Q: Vacating a home while in foreclosure

[misslynn62]

I filed ch13 and had my 341 mtg on 1Nov. I have not been notified that my home is in foreclosure yet, however I did not re-affirm it. I have been in the home 3 years as of October. I did get a notice from the mtg. co. in regard to calling my 2nd mtg. due, dated 15NOV. My question is: how long can I stay in the home? I have heard that I can stay here until the sheriff's sale. Will I get notified in writing when the mtg. co. initiates the process, or do I have to do some sleuthing and try to find out via the county clerks office or somewhere else? The mtg. co. is notorious for not making the notifications to the mortgagee's in a timely manner. I just had my daughter move in with me, and I need to know how long I have to save up to afford to move (1st months rent, deposits, etc.). I am worried I will get notice of the sheriff's sale before I even know the mtg. co. has begun the foreclosure process. Also...what is the deal with escrow and paying taxes and insurance during the process? What am I liable to pay? Does the mtg. co. have to keep my escrow funds? Can I cancel my homeowners and get a refund of any funds paid in advance? How do I get them to do that? Any help you can give me would be greatly appreciated!

[HHM]

First things first, you said you filed Chapter 13, correct? You don't do reaffirmation agreements in Chapter 13's. Thus, what is the status of your mortgage payment vis-a-vis your chapter 13 payment plan.

Were you in arrears on mortgage payments when you filed? Have missed any payments since filing Chapter 13?

Also, I do not think the lender can call the 2nd mortgage due when you file BK.

Why are you in Chapter 13...why can't you afford the house. Typically, most people file Chapter 13 to "save" a house, not let it go.

[misslynn62]

Okay...wrong verbiage regarding not "reaffirming" my mortgage. When I first began the ch 13, my intent was to save my mortgage. I was behind and the mortgage company did not offer any options that I could manage within my budget. I tried to re-mortgage the house, to combine my 1st and 2nd mortgages at a fixed rate (I was on an adjustable rate), but I could not find a lender (even my current mortgage company) who would work with me. By that time, my credit was in the toilet. I went through a non-profit credit counseling group for help. However, it couldn't help me with the mortgage arrears. The only option I had left was bankruptcy. I had to file ch 7 previously due to my pending divorce (I could not afford 1/2 the debt). The ch 7 was discharged in 99. Therefore, a ch 13 was my only option. Summarily, as I talked to my lawyer and got a preliminary idea of what my payment would be, I realized I would still have to let the house go. I could not keep up with the rising mortgage payments and keep up my obligations too. I would have ended up in the same hole as I was. I had to find somewhere to live where the rent/mtg. did not take up 60% of my take home pay (literally...that does not include utilities!). So, I have not made a payment to either mortgage since I filed. I just got the notification from the courts giving the mortgage company the go ahead to file foreclosure. It was dated 13DEC. I have already had the 341 meeting, the court has agreed to the plan we presented.

[HHM]

You still have a few months before you would have to move out.

Indiana uses a Judicial Foreclosure system. So, once the mortgage companies get the OK from the BK court (you will be copied on the Order). From what I have read, the total foreclosure process takes about four months from the Date the Mortgage Company files the Complaint for Foreclosure (if you are living at the house, you will get a copy in the mail). There is a 3 month pre-foreclosure waiting period that starts when the Mortgage Company files the Complaint for Mortgage. After the 3 months expires, the Mortgage Company gets the Judgment for foreclosure. Then the mortgage company must auction the property, which requires the mortgage company give the 1st notice of the sale date at least 30 days prior to the sale date.

So, I am guessing, you have at least until mid April (and probably a little longer) before the house is sold at auction.

[misslynn62]

Thanks HHM for your insight. It helps allot! How do I handle the insurance, and what is the disposition of the funds in the escrow account?

[HHM]

Strictly speaking, you are supposed to keep insurance on the property until the house is auctioned. If you haven't been paying, do you even have any money in the escrow? If you do, it will get used up.

[misslynn62]

Thank you HHM, this is what I needed to know.