AboutMike Weikle Expertise Banking Lender Liability; Insurance Coverage; Consumer Rights; Bank Fraud; Criminal: White
Collar Crime; Fair Debt Collection Practices Act; Directors and Officers Liability
Experience Commissioned National Bank Examiner 7 years; President of Two Community Banks; Division Claims Specialist for American Bankers Association Sponsored Insurance Program; Carter Member of the Bank Fraud Team of the Office of the Comptroler of the Curency "OCC" (National Banjk Examiners); Attorney previously representing FDIC and Resolution Trust Corporation as well as consumers and commercial borrowers in claims against the banking industry; Former Data Processing Systems Examiner for the OCC; Expert Witness on variety of banking issues in both state and federal court.
Education/Credentials Certified Public Accountant;
JD -- West Virginia College of Law - Order of the Coif
Data Processing Training Old Dominion Bank and IBM
My mother and grandmother bought a townhouse in July 2000; both names are on the mortgage and title. The townhouse price was $93,000. In early January 2006, my grandmother died of ovarian cancer, and six months later my mother took a home equity line in the amount of $37,000 to cover some of her debt and funeral expenses. In September 2008, the State of Washington placed a lien against our property in the amount of $230,000 to recover Medicare expenses. My mother tried to fight the lien in court but lost. According to her attorney and documents, the lien is in my grandmother’s name and not my mother’s. In June, my mother has filed for bankruptcy because my stepfather lost his job due to lack of employment in construction industry. His unemployment caused a HUGE loss of income. They got a divorce in November 2008, but we all still live together.
Since my mother is filing for bankruptcy (Chapter 7), she wants to foreclose on our townhouse of nine years. Countrywide is not aware that there is a lien on the townhouse in the amount of $230,000. The mortgage and the equity total $130,000.
If the Countrywide forecloses on our townhouse and attempts to sell it off at an auction, what would happen to the lien?
Would Countrywide garnish my mother’s wages after foreclosure? She has two jobs and both pay minimum wage.
According to state of Washington representative, the state only wants my grandmother’s profit from the townhouse when sold… our townhouse has been on the market for $160,000 for a year now… but there are no buyers.
What would your advice and/or recommendation be? I’m just perplexed about the lien and foreclosure procedure.
Thank you very much!
Answer Since the lien is against your grandmother, the State of Washington cannot go against your mother to recover any part of the lien not satisfied (paid) by the sale of the townhouse. If it is jointly owned property (depending on all the facts) your mother may still be entitled to half of any profit (balance after mortgage is paid) from the sale. If your mother wants to keep the townhouse, the bankruptcy court may try to work it out for her provided her bankruptcy attorney files the proper motions with the court.
But, do not worry. If the townhouse sale does not yield enough to pay the State's lien against your grandmother, the State cannot go after your mother for any payment of the balance. And, please note, the mortgage lender has the first lien (meaning they get paid first from the proceeds of the sale of the townhouse). The State's lien comes second or third if there is a second mortgage on the property.
Countrywide could only come after your mom for any amount still owed the lender(s) on the mortgages. They are not in any way concerned about collecting for the State. And, even if there is a balancde owed the mortgage lenders, the bankruptcy court is likely going to discharge any balance entirely.
Bottom Line: Do not lose any sleep. No one is coming after your mom and her pay from two minimum wage jobs. Even if they could, they likely would not sue anyway because the cost of lititgation is too high. Please let me know if you have any follow-up question.
