Getting sued for a foreclosure on an 'under the table' home equity loan

[SEAMIZ]

My mother took out a private home equity loan from a guy 12 years ago. She recently passed away in January of this year and my brother and I are now the legal owners of the property. She stopped paying the loan about a decade ago, this guy has threatened to take the house and sent numerous letters over that time, but stopped all communication around 5 years ago. Yesterday, I received notice that his family trust has filed a motion to foreclose the property if we don't pay the 30k balance more than double the initial loan amount or respond within 45 days. From what my mother told me, the loan was 'under the table' and there will no liens of any kind when we did the paperwork to transfer the home to my name several months ago. I have no seen any of the original documentation that the loan even exists legally. I have several questions regarding this 1 In order to have the county circuit notify me of this foreclosure letter, did they have to prove any actual loan exists? 2 If the loan is legal, can I just tell the family trust to take the house to pay the debt the house is in terrible condition and has been appraised for half the value of the loan? If I do this, will I have a foreclosure go on my credit report? 3 Not being the initial signee of this loan, what is the worst that can happen to me legally? If they do have legal right to this property, I'm fine with letting them take it, but what do I really face here?

 

[LdiJ]

My mother took out a private home equity loan from a guy 12 years ago. She recently passed away in January of this year and my brother and I are now the legal owners of the property. She stopped paying the loan about a decade ago, this guy has threatened to take the house and sent numerous letters over that time, but stopped all communication around 5 years ago. Yesterday, I received notice that his family trust has filed a motion to foreclose the property if we don't pay the 30k balance more than double the initial loan amount or respond within 45 days. From what my mother told me, the loan was 'under the table' and there will no liens of any kind when we did the paperwork to transfer the home to my name several months ago. I have no seen any of the original documentation that the loan even exists legally. I have several questions regarding this 1 In order to have the county circuit notify me of this foreclosure letter, did they have to prove any actual loan exists? 2 If the loan is legal, can I just tell the family trust to take the house to pay the debt the house is in terrible condition and has been appraised for half the value of the loan? If I do this, will I have a foreclosure go on my credit report? 3 Not being the initial signee of this loan, what is the worst that can happen to me legally? If they do have legal right to this property, I'm fine with letting them take it, but what do I really face here?

Its not your debt, therefore it can never go on your credit report. If you know that the home equity loan is a valid debt of your mother's, then the house should not have been transferred to you. It should have been liquidated to put towards her debt, as her estate was/is responsible for her debts. I would just let them have the property.

 

[SEAMIZ]

Thanks for the response. The biggest problem I have is that I have no idea whether the debt is valid or not. My parents were very irresponsible people, never planned for the future and certainly rarely shared their dirty laundry with us. She would mention it off hand once in a blue moon when I was a child, but again, I have never seen the paperwork and I have never heard from the private lender until today. It seems like the next step of action is to contact a real estate lawyer and have them request the legal documents that contain whether or not this is actually a valid suit. I'm not so sure it is.

However, I assume they have to show the court some paperwork in order for this legal action to be sent to me through the court system, right?

 

[LdiJ]

Thanks for the response. The biggest problem I have is that I have no idea whether the debt is valid or not. My parents were very irresponsible people, never planned for the future and certainly rarely shared their dirty laundry with us. She would mention it off hand once in a blue moon when I was a child, but again, I have never seen the paperwork and I have never heard from the private lender until today. It seems like the next step of action is to contact a real estate lawyer and have them request the legal documents that contain whether or not this is actually a valid suit. I'm not so sure it is.

However, I assume they have to show the court some paperwork in order for this legal action to be sent to me through the court system, right?

Actual no, they do not necessarily have to show the court paperwork to get started. Eventually evidence would have to be shown, but not necessarily at the beginning.

 

[SEAMIZ]

Oh interesting. I asked on another website and they mentioned to go to the recorder of deeds to see if there was a trustee on the property. Low and behold, there is a deed of trust (it is the guy who is trying to foreclose). If the recorder of deeds has this guy's name as a trustee (and the loan amount recorded as well, that makes it seem pretty clear now. Although, when we got the house titled in my name, no one said anything...which is interesting. So I am on the beneficiary deed and he is on the deed of trust.

 

[justalayman]

Oh interesting. I asked on another website and they mentioned to go to the recorder of deeds to see if there was a trustee on the property. Low and behold, there is a deed of trust (it is the guy who is trying to foreclose). If the recorder of deeds has this guy's name as a trustee (and the loan amount recorded as well, that makes it seem pretty clear now. Although, when we got the house titled in my name, no one said anything...which is interesting. So I am on the beneficiary deed and he is on the deed of trust.

Actually depending on the actions surrounding the transfer of the property, it isn't odd at all the mortgage wasn't discovered. Since there is a deed of trust it is quite clear he does have a lien on the property. He likely can foreclose on the property.

You removed the question regarding your state so, as Forrest Gump said:
And that's all i have to say about that.