Complex 2nd mortgage foreclosure involving divorce & bankruptcy in Michigan- Please help!

[srb2975]

Summary of events:

Ex-Husband and I divorced in 2007 and divorce decree stated that I got the house and would assume the mortgage payments. The deed was transferred to my name. The mortgage was in his name only and he had taken out an $11,000 2nd mortgage against it in 2004. The first mortgage is not in default as I have been making the payments.

Ex-Husband filed for bankruptcy in 2013 and the lender never contested the 2nd mortgage and it was discharged.

In June of this year I was notified that my home was going to be sold at a Sheriff’s Auction as the 2nd mortgagee had commenced foreclosure proceedings for $26,000 and never notified me or my ex-husband until the sheriff’s sale was scheduled.

Is this scenario even possible considering that the deed to the property is in my name and the home equity loan that they are foreclosing on was discharged by the bankruptcy court?

Also, the divorce decree states that my ex-husband cannot bankrupt any of his legal obligations related to our marriage. Wouldn’t this include the 2nd mortgage? Why are they not going after him or going through the bankruptcy court?

 

[FlyingRon]

Note that the discharge only got rid of your husband's responsibility to the lender. It didn't remove the house as security for the lien (provided there was sufficient equity). Having him deed the property to you doesn't get rid of any of the mortgages, deeds of trust, or other liens that are pending.

What was supposed to happen to the 2nd mortgage in terms of the property settlement? You didn't indicate that.

Chances are, you're best bet is to head to the bank and either bring that loan up to date or get it refi'd in your name. Then you can go after your husband in court to get him to pay you back if he has some responsibility for that.

It will mean nothing that "he" was supposed to pay to the bank. The bank expects to get paid and legally can forclose.

 

[HRZ]

You did not mention state...and there might be some serious issues if the lender failed to follow required notice requirements ...but my lay view is you need to sort out your options , the simplest of which may be to settle up with the mortgage holder ...there might be other options ...

ITs not clear if you have any recourse against Ex at all, if you got the house plus duty to pay mortgage(S) then it reads like your duty to pay 2nd as well. AT best, lender is not party to the divorce and if the 2d was recorded ahead of your new deed than that lender has darn strong leverage to get paid in full.

 

[Zigner]

You did not mention state...

Michigan (per the thread title).

 

[HRZ]

Whoops , thanks .

MIchigan gives the homeowner some limited redemption window ..I suggest you cure your problem before the sale and NOT count on a redemption ...

 

[PayrollHRGuy]

Both the 1st and 2nd mortgage existed at the time of the divorce. You wrote that you were to assume the mortgage payments. Unless there was verbiage in the divorce order stating otherwise that would mean both mortgages.

 

[justalayman]

A little bit different explanation of the relationship between bankruptcy and the mortgage


Bankruptcy released your husband from being required to repay the debt

It did not cancel the debt though (this is often the misunderstanding).

Since the debt remained and the lender holds a security interest in the property, (the lien was not cancelled by the bankruptcy either), if nobody pays the debt the lender can forclose on the property.

 

[srb2975]

To clarify, the divorce decree specifically stated that the 2nd was his responsibility. I know understand about how the bankruptcy just released him from it and it was still secured against the property, thank you all for your answers.

What is most concerning is the lack of notice and the amount of time they let go by until proceeding with this action as it's now doubled. What notification requirements do they have? I had absolutely no knowledge of this as I thought he had taken care of the 2nd as stipulated in the decree and then all of a sudden a notice was taped to my front door informing me of the sheriff's sale. Shouldn't I have been given the opportunity to try and refinance, etc. or do anything to try and work with them instead of it going straight to the sale? I have over $100K in equity and can afford the mortgage just fine, I just think I should have been afforded a little bit of time to refinance and settle it and then go after my ex for it.

I almost feel like they (the mortgagee and their attorneys) have been rather deceptive and are trying to screw me out of my house because they know there is a decent amount of equity in it. Is there anything I can do to put a hold on things as I just do not feel like I was given adequate notice? I mean the founder and former CEO of the bank went to prison for mortgage fraud...it just all seems really shady.

 

[HRZ]

THe divorce order most likely does not trump bankruptcy law...did he file ch 7 or Ch 13 ..may matter a lot ...but bottom line as a layman I suggest you rush to bail out your property , use counsel, and sort out recovery from ex later as well as sanctions if any for violation of the order.

IF the sherrif or bank bungled any steps of notice , leave that to your legal pro . One of my legal pals did get a sheriff sale set aside on issues of notice ....but this was not in your state ..leave that issue to a pro...in the meantime save the ship before salvage costs soar

 

[justalayman]

To clarify, the divorce decree specifically stated that the 2nd was his responsibility. I know understand about how the bankruptcy just released him from it and it was still secured against the property, thank you all for your answers.

What is most concerning is the lack of notice and the amount of time they let go by until proceeding with this action as it's now doubled. What notification requirements do they have? I had absolutely no knowledge of this as I thought he had taken care of the 2nd as stipulated in the decree and then all of a sudden a notice was taped to my front door informing me of the sheriff's sale. Shouldn't I have been given the opportunity to try and refinance, etc. or do anything to try and work with them instead of it going straight to the sale? I have over $100K in equity and can afford the mortgage just fine, I just think I should have been afforded a little bit of time to refinance and settle it and then go after my ex for it.

I almost feel like they (the mortgagee and their attorneys) have been rather deceptive and are trying to screw me out of my house because they know there is a decent amount of equity in it. Is there anything I can do to put a hold on things as I just do not feel like I was given adequate notice? I mean the founder and former CEO of the bank went to prison for mortgage fraud...it just all seems really shady.

Why would they have to give you notice or an opportunity to refinance a loan that wasn’t yours and in a persons name tjhat no longer had any legal relationship to you?

 

[HRZ]

op is apparently the deeded owner : Here is a possible problem, unless the loan docuements provide for stricter notice requirements ( which we don't know) MI law allows holder of the defaulted note to proceed to sheriff sale by publication of public notice 4 times in local paper...lender may be smart enough to get that part right? Find the notices and check details if such applies?

 

[HRZ]

ps..you got notice..taped to your door and it is very likely that that is sufficient if it is timely and contains the required information.

 

[justalayman]

op is apparently the deeded owner : Here is a possible problem, unless the loan docuements provide for stricter notice requirements ( which we don't know) MI law allows holder of the defaulted note to proceed to sheriff sale by publication of public notice 4 times in local paper...lender may be smart enough to get that part right? Find the notices and check details if such applies?

https://www.michigan.gov/documents/reinventretirement/Home_Foreclosure_469522_7.pdf


Under Michigan’s Foreclosure by Advertisement Law, a company must publish a Notice of Sale once a week for four weeks, in a newspaper of general circulation in the county where the property is located. The notice must also be posted on the property at least 15 days after the first Notice of Sale is posted.
Mortgage companies cannot make the first notice or filing in the foreclosure process unless one of the following is met:
n The loan is more than 120 days past due;
n The borrower has violated a due-on-sale clause; or,
n The foreclosure action of a second mortgage is being joined.
A foreclosure sale must be made at a public auction to the highest bidder. The trustee or the sheriff of the court of the county in which the property is located may conduct the sale between the hours of 9:00 am and 4:00 pm on the date specified in the Notice of Sale.


I see enough notices in the local newspapers to guess it is common that lenders do use the proper methods.

A timeline of the foreclosure process, “Stages of Foreclosure,” is available at the Michigan State Housing Development Authority’s (MSHDA) website at www.michigan.gov/mshda. If you are facing foreclosure and need assistance, contact the Department of Insurance and Financial Services at 877 999-6442, Michigan State Housing Development Authority at 866-946-7432, or seek legal advice.

 

[srb2975]

Thank you everyone for your replies, I really appreciate the information!

My ex filed chapter 7. The notice taped on my door was only 3 weeks prior to the sale. I had read about the notice requirements in a local newspaper and there aren't very many in Van Buren County Michigan. I have searched and searched and haven't found zero notices. I have not even been able to find my address or home on any of the Foreclosure listing websites.


My concern over the length of time that has transpired is that they waited over 5 years since his bankruptcy to do something about it, and the original $11,000 note is now $26,000. he possibly could have made payments towards it as well so the balance could have been much lower but I don't even know.

I have retained an attorney but my confidence in his ability due to the complexity of this issue is really starting to diminish. That is why I decided to post on this forum to see if I could get any suggestions because I don't even know what type of an attorney to go to at this point.

 

[justalayman]

I don’t see it as overly complex. Once you prove standing to redeem the property, then it’s a matter of making payment and getting on with life. State law specifies the time allowed to reclaim. It appears thst is 6 months

A an attorney that deals with foreclosures specifically would be the best but most attorneys that practice in general civil practice should be able to handle it as well.