Hey y'all!
It's been a long time since I posted here, and two and a half years post-Ch7 I am doing very well! I hope you are too -- or are about to be, in any case!
But I have a friend who is going through this now, and received a question from him that I wanted to run by you all, because all my book larnin' regarding bk code has faded pretty rapidly in my head after all this time.
Anyway, long story short, my friend has an elderly mother who owns a house for which she got behind on the payments. After two years and several tries to work out a payment plan (each of which were set waaaaaaay too high by the mortgage company; the woman is living off SS and a small pension and just couldn't afford the inflated makeup payments) she finally decided to move out. The house -- while still sellable and in good shape -- is now sitting empty, and she is several miles away in a rental and moved on with her life.
This dear lady has no assets, and no income that can be legally garnished, so she's effectively judgement proof. Facing imminent foreclosure, her son (acting as power of attorney) decided to approach the mortgage company in regard to a deed-in-lieu since the house is already empty, thinking that would be easier for this elderly lady than going through a full foreclosure.
The mortgage company agreed -- it's a desirable property in a good neighborhood and will sell even in this market with a minimum of effort on their part -- and sent this lady a deed-in-lieu. She and her son took it to a legal aid attorney because they had a number of concerns about it -- specifically, the language seemed to indicate that the mortgage company was actually holding out to claim a deficiency balance from her after the title transferred. The legal aid attorney agreed and drafted a counterproposal. This was sent to the mortgage company, which of course responded that they had to draft their own but they would take it under consideration.
Several weeks later, the mortgage company sent this lady another deed-in-lieu that was amazingly similar to the first, if I'm remembering correctly. This lady and her son, knowing that she can easily file Ch7 if the mortgage company decides to renege on their assurances not to pursue a deficiency balance, decided to go ahead and sign, which they did. This was properly executed and sent back to the mortgage company a few weeks ago.
This is where it gets ugly.
Instead of registering the deed normally with the clerk of court (which, according to the legal aid attorney, was technically valid as soon as it was executed) the mortgage company has sent this lady a whole new deed-in-lieu with even more questionable provisions, as well as an affidavit they expect her to sign. This affidavit includes two exceptionally stinky clauses: one that affirms this lady is not insolvent (she is, and had claimed insolvency in her written application for deed-in-lieu to begin with) and another that affirms she does not now or in the future intend to seek bankruptcy protection.
Basically, what I think the mortgage company is trying to do with this -- AFTER a valid deed-in-lieu has already been executed -- is entrap this dear lady into making false written statements regarding her financial position in order to have the debt (in this case, any future deficiency balance) rendered non-dischargeable by fraud should she seek Ch 7 protection in regard to it, OR at the very least, render her bk more difficult and expensive by mounting a creditor objection, which they are very clearly positioning the agreement to facilitate.
That's so dirty I just don't even have words, but there ya have it. Apparently their position is to completely ignore what has already been executed, thinking this dear lady is desperate to avoid foreclosure. She may be for emotional reasons, but her son, my friend, is not. My friend has no intention of allowing his mother to sign the thing, and has simply not yet responded.
I actually think non-response at this point is the best way to deal with it right now, because the less she says the more options she has in any future bankruptcy, plus he has copies of the executed deed-in-lieu she's already signed, as well as the letters that went back and forth between them before they got to this point. If she does nothing right now, worst-case scenario is that the bank forecloses anyway, and she has not imperiled any future Ch7 by making statements that could complicate things or keep any deficiency balance from being discharged. So there's no immediate danger of anything -- she's out of the house anyway and her son won't let her be bulldozed -- but they're quite upset. That is just some seriously dirty shizzle to pull on an old lady, especially after doing all they could to guarantee she could never catch up on the mortgage by making sure the payments stayed out of her reach. (Honestly, it's like they wanted the property from the start... weird, I know, but that's my gut take on it.)
My question for those of you who have done your research is this: I seem to recall, back when my head was still full of reliable bk information
that the idea of structuring any kind of legal agreement that is intended to preclude or supersede a future bankruptcy is not only invalid and unenforceable, but that disallowing anything like it is a core tenet of the bankruptcy code. But I can't remember what it's called or where to find it anymore in the law.
The other thing is, beyond the new deed-in-lieu and affidavit itself, has anyone else encountered this? If so, what were your experiences? (I did a search of the forum but didn't find anything, so either I'm searching wrong or no one else has been this unfortunate yet.)
Anyway, all input appreciated -- and anyone seeking a deed-in-lieu should be aware of this. You gotta know what you're signing. I shudder to think what would have happened to this lady had her son not been a very careful sort of fellow...
Thank you so much for reading this long thing! I remember you all fondly and have thanked you a million times in my heart for all the help you gave me, and still do try to pay it forward. You're the best!!!
Thanks again,
FreshLikeADaisy
It's been a long time since I posted here, and two and a half years post-Ch7 I am doing very well! I hope you are too -- or are about to be, in any case!
But I have a friend who is going through this now, and received a question from him that I wanted to run by you all, because all my book larnin' regarding bk code has faded pretty rapidly in my head after all this time.
Anyway, long story short, my friend has an elderly mother who owns a house for which she got behind on the payments. After two years and several tries to work out a payment plan (each of which were set waaaaaaay too high by the mortgage company; the woman is living off SS and a small pension and just couldn't afford the inflated makeup payments) she finally decided to move out. The house -- while still sellable and in good shape -- is now sitting empty, and she is several miles away in a rental and moved on with her life.
This dear lady has no assets, and no income that can be legally garnished, so she's effectively judgement proof. Facing imminent foreclosure, her son (acting as power of attorney) decided to approach the mortgage company in regard to a deed-in-lieu since the house is already empty, thinking that would be easier for this elderly lady than going through a full foreclosure.
The mortgage company agreed -- it's a desirable property in a good neighborhood and will sell even in this market with a minimum of effort on their part -- and sent this lady a deed-in-lieu. She and her son took it to a legal aid attorney because they had a number of concerns about it -- specifically, the language seemed to indicate that the mortgage company was actually holding out to claim a deficiency balance from her after the title transferred. The legal aid attorney agreed and drafted a counterproposal. This was sent to the mortgage company, which of course responded that they had to draft their own but they would take it under consideration.
Several weeks later, the mortgage company sent this lady another deed-in-lieu that was amazingly similar to the first, if I'm remembering correctly. This lady and her son, knowing that she can easily file Ch7 if the mortgage company decides to renege on their assurances not to pursue a deficiency balance, decided to go ahead and sign, which they did. This was properly executed and sent back to the mortgage company a few weeks ago.
This is where it gets ugly.
Instead of registering the deed normally with the clerk of court (which, according to the legal aid attorney, was technically valid as soon as it was executed) the mortgage company has sent this lady a whole new deed-in-lieu with even more questionable provisions, as well as an affidavit they expect her to sign. This affidavit includes two exceptionally stinky clauses: one that affirms this lady is not insolvent (she is, and had claimed insolvency in her written application for deed-in-lieu to begin with) and another that affirms she does not now or in the future intend to seek bankruptcy protection.
Basically, what I think the mortgage company is trying to do with this -- AFTER a valid deed-in-lieu has already been executed -- is entrap this dear lady into making false written statements regarding her financial position in order to have the debt (in this case, any future deficiency balance) rendered non-dischargeable by fraud should she seek Ch 7 protection in regard to it, OR at the very least, render her bk more difficult and expensive by mounting a creditor objection, which they are very clearly positioning the agreement to facilitate.
That's so dirty I just don't even have words, but there ya have it. Apparently their position is to completely ignore what has already been executed, thinking this dear lady is desperate to avoid foreclosure. She may be for emotional reasons, but her son, my friend, is not. My friend has no intention of allowing his mother to sign the thing, and has simply not yet responded.
I actually think non-response at this point is the best way to deal with it right now, because the less she says the more options she has in any future bankruptcy, plus he has copies of the executed deed-in-lieu she's already signed, as well as the letters that went back and forth between them before they got to this point. If she does nothing right now, worst-case scenario is that the bank forecloses anyway, and she has not imperiled any future Ch7 by making statements that could complicate things or keep any deficiency balance from being discharged. So there's no immediate danger of anything -- she's out of the house anyway and her son won't let her be bulldozed -- but they're quite upset. That is just some seriously dirty shizzle to pull on an old lady, especially after doing all they could to guarantee she could never catch up on the mortgage by making sure the payments stayed out of her reach. (Honestly, it's like they wanted the property from the start... weird, I know, but that's my gut take on it.)
My question for those of you who have done your research is this: I seem to recall, back when my head was still full of reliable bk information
that the idea of structuring any kind of legal agreement that is intended to preclude or supersede a future bankruptcy is not only invalid and unenforceable, but that disallowing anything like it is a core tenet of the bankruptcy code. But I can't remember what it's called or where to find it anymore in the law.The other thing is, beyond the new deed-in-lieu and affidavit itself, has anyone else encountered this? If so, what were your experiences? (I did a search of the forum but didn't find anything, so either I'm searching wrong or no one else has been this unfortunate yet.
)Anyway, all input appreciated -- and anyone seeking a deed-in-lieu should be aware of this. You gotta know what you're signing. I shudder to think what would have happened to this lady had her son not been a very careful sort of fellow...
Thank you so much for reading this long thing! I remember you all fondly and have thanked you a million times in my heart for all the help you gave me, and still do try to pay it forward. You're the best!!!
Thanks again,
FreshLikeADaisy
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