Legal Question in Real Estate Law in California
Foreclosure and credit
Condensed version:
My home in Palmdale, CA, went into foreclosure in October of 2007. The auction took place in mid December of 2007. An entire year went by with no calls or letters from the lender. On February 26th, 2008, I checked my credit report and it showed that the 1st mortgage was still CURRENTLY PAST DUE, while my 2nd mortgage was charged off around the time the auction took place. I called my lender and they told me that the house did not sell and that as long as the house remains theirs, I was still responsible for the loan and it would continue to show PAST DUE until it resold to a third party. I also recently received a letter stating that the insurance expired on December of 2008 and I was liable for keeping it insured even though I no longer live their. I contacted the Trustee who carried out the auction and they mailed me the Trustee's Deed Upon Sale stating that the property was in fact sold to my lender in December of 2007.
My question is:
Should I still be responsible for the insurance and should it still be showing as a foreclosure in process eventhough years have passed and I am no longer the owner?
2 Answers from Attorneys
Re: Foreclosure and credit
Buy renters' insurance. Theoretically they could evict you and/or sue for the fair market rental value. Or maybe they will forget all about you. It's not like the place will ever sell, let's face it, Palmdale is where dogs go to die.
Re: Foreclosure and credit
When the foreclosure sale was held, as is normally the case, no one bid on the property except the bank. Up to the time of the sale you were stil the owner of the house. As soon as the auction ended, the bank having made the highest bid became the owner of the property and the mortgage disappeared. They can not go after you for any difference between what they bid at the sale and the amount of the mortgage [anti-deficiency legislation bans going after the excess].
You have no obligation to keep the insurance current as you do not own the house and do not reside there [you lack an insurable interest and any intelligent insurance agent would refuse to sell you coverage]. The credit report is wrong but that probably is more in your favor than having a bankruptcy recorded. The best thing might be to write the lender a letter stating they are the owner and you do not reside there and thus have no duty or right to obtain insurance on the property. Then do nothing and hope they just forget about you for a longer period of time.
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