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2nd mortgage not paid but owner refinanced

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hammer751

Junior Member
Indiana

This is kind of confusing. I will give as many details as possible. All help is appreciated!

I accepted a 2nd mortgage on a home I sold in 2000. On the day of closing the buyer's lender cut the amount they would loan due to a lower credit score. $19,000 was to be paid to me in 2003. I never was paid. I didn't persue it because I knew their rate was high and eventually they would have to refi. Well they did refi in 2006 and didn't pay my mortgage. In April 2008 I read in the paper that their home was being sold at Sheriff's sale and I was not named. My attorney had the sale stopped and we foreclosed on the mortgage which now is over $40,000. I was told that the title company made a mistake and a claim would automatically kick in. Deutsche bank would not pay because they said they were not putting anymore money into it. The title company did not pay either. So, everything went through the courts. The judge gave them 90 days to pay me or their lien would be extinguished. They didn't pay so it was going to Sheriff's sale on May 20th. 2 days before the sale (the people were still living there and had not paid a payment to anyone for almost 2 years) the house burnt down! I did not have insurance, but they did and their new lender was named on the policy. Deutsche bank sold the loan after the suit was filed! So now the new bank is calling them telling them they will work out a deal with them to start making payments. Is it possible they don't know their lien was extinguished? We went on with the sale and now I have a deed with no liens on it but the house is burnt down. Sorry for the long story but I tried to give as many details as possible. What do you think will end up happening?
A) The insurance company will try paying me the judgment? Remember though the judgment was satisfied when I obtained the deed at the sale, so should that be taken into consideration?
B) The insurance company will pay me replacement cost on the home and let me keep ownership of the land?
C) The insurance company will pay me replacement cost on the home but make me deed the land back to the people living there?
D) Is it possible they could even pay the people and no one else? All liens were extinguished before the sale except for mine but I was deeded at Sheriff's sale.

This has been crazy and I just want to get paid when I can. The insurance wanted a payoff letter from me along with any documents I have from the courts. I just want to know what everyone thinks.
 


b.momma

Member
Indiana

This is kind of confusing. I will give as many details as possible. All help is appreciated!
o.k

I accepted a 2nd mortgage on a home I sold in 2000.
so, instead of selling the house, you privately mortgaged it.


On the day of closing the buyer's lender cut the amount they would loan due to a lower credit score. $19,000 was to be paid to me in 2003.
so the primary lender paid you 19k of how much? (not that that matters.)

I never was paid.
so, were you paid, or were'nt you.

I didn't persue it because I knew their rate was high and eventually they would have to refi.
you didnt care you werent being paid?

Well they did refi in 2006 and didn't pay my mortgage.
why werent you more carefull you were clearly listed as a lien holder, since you were so sure they'd refinance.


In April 2008 I read in the paper that their home was being sold at Sheriff's sale and I was not named. My attorney had the sale stopped and we foreclosed on the mortgage which now is over $40,000. I was told that the title company made a mistake and a claim would automatically kick in. Deutsche bank would not pay because they said they were not putting anymore money into it.
why didnt you forclose much sooner? you went 9 years without being paid for a house you sold?



The title company did not pay either. So, everything went through the courts. The judge gave them 90 days to pay me or their lien would be extinguished.
who is they, and what do you mean extinguished? as in, they pay you, or they dont owe you?


They didn't pay so it was going to Sheriff's sale on May 20th.
of course they didnt.

2 days before the sale (the people were still living there and had not paid a payment to anyone for almost 2 years) the house burnt down!

finally, some relevence.

I did not have insurance, but they did and their new lender was named on the policy.
so, not only did you not care about being paid, you also didnt care if your investment was properly insured. and furthermore, of course the bank was listed properly, its required.

Deutsche bank sold the loan after the suit was filed
!

what suit are you talking about? before or after the fire? this happens all of the time.

So now the new bank is calling them telling them they will work out a deal with them to start making payments.
who is them?

Is it possible they don't know their lien was extinguished?
what does this mean?

We went on with the sale and now I have a deed with no liens on it but the house is burnt down.
how did you get the house back, did you buy it from the bank? wasnt it burned at this point? why would you want that?

Sorry for the long story but I tried to give as many details as possible. What do you think will end up happening?
I think you should have been more proactive from the begining then this wouldnt be happining.

A) The insurance company will try paying me the judgment?
why do you feel like you are going to be paid anything.


Remember though the judgment was satisfied when I obtained the deed at the sale, so should that be taken into consideration?
uh, yes. this means you shouldnt be paid at all.


B) The insurance company will pay me replacement cost on the home and let me keep ownership of the land?
I seriously doubt you will be paid.

C) The insurance company will pay me replacement cost on the home but make me deed the land back to the people living there?
This doesnt even make any sence. not that you have been making sence to this point.


D) Is it possible they could even pay the people and no one else? All liens were extinguished before the sale except for mine but I was deeded at Sheriff's sale.
um, yes. if there was no lien on the property, and more importantly listed on the policy, then the money is going to the policy holder. How come the banks intrest was ignored, and "extinguished," and only yours counted?

This has been crazy and I just want to get paid when I can.
Then you should have just sold the house compleately in the beginnng.


The insurance wanted a payoff letter from me along with any documents I have from the courts.
They'll probably use this to not pay the claim, since you are sayng the house no longer belonged to the policy holder at the time of the fire.

I just want to know what everyone thinks.
I think you have a burned down house, and no money.
 

hammer751

Junior Member
Indiana


o.k


so, instead of selling the house, you privately mortgaged it.

I sold it but did not get paid the full amount. I knew when they refinanced they'd have to settle with me and it was at 10.5% interest.



so the primary lender paid you 19k of how much? (not that that matters.)

I was paid nothing. The 2nd was recorded and the title company missed it.


so, were you paid, or were'nt you.

I was not paid anything.


you didnt care you werent being paid?

I didn't care if it took years because 10.5% is a good return on my money.



why werent you more carefull you were clearly listed as a lien holder, since you were so sure they'd refinance.

What more careful can you be when you have a recorded mortgage?


why didnt you forclose much sooner? you went 9 years without being paid for a house you sold?

They were supposed to pay in 2003 but didn't refinance until 2006. It wouldn't be worth foreclosing on it then when there was a $75,000 mortgage ahead of me...I foreclosed on my note in 2007. There has been a 90 day waiting period on about 4 different steps and a 10 week period to get to Sheriff sale.


who is they, and what do you mean extinguished? as in, they pay you, or they dont owe you?

The Judge gave them (Deutsche Bank who now held the 1st mortgage, but was in the 1st position illegally) 90 days to pay me. They did not. Since they did not he extinguished their lien. As in it was not tied to the property anymore. They can still try to collect but they have no collateral.




of course they didnt.




finally, some relevence.
?


so, not only did you not care about being paid, you also didnt care if your investment was properly insured. and furthermore, of course the bank was listed properly, its required.

The people living in the house had insurance but had Deutsche listed. I could not insure until it was in my name. It does not matter who is listed the money is paid in order as to who it is owed. So I did know it had insurance and as you can see I wanted to get paid or I wouldn't have foreclosed?

!

what suit are you talking about? before or after the fire? this happens all of the time.

The house burned down 2 days before the Sheriff sale.


who is them?
?



what does this mean?
?



how did you get the house back, did you buy it from the bank? wasnt it burned at this point? why would you want that?

I got it back at Sheriff sale because no one was going to bid $41,000 (the amount of my judgment) on a house that was burned down. It was already scheduled and I was not going to take the chance of not getting the land deeded to me. At least I have leverage and I'm not deeding it back to anyone until I am paid. Why wouldn't I want 2.5 acres with a foundation, septic, well and pole building if it wasn't costing me anything? The fire happened before that so I do not think it matters what I do after.



I think you should have been more proactive from the begining then this wouldnt be happining.

What more could have been done? Buy out the original $75,000 1st mortgage.



why do you feel like you are going to be paid anything.

Because I am the only person with a lien or a deed on the property!



uh, yes. this means you shouldnt be paid at all.

Wrong




I seriously doubt you will be paid.

Well, the offer from the insurnce today must not be real. lol



This doesnt even make any sence. not that you have been making sence to this point.

I make better "sense" than your last sentence.




um, yes. if there was no lien on the property, and more importantly listed on the policy, then the money is going to the policy holder. How come the banks intrest was ignored, and "extinguished," and only yours counted?

Because since they did not pay me I am now 1st in line and the only person in line because they refi'd without paying me off.



Then you should have just sold the house compleately in the beginnng.

While it was going through the court with no deed? There is a foreclosure process in Indiana.




They'll probably use this to not pay the claim, since you are sayng the house no longer belonged to the policy holder at the time of the fire.

It did because it happen 2 days before the Sheriff sale.



I think you have a burned down house, and no money.
Well your advice is not very good because I was offered $41,000 today but they wanted me to deed the land back. I told them the only way I was deeding land back was if I was paid the full $75,000. So I guess you are wrong. You don't do this for a living do you? Sorry to everyone else that reads this, I am not a smart ass but this person doesn't have a clue!
 
Last edited:

justalayman

Senior Member
Well your advice is not very good because I was offered $41,000 today but they wanted me to deed the land back. I told them the only way I was deeding land back was if I was paid the full $75,000. So I guess you are wrong. You don't do this for a living do you? Sorry to everyone else that reads this, I am not a smart ass but this person doesn't have a clue! Maybe she should lose some weight and she would be so unhappy.
honestly, you initial post is so confusing that I am surprised anybody attempted to answer you. You want to be a smart aleck, how about explaining why you think an insurance company should pay you anything since you are not the policy owner? The policy does not carry over simply because you took title. You have to buy your own insurance if you want insurance coverage.

The people living in the house had insurance but had Deutsche listed. I could not insure until it was in my name. It does not matter who is listed the money is paid in order as to who it is owed. So I did know it had insurance and as you can see I wanted to get paid or I wouldn't have foreclosed?
Not true. Unless you were listed as the payee to the policy, you were owed nothing from the insurance. and yes, you could insure the property without it being in your name. You did have a financial interest in the property and that is what it takes to buy insurance.

oh, and btw, if a party has a first and second mortgage on a property, they can refi either mortgage without affecting the other. They do not have to pay off both if refinancing only the first or second.

Well your advice is not very good because I was offered $41,000 today but they wanted me to deed the land back. I told them the only way I was deeding land back was if I was paid the full $75,000.
who offered you $41k and what in any sane mind makes you think you are due $75k from anybody. You have already been paid whatever you got at the original sale plus you have the property back now. You are owed nothing. Not even the $41k. You took the property in the sale and that extinguishes your mortgage and lien. You have a chunk of land. That is it. If no other bank has any interest in the property, you have a chunk of land with a burned down house free and clear.

the insurance company owes the policy proceeds to whomever was name as payee. If the payee is no longer applicable, they owe the policy owner (the folks that used to own the place.

buy buying it as the sheriffs sale, you removed all the liens and anybodies claims to anything.

you got a chunk of dirt. That's it.
 

b.momma

Member
Why on earth do you think you should be paid one penny more then the amount of your judgement?
Which is what you got when you got the burned house back.

If you accept any money from the ins co. you are commiting fraud. The ins co owes you nothing, it wasnt your policy, and you werent listed as a mortgagee. Plus you did'nt technically own the house until after it burned, so you cant even make the rediculous arguement, because you owned the house, you should be paid.

10% interest on a loan thats not gong to be paid is like 10% of nothing. (but Im the idiot)
Now all you have is a burned house.
 

moburkes

Senior Member
Which is what you got when you got the burned house back.

If you accept any money from the ins co. you are commiting fraud. The ins co owes you nothing, it wasnt your policy, and you werent listed as a mortgagee. Plus you did'nt technically own the house until after it burned, so you cant even make the rediculous arguement, because you owned the house, you should be paid.

10% interest on a loan thats not gong to be paid is like 10% of nothing. (but Im the idiot)
Now all you have is a burned house.
When a seller finances a property they aren't a mortgagee. While they could have been listed on the insurance policy, it would not have been as a mortgagee, and they would not have the same rights as a mortgagee.
 

b.momma

Member
When a seller finances a property they aren't a mortgagee. While they could have been listed on the insurance policy, it would not have been as a mortgagee, and they would not have the same rights as a mortgagee.
Ah, not mortgagee, but aditionally insured... which he still was not listed as.

And without the same rights as a mortgagee, and not specifically listed as A'dtl ins'd.... the company who he is claiming to be working to settle with him, certainly does'nt have to.

:)
 

moburkes

Senior Member
Ah, not mortgagee, but aditionally insured... which he still was not listed as.

And without the same rights as a mortgagee, and not specifically listed as A'dtl ins'd.... the company who he is claiming to be working to settle with him, certainly does'nt have to.

:)
Sure. I didn't read the post because it was too long, so I tried to get the gist by the responses. Was just making that correction, and wasn't referring to anything else.
 

ecmst12

Senior Member
It seems OP has a valid judgement against the owner (or someone), so maybe he is trying to place a lein on the insurance settlement. Which may be possible (or may not, I don't know) but he would still not be able to recover more then the amount of the judgement.
 

b.momma

Member
It seems OP has a valid judgement against the owner (or someone), so maybe he is trying to place a lein on the insurance settlement. Which may be possible (or may not, I don't know) but he would still not be able to recover more then the amount of the judgement.
I have been thinking about this, that the house burned before the ownership was transfered, and IF he were listed as a loss payee properly second to the bank, then... wouldnt BANK 1 be paid there outstanding balance, and the remainder of the money to aditionally insured OP?

But then the house went back to the aditionally insured directly after the fire, which might not matter, because the house burned first.

This is sticky, and like I said, if the company is negotiating with him, even after he was'nt listed properly then they are going above and beyond usual practice. which they dont have to do.
 

justalayman

Senior Member
quoting moburks:

When a seller finances a property they aren't a mortgagee. While they could have been listed on the insurance policy, it would not have been as a mortgagee, and they would not have the same rights as a mortgagee.
He claims to have had a a true mortgage. If not, how could he have foreclosed on the home and actually in priority over the 1st mortgagee?
 

hammer751

Junior Member
I know this is very confusing that is why I am on here asking for help. Even my own attorney isn't sure what to do and he has been a real estate attorney for 30 years. Here are answers to a few points:

My judgment is for $41,000 and the reason I was asking if I should get more was because the judge extinguished all other liens and judgments because I did not get paid when they refinanced loan. Since I was not paid I foreclosed because I was in 1st position. They want me to quit claim deed back to lender before I get $41,000. The thing is, they did not pay and if the house hadn't burned down it would be worth $90,000 on the market. So, if I was getting a house at sheriff sale why wouldn't I gt replacement value?

I understand the Sheriff sale removed liens but it happened after the fire. So shouldn't that make a difference?

I did have a 2nd mortgage recorded that was not paid which put me in 1st position when the bank refinanced and did not pay me off.

Correct on the last statement Justalayman...I had a recorded 2nd mortgage that the title company didn't pay when the owners refinanced. The Judge gave the lender 90 days to pay me off. They didn't, with their reasoning being they already are $90k into it and they were not putting another $35,000 (the amount owed at the time) because the owners weren't even making the payments to them. They lived there for free for 2 years! I just hope I didn't screw up by going on with the Sheriff sale. I just thought I'd have leverage because the insurance is to protect the homeowner, right? So, if it pays the lender I still have the land. I wish the title company would have just paid the title insurance from the beginning and none of this would have happened. I was told by the adjuster today it does not matter who is named on the policy, the funds get disbursed in order as they should. He agreed I was 1st but wants me to deed the land back. If it was their fault for letting it go do I even have to?
 

b.momma

Member
So if the ins co has decided to include you in the settlement of insurance money this is the order it will be paid, as that was the way it was on the house that was burned.

1) 1st listed bank gets paid first. 90k-
2) you get paid- 41k (as long as theres enough coverage.)

insureds get there personal property coverage, as well as loss of use.

If you accept the payouts this way, technically the insureds get the house back, because now each loan has been satisfied. (they wont have any money to rebuild but they will own the wreckage instead of you.

This is quite sticky, as far as the 90 day deadline being after the house burned, when it was elegable for payment... but payment actually being dispursed after the 90 days.

hmmm, this is too complex, i dont think your going to be able to get the answer here. thats up to the involved lawyers, insurance company and you.
 

justalayman

Senior Member
ok. real simple.

all you were owed was $41k. You foreclosed so whatever value you received would reduce the amount you were owed. So, (as an example) if the land is worth $21k, you still are owed $20k from the borrower. You are never entitled to more than that $20k.

So, who owes your the $20k?

The borrower because in Indiana you can collect on a deficiency when you foreclose on a mortgage.

Now, who is due the insurance money?

Well, generally an insurance policy goes to whomever is named beneficiary/owner. What changes that is when there is a loss payee. Then, the loss payee is paid their loss from the insurance and any remainder goes to the bene/owner. The loss payee is not entitled to anything more than it takes to make them whole. In your case (using my example) you would be paid $20k IF you were listed as loss payee, which you were not.

So, who gets the money then?

Well, the other mortgagee had been listed as loss payee so, if they were still the registered mortgagee, they get the money and you are left being owed $20k. You then can collect on that debt just as any other creditor using the laws and mechanics in place to collect such a debt.

If the loss payee no longer is in place, then the policy owner is paid the money or whatever the policy allows.

the thing I do not understand is how you were put in 1st position.

and again, a 2nd mortgage does not have to be paid just because the 1st is refi'd. It simple stays where it is. As such, there would be no reason for the title insurance to pay you anything. On top of that, title insurance would not pay for a mortgage foreclosure. It is for latent claims on the title, which, your is not.

Oh, and the QC in exchange for the $41k. Of course. You can't have your cake and eat it too. You were owed $41k. Not $41k and the property. You can either have the property and attempt top collect the deficiency OR you can get your $41k and sign off of the property.
 

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