now in those robo cases or in the case of lost documents there are still ways for the banks to prosecute those foreclosures.

But maybe one of the Flordia guys will chim in ... Wayne Brooks probably knows this answer right off the top of his head.

I knew this had to be Florida when I saw the post.  Do NOT pass go.  The homeowner did not get the case dismissed "due to the statute of limitations".  It became a popular theory, promoted chiefly by foreclosure defense attorney looking to put more clients on the $500/mo plan, a couple years ago.  I looked at it, decided it was a fool's errand after sitting down with some top foreclosure defense attorneys.  The theory was that "if at any time 5 years after the loan was accelerated" the case was dismissed, or dismissed and not refilled-the lender was barred from foreclosing.  This was further shot down by 5th DCA rulings.  Only people just now hearing about this don't realize it's old news, and doesn't fly.  And of course, many borrowers in default "want to believe" these bogus claims, and can be a bit delusional.  Nothing complicated here, just misunderstanding.  Short sale or eventual foreclosure are the only outcomes here.

Originally posted by @Wayne Brooks :

I knew this had to be Florida when I saw the post.  Do NOT pass go.  The homeowner did not get the case dismissed "due to the statute of limitations".  It became a popular theory, promoted chiefly by foreclosure defense attorney looking to put more clients on the $500/mo plan, a couple years ago.  I looked at it, decided it was a fool's errand after sitting down with some top foreclosure defense attorneys.  The theory was that "if at any time 5 years after the loan was accelerated" the case was dismissed, or dismissed and not refilled-the lender was barred from foreclosing.  This was further shot down by 5th DCA rulings.  Only people just now hearing about this don't realize it's old news, and doesn't fly.  And of course, many borrowers in default "want to believe" these bogus claims, and can be a bit delusional.  Nothing complicated here, just misunderstanding.  Short sale or eventual foreclosure are the only outcomes here.

 Thank you for the information. My gut feeling was telling me this sounded like something I should not get involved with. I have contacted the seller and offered to put the house under contract using a short sale. He is unwilling as he would not get the money, it would go to the bank. I think he is just getting bad information from his attorney. Is there anything I could tell him to get him to understand that there is no other option but a short sale or a foreclosure eventually? 

This post has been removed.

Nope, they "want to believe".  He'll keep believing it right up until the sheriff ejects him after the conclusion of the next foreclosure.  Then he'll be yelling about "the injustices and illegalities of it all".

Originally posted by @Eric Renney :

Here is my situation, I did a mail out and got a guy to call me about his home. He is wanting to sell it but the property still has the original mortgage on it. He estimates at about $250,000. The lender started the foreclosure process in 2008 and the homeowner got the case dismissed in 2011 due to the 5 year statute of limitations here in Florida. There is no foreclosure currently being worked. I know if i purchase this home I would be taking ownership of this lien, but my question is: can the original lender then come after me for the loan amount? and if so would I be able to still use the statute of limitations as a reason to not pay it?

I have been reading that if the lender would take a quite claim deed it would get the lien off of the title. How exactly does this process work? and would I be able to do it after purchasing the home?

Lots of questions I know. This is a complicated deal.

Thank you in advance for all your help.

Check the actual court order for dismissal. If the case was dismissed "With Prejudice" then negotiate your deal with the homeowner then hire a title attorney to review your deal. Have the attorney address having the lien released, if not already released by the court order. Have the attorney confirm that he can insure title without exceptions for the homeowner's mortgage.

If the case was not dismissed "With Prejudice" your options are most likely going to be limited to: reinstating the loan, short selling the loan, buying the loan, or paying the loan off.

Not sure why you feel the lender would want a quit claim deed, unless you mean a deed-in-lieu, after which lenders usually sell the property as REO to the general marketplace. A short sale would be a more suitable option for you as the buyer.

Without knowing all the numbers this sounds like a simple deal. Is there any equity?

There is no equity in the property. The lender was claiming $135,000 in the foreclosure hearing. The home might be worth $80,000 as is now. I am having my real estate attorney take a look before I try other routes. 

Thank you for your insight and knowledge on this subject. I really appreciate it.

@Eric Renney Just curious what happened with this property in the end? A NY Times article suggests that the homeowner may be correct that the mortgage is no longer valid. 

Think you should look for a Grant/Warrant deed, else you'll never have a clean title.

UPDATE:

So after my real estate attorney took a look at this particular case, he agrees that the seller has a very good chance of getting the lien removed. The seller just tried negotiating with the bank to remove the lien without going to court and wasting everyone's time and money but obviously they were having none of that.

There is a supreme court case open right now in miami, fl that is almost identical to his case. The ruling is supposed to happen this January. The seller wants to wait and see what the ruling is before he takes the bank to court. If the ruling on this case is possessive towards the borrower than it would open up alot of deals in the same situation. 

Florida's 5th DCA already ruled, in Bartram vs US Bank, and Hicks vs WF, that while they may not can refile foreclosure on an acceleration/missed payments more than 5 years old, they Can refile foreclosure on all missed payments, and other defaults, after that within the preceding 5 year period.  A DCA ruling is precedent, whereas a local yocal circuit judge is not.  The 5th DCA sent this to the Florida Supreme Court for confirmation, and that is being awaited now.  I took a sip of that kool aid the foreclosure defense attorneys were handing out, but never really drank it.

The property will be difficult to sell /flip for you. Your buyer, probably can not get title insurance.

I took a sip of that kool aid the foreclosure defense attorneys were handing out, but never really drank it.   

  I like the way you worded that ! ! !   @Wayne Brooks

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