How do I foreclose?

Question

Who pays for the back taxes, who pays the PMI & can the bank or city come and arrest us for failure to pay.

Answer 1

The back taxes...runs with the land...you are not responsible for real estate taxes if you get a foreclosure, the bank must assume those as part of the "buyout" or it can't be insured by a title company.

The PMI is paid by the bank and they will turn in a claim for any losses...but the PMI company may come after you.  Remember that PMI protects the lender from default...not you.

No one can arrest you for failure to pay a debt.

Answer 2

I'm not sure you're asking the right question.  I think you meant to say "How do I BUY a foreclosure" -- is that right ?  I will answer the question you asked though, "How do I foreclose" -- it depends on the state you live in and your relationship with the borrower, and what your documents say. In California, you can foreclose if you are a secured lender with a deed of trust that permits you to foreclose.  To actually foreclose because of a breach of the terms, you notify your trustee and they record a Notice of Default.  If you are the lender and you get the property back (called an REO) then you are responsible for back taxes.    Re: Arresting you for failure to pay - unless you defrauded someone, there are no criminal penalties for not paying the taxes, but the municipality could foreclose on you for not paying taxes and then sell the property at an auction.

Answer 3

You are asking the wrong question.  If you are not making payments, "you" do not foreclose, the lender forecloses on you.  But first discuss with the lender if you have any options to modify the loan to something you can afford.

If they do foreclose, you will be kicked out.  That happened very suddenly (within a few days) for neighbors of my sister because another bank bought the home at auction.

The good news is that if the bank forgives any of your debt and you receive a 1099 for the income, you will not need to pay income tax on the forgiven debt 2007-2009 if it is your primary residence.