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HELP! The house just sold at auction! Now what?

Discussion in 'Stop Foreclosure and Tell Us Your Story' started by Lee.L, Sep 17, 2012.

  1. Lee.L

    Lee.L LoanSafe Member

    Hi Everyone!

    I am new here and I am hoping you can help me out. My house just sold at auction last week on 9-11-12. We are now ready to give the keys to the new owner today at 3pm (a third party bought it at auction). We don't have a lawyer and I'd like to make sure that we are doing all that we should and make sure that we don't do anything that is not in our best interest. Bank of America and the company that handled the foreclosure sale are obviously not very helpful or forthcoming. There's more to our story, but this is where we stand right now.

    Is it okay to give the keys to the new owner today before his name is on the title?

    Should I make sure he has insurance first before he takes possession of the house, as he is going to do a lot of work on it and flip the house? The new owner has already sent over a roofer while we were trying to move out over the weekend.

    Thank you for your help. I'm trying to breathe, but still holding my breath.

    Lee<!-- google_ad_section_end -->

    P.S. Please tell me if I am posting this in the wrong section. Thank you.
  2. Cat Damiano

    Cat Damiano Mortgage Wars

    Welcome to the forum and thank you for joining............

    You would only need to post a new thread once and give members a chance to reply here.
  3. Lee.L

    Lee.L LoanSafe Member

    Thank you very much. :)
  4. Lee.L

    Lee.L LoanSafe Member

    This feels so odd! Handing over the keys in one hour!

    It's hard to believe that after 22 years in our home that we are now handing over the keys in one hour to the new owner. He just bought it at auction last week. I'm not sure whether to laugh or cry. Maybe both! I've raised my three children in this home and have fond memories here, but have a bad taste in my mouth after fighting with BofA for a year and a half. The new owner will need to put in about 5OK worth of work (roof, windows, dry rot, termites, fencing etc etc etc.). There must a silver lining here... I just know it!
  5. Evan Bedard

    Evan Bedard Call 1-800-779-4547 Loan Safe Mortgage

    I'm sorry to hear this Lee and I can only imagine the feeling you must have having to leave the place you have called home for the last 22 years. But life will roll on and I'm sure you will have many fond memories with your family elsewhere wherever your journey may take you my friend:)
  6. JustSharon

    JustSharon LoanSafe Member

    I don't know what you should do legally, but I will tell you that I would insist on the buyer showing or providing me with a copy of the RECORDED deed/title. You can be nice about this if you want to "oh, please remember to bring a copy of the title with you when you come to pick up the keys." If he has the recorded title, I wouldn't worry about insurance. It's his problem now.
  7. Lee.L

    Lee.L LoanSafe Member

    Can I file for bankrupcy after a foreclosure? Is pension now at risk?

    Hi... Can I file for bankruptcy after a foreclosure? I learned from our accountant tonight that since our home loan (in California) had been refinanced in the past that we now may have a tax bill after this foreclosure. I guess a refinance means we do have a recourse loan. The foreclosure just took place on 9-11-12. I am going to make calls in the morning, but thought I'd ask for input here tonight. Also, I am to call (per my accountant's instructions) regarding my husband's pension to see what the cash value might be. Oh boy, are we in for a rough ride here regarding taxes now? Geez... this never ends.

    Thank you.
    Last edited: Sep 18, 2012
  8. Lee.L

    Lee.L LoanSafe Member

    Evan Bedard,
    Thank you very much. I am trying to see the good in all of this and find each and every silver lining I can possibly dig up. Unfortunately, I just learned from our accountant that we have a recourse loan due to a refinance we did years ago to cover bills (pay them off) due to a rough time for our family when I had cancer. He says that we may have to file bankruptcy. I am in the process of finding out if we can still file for bankruptcy after the foreclosure (foreclosure sale was 9-11-12). The accountant also told me to check to see what the cash value is on my husband's pension as that all figures into the tax equation. Boy... this just doesn't end.
    Thanks again for the nice response.
  9. Lee.L

    Lee.L LoanSafe Member

    Thank you, JustSharon. I made sure it was the right guy and he did indeed buy the house. This is all so unpleasant. Talk about feeling powerless in your own life. This takes the cake!
  10. Jeffrey L. Shurtliff

    Jeffrey L. Shurtliff LoanSafe Member

    Just a note here. Have you recieved an engagement letter from an independent foreclosure reviewer appointed by your bank?
  11. JustSharon

    JustSharon LoanSafe Member

    Hi Lee:

    Don't panic! There are people on this board who probably know more about this than your accountant. I am neither an accountant nor a lawyer. But I do know that there is help out there for you.

    As I understand it, a recourse loan means that the lender can come after you to try to collect for the deficiency (the difference between what the lender got from a sale and what you owed on the mortgage). That is one thing. The lender may or may not actually do this this. I believe there may be special laws in California that will also protect you in this case. If the lender does come after you, then you may want to consider bankruptcy.

    The tax bill issue is something different. If a lender "forgives" or doesn't get all the money you owe him from a foreclosure sale, he may send you a 1099 form for the difference. In other words, if the lender got $80,000 from the foreclosure, but you owed him $100,000, you may get a 1099 form for $20,000; the $20,000 is considered "income" to you. That means you might owe income tax on the $20,000 at whatever tax rate you pay. HOWEVER, there is a Federal Act in effect until the end of 2012 (and maybe beyond) that protects you from paying a tax bill on this amount. Your accountant should know about this.

    And, I would absolutely NOT take a penny out of your husband's pension without solid advice on that issue. There are usually tax consequences of taking money out of a pension -- sometimes very high. Also, the pension is probably untouchable by any lender/bill collector and also untouchable in bankruptcy. So the pension money is probably safe right where it is, but it may not be safe if you take it out and put it in your bank account. I have no idea what your accountant is suggesting that you do with your husband's pension money, but whatever it is, it is probably not a good idea. Making a phone call to ask about the pension won't hurt, but DO NOT take any pension money unless you fully understand the consequences/costs and think that it is absolutely essential that you do it.

    I hope others will chime in here with more specific information on these issues. But in the meantime, go slow, don't panic and don't do anything until you are confident that you have A-1 legal advice.

  12. Lee.L

    Lee.L LoanSafe Member

    Thank you, Sharon. I'm trying hard not to panic…

    I thought the worst was over after handing over the keys to the house on Monday, but I fear there is more trouble around the corner. We're going to see an attorney today to discuss our case and find out more about bankruptcy. I too thought there was a Federal Act in effect until the end of 2012 that would protect us against a big tax bill in this deficiency amount on the foreclosure. I need to find out more about this Federal Act.

    We owed 349K (including all the added on fees for foreclosure) and the house sold to a third party at auction on 9-11-12 for 216K. That's a huge deficiency (133K). That really scares me. My accountant was talking about trying to see if we are insolvent (he sent a list/paperwork for us to fill out...don't have it yet), so I guess this is supposed to help fix the tax part of this problem for us.

    I'm just trying to breathe... still holding my breath. I really hope we don't have to declare bankruptcy, but from what I understand so far we may have to consider it to make sure my husband's pension cannot be touched. Can't take all of this much longer. Geez, we lost the house so what more do we have to endure!?

    Thank you all for your help and advice. I am so glad I found you!
  13. JustSharon

    JustSharon LoanSafe Member


    Re: your husband's pension. Check with your lawyer and/or accountant. However, I believe that the pension is safe from any deficiency claim/judgment etc. I think your husband's pension is just like Elliott Ness -- Untouchable.

    However, if you take the money out of the pension account, it may become "touchable." So be very careful here. I assume that your husband is not drawing his pension yet and that this account is for the future. I believe (but am not certain) that regularly scheduled retirement withdrawals from that pension account may also be untouchable. However, if you take it all out and put it in your checking account, you are asking for trouble -- including probably hefty fees/taxes for taking it out ahead of schedule.

    Unless you have other large credit accounts that are causing you bigtime problems, I don't think you should file bankruptcy until you find out the laws that apply and also whether or not the lender is going to come after you for the deficiency. Laws differ from state to state. In some states the lender has only a very short time (like 30 days) to come after you for the deficiency. In some states the lender can't foreclose and then sue you. There are rules the lender has to follow. So get all the info on how this is handled in your state from your lawyer. If he/she doesn't know those answers, then check with a real estate lawyer who does know.

    Good luck.

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