Foreclosure/foreclosure delay after Chap 7 was discharged.
QUESTION: I am in California. I had debt discharged in Chap 7 last year. There were two rental properties included which I indicated was I was surrendering. The bank should foreclose on these properties but is not doing anything about it. The bank does not maintain nor pay real estate taxes on the properties. It is creating an eyesore and neighbors are complaining.
I called the bank and they contradict themselves. First she tells me its up to the investor who put out the loan who is the one to authorize the foreclosure.
Then, she gives me a a fax number where I can request the bank to start the foreclosure process and that I don't want any other arrangement be done on the properties.
She also does not know why the vacant properties have not foreclosed yet, after being 10 months vacant.
I realize that ten months of delinquent billings are already in the tens of thousands in mortgage, taxes/insurance are accruing, but that's the banks responsibility now as I already bankrupted last April. I do worry that the property is in my name until the bank forecloses on property. Do you have an idea why the bank is delaying on the foreclosure? I do wan't to get this behind me and I don't want the liability in case theres a fire on any vacant property.
ANSWER: They are more than likely just covered up. It is my opinion that the bankruptcy frees you from any obligation however until the bank forecloses you still have control of the property and you could even rent the property if you like as long as it is month to month. Looks like you could have made ten months of rental income with no mortgage expense. You could just walk away and forget it. I think there is no way to make you liable for anything since you filed bankruptcy. I assume the bankruptcy was a chapter 7. When the borrower (you) stops making payments on a mortgage, the bank takes out what is called forced placed insurance to cover the property against any peril. You could take the other route and prod the bank into foreclosing on the property.
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QUESTION: Regarding the hazard insurance on the property. If I don't pay it and the bank gets their own insurance policy, it could turn out to be several times greater than the normal annual insurance. Will I be responsible for this insurance cost to the bank, after the bank finally forecloses on the property?
In my opinion you will have no liability. The only way it would make any difference is if you were trying to get the properties back. It does not matter how much you owe the bank, these properties were included in the bankruptcy prior to any forced placed insurance.