Wrap mortgage nightmare!

[beth_staggs1]

What is the name of your state (only U.S. law)? Arkansas

10 years ago my husband and I entered a wrap mortgage situation. The owner of the house kept only his name on the mortgage, but has a quit claim deed that took the house from his name, to his name and mine and my husband. We have been making the payment directly to the lender, as well as paying the real estate taxes, and keeping the insurance in our name. We wish to sell and buy another home, but the original ower will not give his permission to sell. He is also still in bankruptcy, and is under that protection. What is our liability if we just walk away and let the property be included in his bankruptcy?

 

[FlyingRon]

Do you have any sort of written contract?

This doesn't sound like a wrap mortgage, it sounds like a scam on someone's part.

You own 2/3 of a house (or perhaps 1/2 depending on the deed wording).

If the owner of the 1/3 is in bankruptcy it will be sticky to sell or sue for partition.

I'm surprised you haven't heard from the bank holding the mortgage. They usually find out about such shenanigan s when they get a notification of the insurance policy changing.

 

[beth_staggs1]

as for a contract - I have a quit claim deed that puts the property into 3 names, so original order is a third owner and my husand and I are each 1/3 owner.

The mortgage company doesn't seen to care with regular payments coming for 10 years. I keep getting letters from them (addressed to the owner) stating they are abiding by bankruptcy law, and any correspondence is not an attemp to collect a debt.

One more piece to this puzzle is the the owner is my former stepdad, the is none to happy about my mother leaving him a few years ago. This is all for spite on his part.

I am perfectly willing to go though the process of selling the home, but I dont' want to be stuck here forever!

 

[FlyingRon]

as for a contract - I have a quit claim deed that puts the property into 3 names, so original order is a third owner and my husand and I are each 1/3 owner.

That's not a contract. It doesn't obligate you to make payments, and gives you no procedure to get the remaining third.

The mortgage company doesn't seen to care with regular payments coming for 10 years. I keep getting letters from them (addressed to the owner) stating they are abiding by bankruptcy law, and any correspondence is not an attemp to collect a debt.

Ah you omitted information about the relationship.

I am perfectly willing to go though the process of selling the home, but I dont' want to be stuck here forever!

At this point you are stuck in his bankruptcy. He can't vacate his interest in the property without the trustee's approval.

You however are on a serious risk here. I'd suggest a real estate lawyer.

 

[beth_staggs1]

Yes, I certinatly realize what a stupid situation in which I have found myself. You will be happy to note, I have not since, and will never again make financial deals with family! At the time, the young and niave newleyweds could't have financed a paper bag! We had thought this was our big change for home ownership at a young age. We have now have great credit and great incomes, and would like to invest in a "nice family home."

That being said, I am trying to prepare myself for some of the options (or non-options) I may face. I want to be efficient with my information when I see the attorney.

I will dig around for any other documents that may exist. We are looking for a promisary note or something like it, I presume?

If his trustee agrees to include this property in his bankruptcy, does that leave us free and clear?

If we force an eviction, (which may be our only way out), and he sells the house for a loss, will we be responsible for 2/3 of the loss?

I guess I really need more advice on what questions to ask. I will shamelessly admit, I am completly clueless! I also do not wish to act unethicly or to out of spite. I have no wish for this to cost him anything.However, a family of 4 living in a 2 bedroom 1 bath cottage is not bearable!

I would appreciate any other tid-bits before you kick me out of this forum!

 

[FlyingRon]

You can deal with family, you just have to do it as if you were dealing with a stranger. This goofy half-sale half-bank-fraud thing is the issue, not the fact that it was family. OK, I'll not lecture further. You've learned.

The bankruptcy will not extinguish the mortgage. It just stays the collection while things are sorted out. Further, obligations TO the bankrupt person are assets. Assets aren't extinguished, you will certainly still be obliged to pay.

You can't evict an owner.

Your only option is to either wait out the bankruptcy and then proceed on either getting the quit claim from dad or the partition suit forcing the sale OR convince the trustee to let him release the property from the proceedings (you will almost certainly be required to refinance or sell to pay off the mortgage in that case).

If you do nothing, chances are as soon as the bankruptcy stay is lifted the bank will foreclose.
Nobody is responsible for a loss. If you weren't signers of the note, they can't come after you just because you were a co-owner. What will happen is that you'll just lose whatever ownership interest you have in the property.


It's going to take a lawyer acting on your behalf to get you out of this.