Subto Property in Forclosure

Has anyone been in this situation before? Is it too late to Subto this property? I am attempting to purchase a property Subto and found out that it has been turned over to a Foreclosure Law Firm within the last 10 days. The Owner of this property died and her daughter lived in the house, but she didn’t make the payments – she has moved out and does not want anything to do with the property. Last week I got Warranty Deeds from the Deceased Owner’s 3 children, was waiting for a Title Search before trying to catch the payments up and filing the deeds. It was at this point I discovered the property had just fallen into foreclosure proceedings. I do not want to trigger the Due on Sale Clause by contacting the Bank or the Foreclosure Law Firm and letting them know the owner has passed away.

How can I get it out of foreclosure – there are contact numbers at the Bank and the Foreclosure Attorney’s office, but I can’t contact either because they will not give out info to anyone but the Owner.

You’re swimming in a messy hole here.

Issue: There’s a significant difference between a default and a foreclosure. If the property has just gone into default, the fees and costs to cure are minimal. If there is a full-on foreclosure action, it’s much more expensive, as I mentioned below.

Issue: Probate: Unless there was a will, this house will have to be processed through probate, and that’s a ball of wax requiring a judge’s approval of the deal. Not necessarily hard, but a hurdle.

Issue: Once a property has gone to foreclosure, it’s not just a matter of catching up on payments. There’s all sorts of fees, fines, penalties, and charges that the loan servicer gets to gouge the bank and the default victim for, as a profit center for supervising a foreclosure, before the default can be cured. So, you’ve got back payments and thousands in fees and costs, before you can cure a default.

Issue: The loan has already been called due. At this point, it’s just a matter of curing the default.

Issue: If you’re willing to cure the default, you need to get the deed first.

Issue: If you have the deed, and cure the default, and aren’t sure the bank won’t exercise the DOSC, then don’t record the deed:

Issue: Failing to record the deed, opens you up to all sorts of superior liens and judgments being recorded against the prior owners. The title can be quieted, but it will require recordation of the deed, likely attorney representation, and a judgment award against all the lien holders.

Issue: How much equity remains after all the costs of a cure have been expended? Is the deal still right-side up, equity-wise?

Issue: Who has power of attorney to deal with bank?
Who has has administrative rights over the defaulted loan?
Can the house qualify for FHA financing in it’s present condition?
If not, how much will is cost to make it “insurable” with FHA financing?
How long has the house been vacant?
Is the insurance still in force?
Cracks in the foundation?
What about mold? Radon poisoning? You know Grandpa Smithers died for a ‘reason.’ Just saying.

Issue: There is no guarantee the bank will cooperate with anyone, outside of probate, even if there’s a bonafide executor(trix).

Another very interesting often missed point.

A deed DOES NOT have to be recorded to be valid.

If you have received the deeds as you say, then you are the owner of the property now, warts and all the other mess.

Thanks for the responses Javipa and Bill H. The owner did die without a will, I got warranty deeds from all of her heirs. The title search should be complete by the end of this week. If I haven’t recorded the deeds, the way I see it if there is a problem with the title or I can’t cure the default, I tear up the deeds and “It never happened”.

What I really want to know is if the Bank and the Attorney’s offices will not talk to any one but the owner, how can I find out the cost to reinstate the mortgage?
I have last months statement which has an amount due thru 12/16/15. I am afraid that since foreclosure has been initiated (12/2/15) if I paid the amount due on the last statement plus this months payment, the bank would keep the money and still foreclose. Thanks again, for the help.

The representative from the bank with NOT talk with you, since you do not have a POA from dead Grandpa Smithers. And since Grandpa Smithers was too ignorant and stupid to make out a will ( or just wanted to screw his kids ), the probate court will appoint an administrator, who can in turn can give you POA to administrate the loan, if not the property, prior to taking title.

Otherwise, you can’t get a legitimate POA outside probate court.

Meantime again, since Grandpa Smithers, died without a will, you are making a big mistake, by bringing this loan current, and taking title without probate court approval.

If this transaction catches the state’s attention, you will end up in court, perhaps forced to unwind the title, lose all your money, and pay a bunch of attorneys fees, regardless of the outcome.

Probate isn’t ‘just for giggles.’ It’s designed so that the state, and ‘any’ interested parties, can recover assets/equity/cash and whatever that is owed to them, by statute, or claim upon the death of a ‘potential’ debtor.

Again, any equity you thought you had, the state may take by statute, or prior claim, and if you blew off the probate court, again you could lose your entire investment.

Don’t do this outside of probate. Perhaps the relatives know something you don’t know about Grandpa Smither’s bad debts? I wouldn’t know. But YOU should.

Frankly, I’m doubtful the probate judge wouldn’t approve of the sale to you, especially in view of the circumstances, but if you bring everything current, and there appears to be equity, and you’ve demonstrated quite obviously, that you took title to Grandpa Smither’s house, without a will, after his body assumed room temperature, outside of probate court, you’re gonna be sorrier than the worms trying to eat the half-digested raisins sitting in Grandpa Smither’s colon …you know how bad that can be.

Meantime, whatever you send the bank, at this point they will keep, regardless of anything else that goes on. You don’t pay the bank squat until you get court approval for the sale, and a date-certain payoff.

Issue: You don’t have power of attorney from Grandpa to administrate his real estate, and the heirs don’t have a will that gives them rights to administrate squat. So whose got POA authority, that the bank will recognize? That’s only gonna come after a successful, probate proceeding.

Probate statutes vary from state to state. You need to talk with a probate attorney, before you get more involved in this potential loss of your time and money.