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California foreclosure

Posted by MARY HOOD on November 20, 2010 at 7:15am in Short Sale Discussions
Would someone explain what happens when a seller ceases to make his mortgage payments and the property taxes and insurance are separate.  Should the seller continue to pay the property taxes?  What is the liability on the taxes when the property goes into foreclosure?  I will be meeting with the client on Sunday.

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  • Thom Colby CA Brkr 888-391-5245 November 21, 2010 at 8:11am
    Mary,
    First, you shouldn't provide advice to the seller on whether to stop paying or not unless you are a practicing attorney.

    As for taxes, it is unlikley the County will take the property - the bank will likely either require the seller to either 1) bring cash to closing, 2) have the buyer pay the back taxes; or 3) bank will pay at closing - Caveat::: if the taxes become delinquent - past the pastdue date, the bank will likely pay them and add onto what is owed.

    As for insurance, if the homeowner doesn't pay it, the policy will be cancelled and the bank will be notified by the insurance company. The bank will then buy RISK insurance, and add that extravagent cost to the balance due. They will then handle it the same as for taxes above.

    Best of luck,

    Thom
  • MARY HOOD November 20, 2010 at 12:31pm
    THANK YOU FOR THE RESPONSE!
  • MARY HOOD November 20, 2010 at 12:30pm


    Smitty said:
    I believe taxes trump mortgage, so technically the town can take the house for non-payment, but the mortgage company usually steps up to pay the taxes. That's what I've seen in my area most of the time. The mortgage company will likely pay off the taxes to get the house sold, whether it's a short sale or REO. If they don't, I think the new buyer would have to pay them.

    Someone correct me if I'm wrong though.
  • Smitty November 20, 2010 at 7:59am
    I believe taxes trump mortgage, so technically the town can take the house for non-payment, but the mortgage company usually steps up to pay the taxes. That's what I've seen in my area most of the time. The mortgage company will likely pay off the taxes to get the house sold, whether it's a short sale or REO. If they don't, I think the new buyer would have to pay them.

    Someone correct me if I'm wrong though.
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