House Buy-Back strategies?

[Tom_Mi]

Hi All,
We just paid the atty, and filing will probably happen in 2 weeks.

My home loan is NOT late. I'm not reaffirming our home, but we're planning a ride-through.

Last month we found a guy that claims to buy homes then land contract to people. (Sounds shady, I'll do plenty of due diligence on him...that's not my question here)

My question is: If I'm not reaffirming, at what point does this guy sweep in and pick up my house at the biggest discount?

Do I have to stop paying first so he can buy it at sherrif's sale or something, or does the bankruptcy process give him a opportunity to buy it back prior to all of the late payment/foreclosure stuff?

If there are several ways for him to buy the house, which one yields the lowest price?


Additional Details: I'm not interested in any strategies dishonest or illegal. We really like our house but our last mortgage guy appraised us (and mortgaged us) at 270k and it now appraises at 190. I could reasonably stay here if I could get the place for 180. Our initial plan was to just say the hell with it and move, but we have family NEXT DOOR and are really attached to the place.

Thanks for any opinions,
-t

[AngelinaCat]

Hi Tom: First, you actually have two issues going here: the mortgage for the home, and the property taxes. If you do not have an escrow account as part of your mortgage, then you have to pay the property taxes seperately.

Conceivably, you can keep the mortage current, but not pay the property tax. After so long--differs by state--this guy can come in and buy the tax deed. Theoretically, if he has bought your tax deed, and you haven't paid the property taxes in at least three years, then he can pay up YOUR delinquent taxes and own your land.

That is the way that I understand it, but I am in no way certain of this. You need to check it out in your state and jurisdiction.

Good luck.

[Tom_Mi]

That's interesting. I DON'T escrow, have always paid the taxes with my income tax return in Feb.

Trouble is, the taxes are pretty current, I only owe 1200 for summer.

I'm aware of tax leins, but didn't know he could pay a 5,000 tax deficiency and the bank would let him take over a 200k mortgage.

[HHM]

First, why do you want to sell the home for the biggest "discount"?

1. In order to sell any piece of real estate and pass clear title to the buyer, ALL liens, mortgages, etc, must be released by the respective holders. In the normal course of business, this means paying the mortgage or having the various lien holders "agree" to release their interest etc.

Bankruptcy does not change the above nor does your failure to reaffirm.

As for not paying property taxes, having this person try to buy the house that way would probably take a couple years before it gets to the point where someone could sweep in and gain a "Tax Title" to the property. Tax sales happen in two ways (1) the state foreclosures the tax lien and sells the property at auction, (2) the state auctions the tax liens to investor and then the investor is given the right to foreclose the tax lien against the property. The owner (and mortgage lender) usually have 6 months after the sale to pay the tax debt (the right or redemption). Keep in mind, what "usually" happens is the lender (the mortgage holder) will actually come in an pay the taxes (for the owner) so they protect their position as 1st lien holder. But, if the lender does not do so, the mortgage is wiped out by the tax foreclosure process.

As of right now, i.e. you being just discharged etc, the only way for this person to buy your house and gain clear title would be to pay off your various mortgages. If you go into default and a foreclosure takes place, then he can bid for the property at auction. In the mean time, your credit gets trashed, there is no guarantee that this person will win the auction etc.

IMO, your "to hell with it" strategy is probably the best. If you are really $80K negative, this is a no brainer, stop making your mortgage payments and walk away. It would easily take 10-15 years to dig out of that negative equity.

[pmed8]

I'm aware of tax liens, but didn't know he could pay a 5,000 tax deficiency and the bank would let him take over a 200k mortgage.

Tom,

I am by no means versed in this sort of thing. I had a co-worker who told me once that her sister had failed to pay the taxes on her home for a few years and some speculator had been paying them. She ended up losing her place and getting stuck with the mortgage. I seriously doubt that once he pays them long enough that he is just going to "take over" the mortgage and everything.

This whole land contract scheme smells like a rotten deal. I would lay a bet this works like the scams that's been discussed on the news recently. The say they will take over it all and then you make payments or whatever to them, but in the end they score the house and/or land and you get stuck with the debt.

My best advice is this. Either file on the house, let it go, and move.(what i did) OR stay there, ride through, and hope that some day the value goes up.
Both of these options have pluses and minuses, you have to decide what is best for you. Whatever you decide, I wish you the best.

Pmed8

PS still waiting on discharge. Last date was 9-9-08

[sarasota7]

Blowing smoke

Not gonna happen, the mortgage company checks on your taxes every year and may even be included on all mailings from the county regarding the taxes. They will pay your taxes and you will end up paying them.
When people do buy tax deeds they get to charge interest usually no more than 18%, if the owner doesn't pay the money you can take the house, but this usually takes a few years of not paying. In Chicago they are sold in blocks or bundled, so you get some nice homes where the owners come through and you make a little money and you also get a bunch of crack houses on the south side that you are now the proud owner of.
The mortgage co won't let your house go for much below market value at the foreclosure sale either.