Has anyone continued to rent their property while its in foreclosure? Long story short I have a rental property that the mortgage was discharged on back in 2013 in a CH7 BK. Fast forward to now, we purchased another home and after renting out our first home for a while but had to stop paying because of other financial issues. We have good tenants who pay on time and take good care of the property. Their lease is through November of this year and I have a sense that they may want to re-up. I just got a very carefully NOI letter from the bank's attorney explaining that that they are not attempting to collect the debt (which would be in violation of the BK discharge) but rather collect the collateral. Otherwise it signals the beginning of the judicial foreclosure process here in NJ. I suppose there are two schools of thought here:
Do Nothing/Attempt a Deed-In-Lieu:
Allowing the process to run its course as quickly as possible or attempting to accelerate it means that we will be off title sooner. At this point, since the old mortgage is listed as discharged in BK on our credit report and our credit scores are currently 700+, this is really is only a financial issue in terms of if we want to refinance our existing house. The other issue is just liability for the property-especially if it eventually becomes unoccupied. Also, I refuse to let the property fall into disrepair out of respect for my old neighbors who we are still friends with (we only live about 10 minutes away now)-so I'll need to hire a lawn service, keep the electric on, etc...if its empty.
File Answers/Motions in Court, Drag the Process Out and Continue to Rent:
As I said, my current tenants will likely want to sign a new lease in November. Legally I would be required to inform them that the property is in foreclosure as a Lis Pendens will certainly have been filed by then. However, they themselves went through a foreclosure a few years ago, so if I explained to them that under NJ (and I believe federal at this point) law they would be protected for the duration of the lease even if the property were to be taken back by the bank that they would understand. The advantage here would be continued cash flow from the property and built-in property maintenance as the tenant mows the lawn, rakes the leaves, clears the snow, etc...
Submitted May 12, 2018 at 07:43AM by yota91 https://ift.tt/2jSlC1P
