When does the bank assume a foreclosed house? (documentation, housing, banks)

[spencgr]

My neighbor has declared Chapter 7 bankruptcy. It is (as of the beginning of July) filed, entered, and "case closed" - full administration. So, the bankruptcy is complete. My neighbor proceeded to move out of his house, so it is vacant. I've seen him a few times since then, and he indicated that he has not received any documentation or correspondence from the bank. The county records still list him as the owner.

In theory, this is not my concern, but I have minor (wanting lawn mowed) and major (non-documented easement issues) reasons for knowing who owns this house, as I may need to approach them and/or enter into a contract (for the easement).

Without a doubt, I will be consulting a real estate attorney, but was just wondering if anyone has dealt with anything similar? Any idea how long it takes for a bank to actually take possession?

[justinbro2002]

Depends on if they bank deems it worth the effort and cost to take possession at present or wait and have to current owner still responsible for any liabilities and taxes. If the housing market isn't strong in your town the bank might just wait it out.

[spencgr]

Originally Posted by justinbro2002

Depends on if they bank deems it worth the effort and cost to take possession at present or wait and have to current owner still responsible for any liabilities and taxes. If the housing market isn't strong in your town the bank might just wait it out.

Thanks. But if the current owner is in Ch. 7 bankruptcy, he's resolved from all liabilities and taxes for this asset, correct?

[jackmichigan]

Originally Posted by spencgr

Any idea how long it takes for a bank to actually take possession?

It depends. But a bank does not benefit by waiting in hopes that the owner will be responsible for paying the property taxes on a vacant house. Property taxes do not follow the person, they become a lien on the property...which will only diminish the bank's equity in the property.

[spencgr]

Originally Posted by jackmichigan

It depends. But a bank does not benefit by waiting in hopes that the owner will be responsible for paying the property taxes on a vacant house. Property taxes do not follow the person, they become a lien on the property...which will only diminish the bank's equity in the property.

Thanks for your reply, and I understand what you are saying, but there is a bankruptcy here. The bank should have zero hope that the owner will pay any property taxes, because he has washed his hands of the matter. So, since the bank is not benefitting at all right now, any idea why they haven't taken posession/ title back?

[thatguydownsouth]

There are actually a TON of foreclosed homes in my City that are sitting empty and not for sale, or still have the original owners in them. Theres a theory going around (call it a conspiracy theory if you want) that the banks are actually too scared to release all of the inventory at once because that would create a market price crash that would wreck the economy...again. So theyre slowly "dripping" the houses back into the market. My mother in law has been living in her house now for 5 year AFTER it was foreclosed upon. They haven't said a word to her about it. Bear in mind that with the original owners in it, theyre keeping it clean and mildew free. If it sits empty, it rots.

[jackmichigan]

Originally Posted by spencgr

So, since the bank is not benefitting at all right now, any idea why they haven't taken posession/ title back?

There could be plenty of reasons. Incompetent bank managers could be at the top of the list.

[Sherifftruman]

There was a house around the corner from me that went into foreclosure at the height of the crisis and sat empty with stickers on the door about how it had been locked and weatherproofed yet stayed in the name of the original owner until it was finally spruced up and sold a few months ago. Close to 5 years I think. Someone had the grass mowed and paid the taxes, but the bank never actually completed the filing with the county.

[Hemlock140]

It depends on where it is. In our city where there were very few foreclosures in the recession, letting the yard go would have brought a notice from the city and the bank would have to pay to maintain it, and that is usually enough to get them moving on the sale. Other places where there have been many foreclosures it can take as long as 2-6 years by the time they get around to posting signs to sell it.

[gv28]

There are several different scenarios that are possible out of the bankruptcy process. The bank did not necessarily obtain a deed to the home from the bankruptcy itself. The bankruptcy at minimum would have stalled the foreclosure process.

From what you’ve described with the homeowner having left the home, the most likely scenario being, I think, that the foreclosure process was stalled during the pendency of the bankruptcy, and that process would now start back up again after the bankruptcy proceedings are now complete.

However if the homeowner did a deed-in-lieu as part of the bankruptcy, and the bank does own the home, maybe the bank has not yet recorded their deed.