Expert: Terry Leeders - 10/30/2008

Question
Mr. Leeder; I have a question that I believe has been asked in the past; but I'd also like to add to the topic.  I filed for Chapter 7 bankruptcy in PA and it's been discharged as of July '07. I didn't reaffirm my mortgage and am now in the foreclosure process because my mortgage company ignored my hard ship letters / phone calls for help since January '08.  I'm receiving certified letters from the lawyer representing the mortgage company.  I don't have a lawyer representing me because I am under the impression that I will owe nothing when the foreclosure procedures are finalized; therefore I don't need to defend myself.  Am I right in thinking this way?  Also, when I voluntarily moved out of my home even before the foreclosure process began; I had indicated to my mortgage company that I wanted to do a 'deed in lieu of foreclosure'.  I believe that went out the window since the paperwork I'm receiving now is stating strictly 'foreclosure.'  My next and last question is this; after I moved out of the house I contacted someone at their lawyers office and asked if I still needed to continue paying the home owners insurance; they told me 'no, why would you pay it if you're losing the house anyway; don't waste your money.'  After hearing this answer I called and cancelled the insurance.  Now after reading some articles on websites; many are indicating the need to continue with the home owners coverage until the bank owns the property.  When exactly does the bank own the property?  Is it when the pre-foreclosure process began; or is it after the foreclosure is completed?  I appreciate any answers you can provide.  After I left the house I started sleeping a little better in knowing that I was out of that mess; but now my nights are sleepless again over worrying if I'm doing the right thing or not.  I'd like to also say that since I started contacting the mortgage company in January '08; my intent was to keep the house and to hopefully get a lower payment in order not to lose it.  Since I was getting absolutely no where with anyone at the company; that's when I basically threw in the towel and gave up totally.

Answer
If you did not sign a reaffirmation, and the debt was scheduled in the case, you can walk away without owing the mortgage a dime.
I recommend to keep insurance until foreclosure is complete in case there is an accident, or someone gets hurt on your property, so you won't be personally responsible for damages.  The title is transferred after the entry of the foreclosure judgment, and redemption period expires.  The home will be sold, then confirmed with the court. That is the decisive date.