Success Story And Hud/partial-claim Lien Question

perplexing

LoanSafe Member
Oct 19, 2017
23
1
3
I'll try to be as succinct as possible...

Our house was in foreclosure, here in NY, the bank dismissed the suit voluntarily *after* the six-year statute of limitations expired, and they can no longer collect. (They tried later to vacate the dismissal on the previous suit but that was denied, the appeal period for that has passed, and they are time-barred from filing a new foreclosure action.) In the coming year, we will be petitioning to have the mortgage lien extinguished.

Around 1 year into the loan mod process, at the beginning, the bank offered a partial claim (HUD) to bring the mortgage current but said to continue not paying because the loan had not been modified yet and we'd have to be a few months behind, all over again, to qualify for a loan mod. We did not make a payment on it, per their direction, and made application after application for a loan mod (always marked incomplete but never accepted and rejected, despite PROOF that it was complete and received in multiple ways.) We did this for several years, over multiple servicers and having the mortgage sold several times. The Partial Claim agreement was terminated, per their own terms, when we filed for bankruptcy in 2013. Regardless, the statute of limitations for recourse has expired (and any possible appeal period has passed) even on that partial claim, even if it hadn't been terminated.

That partial claim is a 2nd lien, subordinate to the first.
(It's very bizarre, actually. It's marked for California (we're in NY), as "Schedule A" - HUD Instrument. The Borrower's Promise to Pay says the Borrower pays the Lender (personal obligation was eliminated in BK years ago) for the subordinate note (the agreement for which was terminated in BK) BUT the 2nd lien itself is held by HUD, per county records.)

Manner of Payment is written as follows:

A) Time

On [30 years from original mortgage origination date] of insured mortgage or, if earlier, when the first of the following events occurs:

1) Borrow has paid in full all amounts due under the primary Note and related mortgage, deed of trust or similar Security Instruments insured by the Secretary, or

2) The maturity date of the primary Note has been accelerated, or

3) The Note and related mortgage, deed or trust or similar Security Instrument are no longer insured by the Secretary, or

4) The property is not occupied by the purchaser as his or her principal residence.

B) Place

Payment shall be made at the [FHA office in D.C.] or any such other place as Lender may designate in writing by notice to Borrower.

_______________________

Now that I'm looking at it, I'm not sure what they were thinking... the maturity date of the primary Note had already been accelerated at the time of this partial claim and it was not accompanied by a loan modification or reaffirmation of the original loan. And, the Note and related mortgage stopped being insured by FHA in 2013, when they paid the lender and the loan was subsequently sold AGAIN.


What about when the 1st mortgage is extinguished but NOT paid or satisfied?

HUD specifies that the lender's recourse for collection of the Partial Claim is foreclosure. The lender cannot foreclose. The 1st lien will be extinguished. What happens to the 2nd lien then?

We'd like to clear title entirely so that we can sell it after our children graduate high school.

Even now, the current lender is paying for homeowner's insurance AND property taxes. It's crazy. We had, at one point during the RJI Settlement process, asked the bank to modify the loan by only $200/mo. rather than foreclose, because they'd already lost about $60K in pursuing foreclosure and were quickly approaching the statute of limitations... they responded by modifying it AT LAST (the judge witnessed them receiving every.single.page, forcing them to do a loan mod) to $200 MORE than the payments were originally. We declined. Later, they voluntarily dismissed the case and cancelled the lis pendens... AFTER the SOL had expired.

I don't mind paying HUD for the partial claim, of course, but their own terms say not to. I don't want to throw tens of thousands into the wind for nothing.
 

perplexing

LoanSafe Member
Oct 19, 2017
23
1
3
Goodness... that wasn't very succinct, was it? Current situation:

-New foreclosure filing (from any party with a possible interest, whether lender or trustee) on the 1st mortgage is time-barred.
-Old foreclosure filing was voluntarily dismissed and the lis pendens cancelled. The old lender made a motion to vacate their own, voluntary dismissal almost a year after making that motion themselves. (They're time-barred for relief, whether it was voluntary or not.) We filed a lengthy opposition motion. Judge denied their motion entirely and granted ours entirely. Even the time period to appeal their denial has passed.
-There are still two liens recorded by the county. One for the 1st mortgage, which will be extinguished, and one for the Partial Claim, which I don't know what to do with because it is tied to the first and the subordinate note agreement (which is also past the SOL) was terminated by filing bankruptcy.

The objective is clear title.

You'd think the current lender would want to extinguish the lien themselves and stop paying the taxes and insurance. Sheesh. We are paying literally nothing to live here except utilities and upkeep. All I wanted was a payment $200/mo. less, easily achieved by matching current rates then without any principal reduction.