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credit/debtor-HOA foreclosure

New Member

credit/debtor-HOA foreclosure

heres the situation, about 4 years ago due to of course unforseen circumstances we walked away from our home, we did talk with a bankruptcy attorney at the time and he suggested we walk away from the home because at that time the home was not worth what we had paid for it(home is in Hawaii). He did say that if the mortgage company comes after us then we will deal with it then.  Heres my dillemma:

when we walked away from the home it was during that time the HOA foreclosed on property, however the Lender is still saying that I because they have mortgage I still own the property and for the past 3 years are wanting to work with me on saving the home.  I keep telling them that the HOA has foreclosed on it and that I dont own it anymore.  The Lender keeps insisting I do and has even sent me paperwork readjusting my mortgage payments, the lender continues to pay taxes and insurance on the property.  My husband and I are in a better financial place now and we would like to buy another home within the next year or so, but this mortage keeps coming up? I guess my question is:

1. is there a way for me to get back this home? even with the HOA already foreclosed on it about 3 years ago.

2. the lender has not foreclosed on me and still wants met to save the home.

3. what are my options at this point, because this is the only thing thats holding my credit up?

 

so confused at this point...please help.

Message 1 of 6
5 REPLIES
Frequent Contributor

Re: credit/debtor-HOA foreclosure

I would be very hesitant on relying primarily on advice from the forums for this particular situation. The reason for that is there are many variables that may impact which route you should take, and it is unlikely for us to get all the information here.

 

With that in mind, if the HOA forceclosed and the lender did not, it is likely the property was not sold to another person (due to cloud on the title). What is the HOA doing with the property now? Renting it out? The HOA is likely not obligated to pay the lender, as they are not the borrowers -- you are. I'm amazed that a lender would not foreclose after 3 years of non-payment.

 

Your best bet to retain the property is to set up a workout agreement with your lender, and work to transfer the property back to your name. It didn't seem like this is what you were wanting to do though. If it is, perhaps your lender will agree to something like a modification or short sale -- back to you.

 

If you want to buy a different property -- you may want to talk to another lender about the likliehood of getting approved for a new mortgage somewhere else. It seems to me that a new lender would be unlikely to underwrite another mortgage while your original lender could sue you for non-payment.

 

Bankruptcy is another option to remove your liability to repay any of it. If you choose to file bankruptcy, you will have to wait 2 years to obtain a government mortgage (VA/FHA) and 4 years for a conventional mortgage loan.

 

For sure talk to a real estate attorney and/or bankruptcy attorney about your options.

Message 2 of 6
New Member

Re: credit/debtor-HOA foreclosure

Mahalo so much for your response...I see a bankruptcy attorney tomorrow....... if I could have it transferred back into my name how do I go about doing that?  because the home is definitely worth more than what I would owe on it now, even with the past due...My mortgage company has been wanting to work with me all this time even up until today they still want to work me..I was just under the assumption that once the HOA foreclosed on the property and it was not in my name I would have to deal with it until the Lender came after me, but this is not the case, the lender is wanting to work me on keeping the home even with my telling them it has been foreclosed by the HOA?

Message 3 of 6
Regular Contributor

Re: credit/debtor-HOA foreclosure

If the property truly was foreclosed upon by the HOA you are not getting it back, unless, of course, the owner sells it to you.  I'm sure that won't happen. 


You are probably still on the hook for the loan you took out to finance the home that is why the lender is calling you.  I believe Hawaii has an anti deficiency statute that applies if the lender does a non-judicial foreclosure but, until it forecloses it would have the right to ask for $$.  The lender does not care that you are no longer the owner.  The lender may not even realize you are not the owner.  The HOA took the property subject to the senior mortgage lien.  If that senior lien is not serviced eventually the lender will foreclose.

 

My guess is that you will be filing a bk to get out from under any claim the lender or the HOA may have for payment of the debt.  Forget about the property - move on.

 

Des.

Message 4 of 6
New Member

Re: credit/debtor-HOA foreclosure

Mahalo Des,

 

just a hypothetical though what if home was bought out  would that wipe out the title of the LLC or would that be another issue to take up or would all that be taken cared of in Escrow?

 

 

Message 5 of 6
Regular Contributor

Re: credit/debtor-HOA foreclosure


JKC1 wrote:

Mahalo Des,

 

just a hypothetical though what if home was bought out  would that wipe out the title of the LLC or would that be another issue to take up or would all that be taken cared of in Escrow?

 

 


What LLC?  If the property was foreclosed it either went to a third party bidder or it went to the HOA on its credit bid.  Either way, the property remains subject to the senior mortgage lien.  See: Hawaii Revised Statute 514B-146.  Anyone who buys the property now still will have to deal with the senior lien either by paying it off at close of escrow or by continuing to service it.

 

Des.

Message 6 of 6