[WSBARP] Ownership of home post foreclosure auction

Thu Jun 23 13:16:02 PDT 2016

Well, that’s pretty smart. My guess is, yes. I stress, “guess:”  (1) Except to the extent permitted in this section for deeds of trust securing commercial loans, a deficiency judgment shall not be obtained on the obligations secured by a deed of trust against any borrower, grantor, or guarantor after a trustee's sale under that deed of trust.” RCW 61.24.100.

We already know that the trustee shall sell to the highest bidder. RCW 61.24.040(4). And the borrower can bid. RCW 61.24.070(1) (anyone other than the trustee can bid). 

There is no provision for an upset price with nonjudicial foreclosures, and the right would run to the borrower anyway, not the lender. Generally, the quid pro quo was, redemption, right to upset price, and homestead rights were traded for no possibility of a deficiency decree. 

When we do foreclosures of liens, which are very similar to judicial foreclosures of deeds of trust, we always have to try to figure out who might do what and be prepared for eventualities. Do we want to bid the entire amount owing? What are the chances the property will need application of cash during the redemption period that won’t be compensated for in case of redemption?  What are the chances the borrower or some other redemptioner will redeem? Do we want to bid over the credit bid? And so on.

I never know what banks do and why they do it, but with a nonjudicial foreclosure, there is little incentive for them to do anything but credit bid. There isn’t going to be a deficiency judgment on residential property, and there isn’t going to be a question of redemption. Maybe if they were smart they would figure out how to calculate future costs of ownership (insurance, upkeep, HOA dues, costs of sale, etc. prior to re-sale), and discount their bid to an amount where if someone outbids them, it makes sense for them to let it go for less than the amount owing for cash now, but that seems beyond their capabilities.  

So, the lesson is, I guess, once in (perhaps) ten thousand trustee’s sales, there will be no bid from the lender, and the owner should go to see if he or she can get the property for next to nothing. 

Rob

Robert D. Wilson-Hoss 
Hoss & Wilson-Hoss, LLP 
236 West Birch Street 
Shelton, WA 98584 
360 426-2999

www.hossandwilson-hoss.com
rob at hctc.com

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From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of NC
Sent: Thursday, June 23, 2016 12:30 PM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] Ownership of home post foreclosure auction

Could the owner have shown up and bid one dollar?

On Thursday, June 23, 2016, Wendy Walter <WWalter at mccarthyholthus.com> wrote:

Jim,

Here’s a relevant statute that discusses tolling events in the statute of limitations.  

RCW 4.16.230

Statute tolled by judicial proceedings.

When the commencement of an action is stayed by injunction or a statutory prohibition, the time of the continuance of the injunction or prohibition shall not be a part of the time limited for the commencement of the action.

The foreclosure fairness act, now within RCW 61.24 et seq. prohibits a beneficiary from proceeding to foreclosure right away and instead requires certain due diligence, meet and confer and mediation steps to be taken in certain cases.  I would argue that this is a statutory prohibition on commencement of an action and thus should not count against the beneficiary if the borrower were to challenge on the SOL defense.

Furthermore, the CFPB servicing rules, contained in 12 CFR 1024.41 similarly prohibit through federal rule the commencement of a foreclosure action by a beneficiary in certain circumstances.  Before getting a borrower’s hopes up that the SOL might help them get out of their debt, consider the huge efforts that were made at a state and federal level to provide loss mitigation to so many borrowers in our state (and across the country).  To come back and say that compliance with those efforts might prejudice the beneficiary from recovery on the debt, especially when the stakes are high and liability can be extreme for running the loss mitigation red lights put into effect is not likely to be supported by a court if you consider RCW 4.16.230.

Wendy Walter | Partner - Pacific Northwest | Member State Bars of WA and OR

McCarthy ♦ Holthus LLP

    m. 108 1st  Ave. S., Suite 300, Seattle, WA  98104 

    d. 206.596.4844 | f. 206.780.6862 | c. 425.241.5459

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From: wsbarp-bounces at lists.wsbarppt.com <javascript:_e(%7B%7D,'cvml','wsbarp-bounces at lists.wsbarppt.com');>  [mailto:wsbarp-bounces at lists.wsbarppt.com <javascript:_e(%7B%7D,'cvml','wsbarp-bounces at lists.wsbarppt.com');> ] On Behalf Of Jim Doran
Sent: Thursday, June 23, 2016 11:04 AM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] Ownership of home post foreclosure auction

Wendy:

I am not clear in my own mind about how the foreclosure process tolls the statute of limitations.  In general, how does that work?  I am willing to learn.  (I try not to but it happens anyway.) 

Jim

James R. Doran

Attorney at Law

100 E. Pine Street -  Suite 205

Bellingham, WA 98225
(360)393-9506

jim at doranlegal.com <javascript:_e(%7B%7D,'cvml','jim at doranlegal.com');> 

www.doranlegal.com

On Thu, Jun 23, 2016 at 10:12 AM, Wendy Walter <WWalter at mccarthyholthus.com <javascript:_e(%7B%7D,'cvml','WWalter at mccarthyholthus.com');> > wrote:

But if the lender was statutorily barred from proceeding to foreclosure because of the pre-foreclosure diligence, meet and confer requirements, or the mediation program and the potential CFPB delays to proceeding to foreclosure due to the 120 day rule or the bar on dual tracking while reviewing a complete loss mitigation application the SOL defense might not apply.  

Wendy Walter | Partner - Pacific Northwest | Member State Bars of WA and OR

McCarthy ♦ Holthus LLP

    m. 108 1st  Ave. S., Suite 300, Seattle, WA  98104 

    d. 206.596.4844 | f. 206.780.6862 | c. 425.241.5459

    e.  <javascript:_e(%7B%7D,'cvml','wwalter at mccarthyholthus.com');> wwalter at mccarthyholthus.com

Arizona ♦ California ♦ Colorado ♦  Idaho ♦ Nevada ♦ New Mexico ♦ Oregon ♦ Texas ♦ Washington

CONFIDENTIALITY NOTICE: The information contained herein may be privileged and protected by the attorney/client and/or other privilege. It is confidential in nature and intended for use by the intended addressee only. If you are not the intended recipient, you are hereby expressly prohibited from dissemination distribution, copy or any use whatsoever of this transmission and its contents. If you receive this transmission in error, please reply or call the sender and arrangements will be made to retrieve the originals from you at no charge.

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From: wsbarp-bounces at lists.wsbarppt.com <javascript:_e(%7B%7D,'cvml','wsbarp-bounces at lists.wsbarppt.com');>  [mailto:wsbarp-bounces at lists.wsbarppt.com <javascript:_e(%7B%7D,'cvml','wsbarp-bounces at lists.wsbarppt.com');> ] On Behalf Of Jim Doran
Sent: Thursday, June 23, 2016 10:09 AM
To: WSBA Real Property Listserv
Subject: Re: [WSBARP] Ownership of home post foreclosure auction

That's what I thought.

Now, bring in the Statute of Limitations issue and the debt might be barred completely or at least partially.  This depends on the time fromthe "acceleration" of the debt.  but certainly some of the past due payments might have fallen off the debt.

Jim Doran

James R. Doran

Attorney at Law

100 E. Pine Street -  Suite 205

Bellingham, WA 98225
(360)393-9506 <tel:%28360%29393-9506> 

jim at doranlegal.com <javascript:_e(%7B%7D,'cvml','jim at doranlegal.com');> 

www.doranlegal.com

On Thu, Jun 23, 2016 at 9:48 AM, Kathryn R. McKinley <Kathryn.McKinley at painehamblen.com <javascript:_e(%7B%7D,'cvml','Kathryn.McKinley at painehamblen.com');> > wrote:

The sale is only “final” if the Trustee accepts an offer and delivers the deed within 15 days. If that isn’t done, there is no sale and the Deed of Trust continues to encumber the property.

Kathryn R. McKinley

Partner

717 W. Sprague Ave. Suite 1200
Spokane, WA 99201
(509) 455-6000 <tel:%28509%29%20455-6000> 
 <javascript:_e(%7B%7D,'cvml','cindy.bryan at painehamblen.com');> kathryn.mckinley at painehamblen.com

From: wsbarp-bounces at lists.wsbarppt.com <javascript:_e(%7B%7D,'cvml','wsbarp-bounces at lists.wsbarppt.com');>  [mailto:wsbarp-bounces at lists.wsbarppt.com <javascript:_e(%7B%7D,'cvml','wsbarp-bounces at lists.wsbarppt.com');> ] On Behalf Of Paul Neumiller
Sent: Thursday, June 23, 2016 9:29 AM
To: 'WSBA Real Property Listserv'
Subject: Re: [WSBARP] Ownership of home post foreclosure auction

Whoa!?!?!  I have never heard of this.  Why would a bank do this??  I would think that the foreclosure process WAS completed because an auction took place at the court house steps.  It’s not the debtor’s fault the bank didn’t credit bid its loan at the sale.  Why couldn’t the debtor now make the argument that the loan has been wiped out by the sale and there is no deficiency opportunity because the lender used a nonjudicial foreclosure?  Is anyone else seeing this?  

From: wsbarp-bounces at lists.wsbarppt.com <javascript:_e(%7B%7D,'cvml','wsbarp-bounces at lists.wsbarppt.com');>  [mailto:wsbarp-bounces at lists.wsbarppt.com <javascript:_e(%7B%7D,'cvml','wsbarp-bounces at lists.wsbarppt.com');> ] On Behalf Of Jim Doran
Sent: Thursday, June 23, 2016 8:06 AM
To: attorney at shanapavithran.com <javascript:_e(%7B%7D,'cvml','attorney at shanapavithran.com');> ; WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com <javascript:_e(%7B%7D,'cvml','wsbarp at lists.wsbarppt.com');> >
Subject: Re: [WSBARP] Ownership of home post foreclosure auction.

If the home was not "purchased" at the sale then the foreclosure was not completed.  No deed from the Trustee was delivered to a new owner.  

This means that your client is still the owner of the property.  

There are a number of defenses that can be raised in a foreclosure process to keep the bank and servicer at bay.  Now that the great recession of 2008 is getting years past the statute of limitations defense is looming and working its way through the courts of America.  The entire debt or part of it might now be barred.

anyway, if you client wants to talk to me a bout tis, or you want to, I am happy to do so.  I have been doing "foreclosure defense" for a while now.

Jim Doran

James R. Doran

Attorney at Law

100 E. Pine Street -  Suite 205

Bellingham, WA 98225
(360)393-9506 <tel:%28360%29393-9506> 

jim at doranlegal.com <javascript:_e(%7B%7D,'cvml','jim at doranlegal.com');> 

www.doranlegal.com

On Thu, Jun 23, 2016 at 4:49 AM, <attorney at shanapavithran.com <javascript:_e(%7B%7D,'cvml','attorney at shanapavithran.com');> > wrote:

 I have a client, whose home was foreclosed, pursuant to a trust deed foreclosure.  The lender held an auction on 2/5/16.  The value of the mortgage was approximately 230K appraised current value is approximately 155K.  Though foreclosed, home was not sold at the auction.  The bank did not bid at the auction or transfer ownership of the home to the bank's name.  The home remains in the client's name. He still pays the water bill on it.  He does not live there right now.  What rights does he have regarding the home?  Does the bank own it or does the client own it outright, as the mortgage is discharged by the foreclosure.

Shana Pavithran
Attorney-at-Law
Pavithran, PLLC.
22525 SE 64th Place, #279
Issaquah, WA 98027

Telephone: (425) 557-3625 <tel:%28425%29%20557-3625> 

Email: attorney at shanapavithran.com <javascript:_e(%7B%7D,'cvml','attorney at shanapavithran.com');> 
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