Cloudy Title (Mortgage) Now what?
July 18, 2017 11:02 PM Subscribe
For reasons that aren't important to this question, we quit making payments on our upside down mortgage early this year, with the intention of negotiating a short sale or deed in lieu with the mortgage company. It's late July and we are still in the house, and haven't even heard from the mortgage company since April, when they rejected our application for relief because the title is "cloudy."
Apparently, the title still shows the mortgage company that went bankrupt in the 2008 crash as the primary lien holder. (The mortgage has been sold a few times) The bank said it would take a few weeks to clear up the paperwork, and once that was done we could start over with the mortgage relief request.
Our financial situation is improving rapidly, and while it was a slam dunk that we couldn't afford this house with our cash flow 6 months ago, it might not be such as slam dunk in the near future. I'm a little worried the bank will be less willing to let us walk away if our cash flow situation is much improved. FWIW, my FICO score has stabilized over the last three months, so not paying the mortgage (everything else is current) has apparently done all the damage it going to do to my credit rating.
One more complicating factor. We'd like to move to a different town in the near future, and my wife is actively looking for a new job in the future locale.
Anybody been in this situation? Do I lay low and wait for the mortgage company to gets its act together? Do I get a lawyer and force the issue? If my wife gets a new job before this resolves do we pack up and leave the house empty? I'm really confused about what my next step should be.
Apparently, the title still shows the mortgage company that went bankrupt in the 2008 crash as the primary lien holder. (The mortgage has been sold a few times) The bank said it would take a few weeks to clear up the paperwork, and once that was done we could start over with the mortgage relief request.
Our financial situation is improving rapidly, and while it was a slam dunk that we couldn't afford this house with our cash flow 6 months ago, it might not be such as slam dunk in the near future. I'm a little worried the bank will be less willing to let us walk away if our cash flow situation is much improved. FWIW, my FICO score has stabilized over the last three months, so not paying the mortgage (everything else is current) has apparently done all the damage it going to do to my credit rating.
One more complicating factor. We'd like to move to a different town in the near future, and my wife is actively looking for a new job in the future locale.
Anybody been in this situation? Do I lay low and wait for the mortgage company to gets its act together? Do I get a lawyer and force the issue? If my wife gets a new job before this resolves do we pack up and leave the house empty? I'm really confused about what my next step should be.
In the early days of the financial crisis, "Show me the (promissory) note" got the attention of lawyers, judges, legislators, banks and homeowners when people realized banks often didn't have the paperwork to prove they held the mortgage because it had been sold and resold among financial institutions. Some states passed laws protecting the banks, in others the debt disappeared. Fifteen minutes with a real estate lawyer could tell you what's possible in your state.
posted by Homer42 at 3:34 AM on July 19, 2017 [5 favorites]
posted by Homer42 at 3:34 AM on July 19, 2017 [5 favorites]
Are you looking to keep the house or get out of it? Not sure what direction you want to head with this.
posted by GhostintheMachine at 3:36 AM on July 19, 2017
posted by GhostintheMachine at 3:36 AM on July 19, 2017
Oops. Forgot the link Time magazine on lost loan paperwork.
posted by Homer42 at 3:39 AM on July 19, 2017
posted by Homer42 at 3:39 AM on July 19, 2017
Agreed that an attorney is your next stop. A strategic default is not to be entered into lightly and the cost of consulting an attorney and accountant is far cheaper than if you were to make a mistake.
In addition to the questions about title, depending on the state you may also be on the hook for the balance left on the loan after your strategic default, as well as tax liability.
posted by Karaage at 4:59 AM on July 19, 2017 [1 favorite]
In addition to the questions about title, depending on the state you may also be on the hook for the balance left on the loan after your strategic default, as well as tax liability.
posted by Karaage at 4:59 AM on July 19, 2017 [1 favorite]
What Homer42 said. "Cloudy" very likely means "missing" and you might already own that house outright. Lawyer. Find out.
posted by sexyrobot at 6:08 AM on July 19, 2017 [2 favorites]
posted by sexyrobot at 6:08 AM on July 19, 2017 [2 favorites]
Depending on when the various events happened, your title insurance policy may provide coverage for parts of this situation (including attorney's fees). But yes, meet with a real estate lawyer first, and ask zir if you have some easier way out. Don't get your hopes up, though. Liens don't usually just go away.
posted by radicalawyer at 7:26 AM on July 19, 2017
posted by radicalawyer at 7:26 AM on July 19, 2017
Your next step is lawyer, as mentioned above. You seem to be waiting for your bank to clear up your title, but that's your job, not theirs. It can be complicated. They have no incentive to help you beyond some minimum.
Also: Are you looking to keep the house or get out of it? Not sure what direction you want to head with this. posted by GhostintheMachine at 6:36 AM on July 19 [+] [!]
posted by JimN2TAW at 7:34 AM on July 19, 2017
Also: Are you looking to keep the house or get out of it? Not sure what direction you want to head with this. posted by GhostintheMachine at 6:36 AM on July 19 [+] [!]
posted by JimN2TAW at 7:34 AM on July 19, 2017
This thread is closed to new comments.
In what state? That's pretty crucial to this question.
posted by DarlingBri at 1:24 AM on July 19, 2017 [2 favorites]