Property Tax Escrow

[concerned]

My husband and I will most likely foreclose on our home in the near future. Our BK was discharged on 2/14/06 and we kept our mortgage payments current. Our property taxes are escrowed in our mortgage payment. Are we still responsible during foreclosure for these property taxes? What happens if they are not paid? I believe the due date for our property tax is the spring sometime, but they may have already been paid for this year; I guess I will have to check on this and see. Should we wait to even considering letting the house go until we know for certain that these taxes are paid. Is it different for property versus school taxes? I'm a little confused as to what happens with foreclosure and the tax situation. Obviously, we no longer have the "automatic stay". How will this impact foreclosure?

Thanks everyone!

Concerned

[Minnymouth]

When you file bankruptcy, surrender a home in bankruptcy or have a foreclosure on a home, YOU only pay property taxes on the months you actually have the home in you possession.
Such as - the Trustee seized my home in bankruptcy.... From the day he seized it I was no long responsible for taxes or insurance. The Trustee has to pay the taxes and maintain the insurance until he sells it or auctions it off.

I paid property taxes and insurance for 5 months, then the Trustee had to pay it for 18 months while in his possession.

In foreclosure when the bank/mortgage company takes possession of the home, it is their responsibility....

As soon as they take title or possession, cancel your insurance and get your money back for months not used....

Its their problem then.......

[Minnymouth]

When the automatic stay is lifted or over the bank/mortgage company will and can notify you of foreclosure procedures immediately....

[concerned]

Minney,

Does that mean we will have less time to vacate?

[SinkingFast]

You'll have to check the Foreclosure Laws for your state. Foreclosure processes vary from state to state. Some are quick while others take a while. You may need to move immediately, you may have a month to get out, or you may get to stay 6 months or more. Depends on the state.

If your State recognizes "right to sale" clauses, and you have one in your mortgage contract, the Foreclosure process will go quicker than if the Lender has to proceed thru a Judicial process. "Right to Sale" allows the Lender to give notice of Foreclosure a set number of days in advance (30 days in our case), and then begin the Foreclosure. That's the advertising in the paper prior to sale. Each state has rules for how the advertising and sale have to take place. Whether or not a Trustee is required to execute the Foreclosure and sale.

One thing the Lender is gonna have to do is file for an "En Rem" process. They have to do that to get your name off the deed so they can sell it unless you give the Lender the Deed voluntarily after your BK.

[concerned]

Sinking Fast:

Our state offers both judicial and non-judicial--this much I know. I have heard about the "right to sale" clause from other posters, but I can't seem to find it in my note. Any idea where I should look? Judicial is the primary for NY, but they will allow some non-judicial.

I have had a hard time finding information on line. Can you direct me to any good web sites for laws by state regarding foreclosure?

[SinkingFast]

[HopeinHorizon]

NY is mainly judicial, you guys have your own "country" up there as far as laws and legalities to jump through in regards to foreclosure...

As far as the property taxes, if you don't pay your mortgage you obviously aren't paying the escrowed taxes either... the lender will advance the funds out of your escrow (creates a negative balance in that account) to pay, because they don't want the county selling the property at tax sale. The lender wants the property to sell or give back to the investor to make sure their losses are minimal... The taxes, attorney fees, and deficiency of sale would all be added as a loss to the lender... and with your bankruptcy they aren't legally allowed to collect upon any of it...

I work for a lender, and there are some properties that have liens placed for sewer, water, and other utilities not being paid against the title... guess what, the lender has to clear title, so that means they pay those bills too..

As far as home owners insurance goes, if it is paid up for the year already because of the premium being paid out of your escrow they will just keep eating away at that premium you already paid. If the insurance isn't in place, the lender will issue forced place lender insurance, and they pay HUGE amounts for that, but again, you are not responsible for anything the day the lender takes title possession of your property... There are some borrowers that will call their homeowner's insurance company, and cancel the policy and request any unused premium back, which IS legal... it came out of your escrow account, and aren't responsible for the insurance after day of sale...

You don't have anything to worry about as far as I can see... You included the home in your bankruptcy... any losses the lender incurred are not collectable from you..

[concerned]

HopeinHorizon:

Thanks for all the info! We wouldn't want to be without homeowners insurance. If we cancel now but the homeowners are paid a year in advance, will we still basically have insurance for the remainder of our stay in the home?

Our next mortgage payment is due April 1, which we will not be able to pay. Will our mortgage company most likley initiate foreclosure right after that? We could basically only have 4-6 weeks after they start foreclosure or longer?

Thanks,
Concerned

[HopeinHorizon]

The mortgage company has to go through all the steps of the foreclosure process...

Even from date of sale, it could be 30 days until an eviction is ordered... I would say that you have longer than 4-6 weeks...

[concerned]

Thanks!

[SinkingFast]

Maybe, maybe not.

We couldn't work out anything with our Lender. We have an offer on the table from a buyer who's contingent. He's got a 72 hour kick-out, he has down payment funds on deposit, and his lender has approved him to carry a swing loan if we get another offer on our house. The offer was structured for him to close within 2 weeks of an approved offer on his house as well.

Our Lender won't bend. We're in Breach and they will move to Foreclose the end of next week.

Turns out, our Lender is simply a mortgage loan servicer representing an investor. The Lender is fulfilling their contract to the Investor by foreclosing on us.

Maybe you can work a deal. Maybe not.

But, you'll probably have to pay the buyers the taxes for the months you've owned the house up until close. We've owned houses in several different states and it's been the same every where. The seller pays the buyer the amount of the taxes that will be due for the time the seller owned that house in the year.

[SinkingFast]

Srry. I didn't realize you were talking PRE paid taxes. That's a real drag.

But looking at it as forced savings is putting a positive spin on it.

Could be those funds come to you at just THE right time for something.

[concerned]

Thanks for the info on NY foreclosure wenderful. We are not selling our house. If we stay in the house and don't pay the mortgage, are we still responsible to pay the taxes? I would stay in the house to save money, but I'm also concerned that if the foreclosure ends during the winter, I could be forced to move during one of the worst times of the year. Wow--18 months is long though. We will never get what we owe on our house so that's why it's pointless to seel it. I believe our homeowners is pre-paid for one year. I thought someone mentioned that we would get this back too--is this correct. I am so confused all of a sudden. One final question to anyone that knows the answer: We built our house and bought appliances. In a foreclosure, are these the banks or ours?

Our Lender won't bend. We're in Breach and they will move to Foreclose the end of next week.

Sorry to hear--keep us all posted on how everything turns out.


Thanks,
Concerned