Foreclosure dismissal idea.


A

APB

I am wondering if this legal argument would work in the scenario described
below. The scenario is hypothetical, but I wrote it in the first person as
if it is happening to me now (which it isn't) just to keep things simple.

I filed a Chapter 7 bankruptcy and received my final discharge. In the
bankruptcy, I surrendered my home because it is worth less than the balance
due on the first and second mortgages. The bankruptcy trustee abandoned the
property because it has no equity. So, now my bankruptcy is over and I
still own the property. I already moved out of the property and I don't
want to keep it. The property is now in foreclosure and all I want to do is
get my name off the foreclosure lawsuit as a defendant so it won't show up
on my credit report. I called the mortgage company and I asked if I could
do a deed in lieu of foreclosure but the person I spoke to said they don't
do that.

So, here's my idea. I go to a stationery store, buy a deed and fill it out
deeding the property to the Plaintiff mortgage company, and then file and
record the deed. Then I file a Motion to Dismiss the foreclosure lawsuit
for failure to state a claim for which relief could be granted. In the
argument supporting the motion, I would provide documentation showing that I
received a bankruptcy discharge and am no longer personally responsible for
the mortgage debt or any deficiency that might result after the foreclosure.
I would also provide an affidavit stating that I no longer occupy the
premises and that I have already surrendered any ownership interest in the
property that I might have to the Plaintiff by recorded deed. Therefore,
there is no longer any cause of action against me and I should be dismissed
as a defendant in the action. And maybe I would add that continuing the
legal action against me under these circumstances would be a misuse of
judicial process.

Any chance of this idea working in a court of law?
 
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B

Brett Weiss

No.

There is no valid transfer of property by a deed without
acceptance. Often, mortgage companies want to do foreclosures in
situations like this to be able to provide a clean title to
purchasers.

--
Brett

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* BRETT WEISS, P.C. *
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The Small Print: This response is for discussion purposes only.
It isn't meant to be legal advice and you shouldn't treat it as
such. If you want legal advice, speak with a local lawyer
familiar with your state's laws who can review *all* of the facts
and the law applicable to your situation.
*****************************************************************
 
C

Canzie

Brett said

......Often, mortgage companies want to do foreclosures in
situations like this to be able to provide a clean title to
purchasers....
That is exactly right.
 
A

APB

Brett Weiss said:
No.

There is no valid transfer of property by a deed without
acceptance. Often, mortgage companies want to do foreclosures in
situations like this to be able to provide a clean title to
purchasers.
My thinking was not to try to dismiss the entire foreclosure complaint, but
rather to remove my name as a defendant in the ongoing action. The basis
for seeking a dismissal of the action against me is that there is no longer
any relief that I can provide to the plaintiff since I already gave them
possession and title to the property and I am not responsible for any
deficiency. Hence, my request for a dismissal -- with regard to me only --
as a defendant.

I do know that technically the property is not conveyed by deed without
acceptance. But it seems to me that it would be difficult for the
plaintiffs to argue in court that they refuse to accept my deed of all of my
interest in the property to them. They could still continue the foreclosure
action against all of the other named defendants to obtain clear title. I
am just wondering if this isn't a novel (though somewhat convoluted)
approach that could be tried by individuals in this type of situation.

While the situation I described is hypothetical, I did have a situation in
the past that was similar in some respects. I didn't think to try this idea
then, but I did do some parts of it. Altogether, I actually had three
different foreclosure actions against me for three different properties.
The only foreclosure that ever appeared on my credit report was the one
where I had not unilaterally deeded the property to the plaintiffs.

Here's what happened. Knowing that I was heading toward a possible
bankruptcy, I called the mortgage companies for two condos that I owned and
that were rented out. One had an FHA insured mortgage and the other had a
VA guaranteed mortgage. Despite the rental income, both were losing money
every month. Both mortgages were current when I first called them. I
offered to deed the properties back to the mortgage company in lieu of
foreclosure. Both refused. I also called FHA and VA and they both said
they don't do that. So, I drew up deeds, deeded the properties back to the
Secretary of Housing and Urban Development, recorded the deeds, and sent
copies to all of the parties (including the tenants). I advised the tenants
that all rents etc. should be directed to the new owners. Later, I filed a
Chapter 7 bankruptcy and received a discharge. When I received foreclosure
notices, I just wrote back stating that I no longer owned the properties and
sent them copies of the deeds and my prior correspondence notifying them of
the transfer of title. Both properties eventually went to sheriff's sale as
part of the foreclosure. The ironic part was that neither of these
foreclosures ended up on my credit reports. I didn't do any of this for the
house where I was living, and that foreclosure did show up on my credit
report.

Again, this is just an idea. My thinking is simply that if someone already
did all that is being asked of them in a foreclosure complaint, perhaps they
could get themselves removed as a defendant in the action since there is no
longer a cause of action against that person. The foreclosure itself would,
of course, continue against all of the other defendants to clear all of the
liens etc.
 
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