My sellers have been accepted into BofA Co-op sale. They had no tax escrow account and had always paid their taxes separately at the end of the year. As they are insolvent, they did not pay 2011 taxes. We are waiting for BAC to give us the list price and yesterday they received a call from the tax assessor's office saying they will be foreclosing on the property. She explained that she's in the middle of a short sale and referred him to me. He called me and I explained where we are in the process. Can they foreclose on the property?
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Find out from the tax assessor's office how much will need to be paid to them for a temporary release and then set up a payment plan for the current owners. If the offer is high enough, the bank will pay the portion for the temporary lien release. Once this is done, the lien follows the owners, not the property. And yes, they can force foreclosure.
I am surprised that foreclosure is being threatened when the taxes owed are from 2011. That seems extremely aggressive.
You bet they can. They have a superlien. But, I would not be overly worried about this, I think. Just a method of getting the mortgagee to pay. Not sure this even makes sense for them.
I have a property with over $40,000 in past due taxes, over five years. I wondered why the City wasn't foreclosing, until I considered their return on this risk-free investment from interest and fees.
Maybe the tax assessor gets a $100 bonus from the delinquent tax payment, so it's worth his time to spend $1,500 of your money on pointless legal costs. And, it keeps people on the payroll, right?
IMMEDIATELY demand that the first mortgage servicer pay the property taxes to preserve their collateral position.
Get a copy of the tax bill and an updated written payoff and send it to the first mortgage lenders escrow department with a full fax cover page explanation.
The seller/borrower DOES NOT have to have an escrow account for the lender to pay the taxes while in default.
Do it and do it today!
Agreed - Many times this takes several years. Also, the foreclosing lender will not want to lose their interest in the property either and will likely step in and pay them if it drags out too long..... My guess is that the taxes would get paid as part of the closing. Good luck!