Forclosure 12 months after title transfer into Land Trust

[kimbeerly norton]

I am beneficiary of a Land Trust in which I bought property with consideration and sub2.  I cured the default of the previous owners a year ago. After about 8 months of paying, the mortgage co. bought the back taxes (the previous owner had not paid) and made the new payments from 1095. to 2500.  The previous homeowners who deeded the property to me sub2 had signed a release that I would not be held liable if the loan was called due for any reason (and they still feel the same about holding me harmless).  Upon attempting to contact us, the mortgage company was told by my tenants that we were the owners and had been for the past 8 to 10 months.  They forclosed on the note after seeing our documentation that we hold title and beneficiary interest.  So, did they forclose on the "note" or on the "property"? Does that mean they can simply attach themselves to the property via a lien and when the property sells, they get paid off; or can they actually take the property from me (Land Trust) and sell it, even though I have owned it for over a year?  What I need to know is do I still have ownership rights in the property and can I sell it - or does it go back to the mortgage co?

[WilliamGA]

Kim,

They "bought" the taxes? Do you mean that the sellers had back taxes and the mortgage company paid them?

The payment went from $1095 to $2500 when they did this? Gee, those taxes must have been high!

If the lender did foreclose, they foreclosed on the property/security instrument on the property. When a lender forecloses they do not have a lien, they are the owners of the property and generally try to list it and sell it to recoup their money.

If the foreclosure has been completed they are the current owners and you or your trust have no further rights to the property.

[/i]

[david barnes]

I'd like to chime in here.

If you have the deed to the property in a trust with yourself listed as the beneficiary then YOU own the property. The bank only has rights to the financial contract.

They can not do anything but implement the 'due on sale' clause (I believe) however there might exist wording that allows them to file the note in default if they have proof there note is being assumed.

a good real estate attorney is in your future

let us know what happened please.

[sammynevada]

When you take the property subject2 the mortgage, you recognize the debt- but are not personally liable for that debt. Put that aside.

The lender has the right to foreclose because there has been a transfer of ownership which occured without their approval.  Read the mortgage document. It clearly states this lender's rights. This also includes, the transfer of any beneficiary interest within a trust. Therefore they are exercising their Due on Sale perogative.

They foreclose on the note. The property is the security for the note. If this goes to sale, assuming that there are no other liens against the property, the excess amount over what is owed the lender will go to the Trust.

In retrospect there were at least four fatal mistakes. First,  the tenant's big mouth. Second, the unpaid real property taxes.  Reading  between the lines. I presume that the lender paid the taxes to keep from being wiped-out. You should know that Real Estate Taxes take priority over mortgages. The last mailing address of the owner of Record (the Trust) or lacking that, the property address should have been repeatedly advised of the delinquent taxes. Someone disregarded all these warnings. This is mistake number three. Mistake four, is generally a less than "trouble free" payment history.  

I would contact the lender and try to work out a deal with them. If that didn't work, then you would have to refinance or sell the property---if there is sufficient equity in this property. Forget consulting an attorney. Consult the lender, a loan broker, or a real estate company in that order.

[Dataattack]

good answer, you sound like this isn't your first rodeo.

[Heather_Tx]

Could you offer the Lender to pay all those taxes back, and them not go through with the DOS?   If your payments were made on time every month, they might not mind doing this..... they want their money plain and simple, and not having those taxes covered was a big mistake.   I have yet to here of a bank calling DOS on a loan that all the payments and texas and insurance were kept up on.....  


Maybe this would be a way the bank would work with you... as long as they weren't out any money and kept getting their payments.  

Just a thought,
Heather Zaal

[JoeKaiser]

It sounds like the bank has foreclosed on the home already and that your interest is now gone.

When foreclosure happens, the lender ends up either getting paid off or getting the property back.  That's pretty much the point of the whole thing.

Joe

[David Alexander]

Confusing post....

If they indeed bought the Taxes....

Then You have rights of redemption in Texas....

6 months.... for Investors and 2 years for homeowners....

On the otherhand.... if they paid the taxes.... which it sounds like they did.... and raised your payments (created an escrow) so that you can pay them back.... and you didnt pay.... they then foreclosed...... Your SOL... Like everyone has told you....

When you foreclose.... (here in Texas) it is with the Deed of Trust.... You foreclose for the non payment of the note.... they are exercising their rights under the deed of trust to protect their interest.....  If no one buys the property at the auction... then they get it back.....

Just go down and check county records....

David Alexander