Don't you want to own your own house?

[Ghel]

I just don't understand this customer.
TL;DR: He's paid for the house, but he doesn't take the last step to make sure it's titled in his own name.

Many years ago (about 13 of them), we had a customer default on a mortgage loan that he had with us. It was an investment property that he was selling via contract for deed to SC, the subject of this story. I wasn't involved at this point (I was merely a teller), but I believe the customer signed a deed in lieu of foreclosure, signing the property over to the bank.

The bank didn't want to keep the property and figured the person (SC) who was buying the house CFD would love to buy it for the amount remaining on the mortgage, and we'd be happy to provide him with a mortgage to pay off the remaining amount. But SC didn't qualify for his own mortgage, which was why they were buying the house CFD in the first place. SC said he was willing to pay, though, so the bank effectively took over the CFD and SC paid his monthly payments to the bank instead of the previous owner.

Everything should be copacetic, right? Hah. SC started getting behind on his payments almost from the first day. We constantly had to send reminder/collection letters, sometimes threatening to cancel the CFD and evict him, usually when he was more than two months behind in his payments. Eventually, though, he made his final payment.

Near the end of this, SC ran for city council and then state legislature, losing both races. While he was running, I wanted to tell people how bad he was at handling his finances, but I couldn't because of privacy laws. That bothered me for a long time.

When we received the final payment in 2013, we had a lawyer draw up a Warranty Deed to satisfy the CFD and transfer the property to SC. We got everything signed and sent in to the county, but they sent it back. We hadn't realized that real estate taxes were past due (an oversight on our part), and SC would need to pay the real estate taxes current before the Warranty Deed could be filed.

I called him (by this point, I was working in the loan department), and he said he couldn't afford to pay the 4 years worth of real estate taxes, but he would let us know when he could. I followed up in 3 months, then in 6 months. He paid some, but still hasn't caught up. It's 3 years later, and he still has 2 years worth of real estate taxes to pay. ...Which, as I look at it now, means he was actually caught up at some point, but neglected to tell us, and he got behind again. Since all payments go to the most recent year, the only way the older years would be paid is if he paid them all.

But that doesn't really matter, since he's past due again now. It would only take him about $200 to be current again, and then we could file the Warranty Deed. I don't understand why he doesn't just pay it, so he can actually own his own house.

[Sparklyturtle]

I suspect the last tax bill might be in a stack of mail on his desk. When my aunt died I was her executor, and I found a pile of bills, etc. on her table. Most of what she owed were small amounts, which I was able to easily pay once I was given access to her checking account. However, my aunt had the excuse of dementia and ill health, and she wasn't seriously behind on anything.

[Deserted]

You know, I saw the title of this post and thought to myself, "Nope." I've been renting for over a decade, and I'm much happier than when I owned. (And I have more money. Repairs are the owner's problem, not mine.)

[Fartleby the Rimmener]

"We hadn't realized that real estate taxes were past due (an oversight on our part), and SC would need to pay the real estate taxes current before the Warranty Deed could be filed."

Uh, what? Could this be derpness/mismanagement from everyone?

[MoonCat]

What city is this that lets someone own a house without paying their taxes?? If that happened here they would foreclose for the unpaid tax! In fact, my mortgage has all the property taxes rolled into my monthly payment. Also, here they apply money first to the arrears, and only when that is caught up do they apply new money to current taxes, so if you don't pay up on time, you'll just keep getting into arrears.

[Rosco the Iroc]

"We hadn't realized that real estate taxes were past due (an oversight on our part), and SC would need to pay the real estate taxes current before the Warranty Deed could be filed."

Uh, what? Could this be derpness/mismanagement from everyone?

What city is this that lets someone own a house without paying their taxes?? If that happened here they would foreclose for the unpaid tax! In fact, my mortgage has all the property taxes rolled into my monthly payment. Also, here they apply money first to the arrears, and only when that is caught up do they apply new money to current taxes, so if you don't pay up on time, you'll just keep getting into arrears.

So are mine, but the SC paid the note off so now they have to pay the gov directly now and it's not the banks just to baby sit you once the notes gone.

I look at the thread title and think about the home bubble of 08'. It's great to give people a chance to own a home. But not everyone should. Some people can't handle it. Both financial and upkeep. So you get what we had here and all over.
I don't like it any more then you do.

[Ghel]

At the time he paid off the CFD, the bank was pretty lax about making sure people paid their real estate taxes, unless they got to a point where they were going to go tax forfeit. So nobody thought to check that they were paid before sending the Warranty Deed to the county. Yeah, that was definitely our error.

I very much doubt this sort of thing would happen now. The new management would be unlikely to take over a CFD that a customer had on their house, since they're supposed to let us know before doing anything like that. Also the new management keeps up much better on people who are behind on their real estate taxes.

I continue to send SC a letter every 6 months or so to remind him that we would be happy to record the Warranty Deed, but we can't do that until he pays his real estate taxes. He (or his girlfriend) signs the slip, since I send the letters certified, but he never contacts us. And we don't have a current phone number for him. So I don't see anything changing for a long while.

[protege]

Uh, what? Could this be derpness/mismanagement from everyone?

That's what it sounds like. The tax issue(s) should have been caught. I just went through a debt consolidation/refinance, and had the pleasure of dealing with the million or so forms you have to fill out. One of them gives your permission for the lender to search through the state and county records to see if the taxes are current. I don't know how it is in other areas, but in Pennsylvania, if everything is good, the loan gets approved. If not, the purchaser can either walk away or deal with the back taxes. Either way, it should have been caught, and all of the stupidity could have been avoided.

With that said, I'm sure the SC probably thought that if he/she ignored the tax issue, it would magically go away. Never mind that in some areas, the SC would be evicted, the property seized, and sold at auction.

[Ghel]

Yeah. Technically, the bank still owns the house. We could probably evict SC for not paying the real estate taxes, but it would be a legal headache. Instead, we'll just send the SC a reminder letter every 6 months, and if they don't do anything, the house will go tax forfeit and it'll be the county's problem. We don't really care about getting it back, since we've already been paid, with interest. The letters are more of a courtesy to the SC than anything else.

[notalwaysright]

I look at the thread title and think about the home bubble of 08'. It's great to give people a chance to own a home. But not everyone should. Some people can't handle it. Both financial and upkeep.

But wasn't that in large part caused by banks giving people mortgages which they shouldn't have? The mortgage payment was the problem, not taxes and upkeep, that's what I thought. So if a person owned their house outright, they weren't caught in the problem, unless they went to sell and found out their house was worth what they thought. The guy in the OP could own his house, but due to a tax issue, the bank still owns it?

Haha, I seriously don't get this whole situation. On a side note, my parents have had their eye on the property next to them for many, many years. My uncle owns it, and rents out this weird old RV, but otherwise it's just an empty lot. He periodically lets the taxes get overdue, and we watch like a hawk to see of the bank will take it back. He always pays, though. The county assessor office has all that info, which is really fun and stalker-y to look at.

[Argabarga]

Of all the things to ignore.... you ignore the taxes, the one part that never, ever, EVER goes away?

People get bored at best, and eventually die at worst, but the taxman isn't going away as long as the state survives... why do so many people not get this? I guess they're just hoping that in a country of millions, they'll just slip through the cracks.....

[Ghel]

I guess they're just hoping that in a country of millions, they'll just slip through the cracks.....

Real estate taxes are online now, and you know what they say about things posted online - they're out there forever.

[Ghel]

Thanks to EricKei for for zombifying this thread!

I have an update.

The bank received a Notice of Expiration of Redemption for the customer's property early last month. Although it's got the customer's name on it as the taxpayer, I forwarded a copy to him anyway, just to make sure he's aware. You see, this is the final notice to the customer before the property is forfeited to the county for unpaid taxes. He has 60 days from when the notice was mailed to pay the past due property taxes, or his house will belong to the county state (according to the notice, forfeiture of land goes to the state).

I checked the county website today to see if he'd paid it. He has not. He's likely going to lose his house for not paying about $400 in back property taxes. It baffles my mind.

To recap, the bank doesn't really care what happens to this property. We can't transfer it into his name because the county won't record the deed with property taxes due. We're not going to pay those property taxes - they're his responsibility. If the county takes the house and land it's on over $400 in unpaid property taxes, we don't care. He has about 30 days to pay it, and he'd be a fool not to.

[taxguykarl]

$400 !? That's it?! Surely, SC can scrape that amount together. After all, the installments would likely have been more than that and for how many months has SC not had those payment?

[Ghel]

I would have thought so, too.

Property taxes are really low in our county. His house has a low market value, and it's not on a lake or anything that would increase the property taxes. The taxes for the past few years have ranged between $100-150 per year. Most people would kill for taxes that low.

He paid his 2017 property taxes, but not 2014-2016. Last I checked, he hadn't paid the first half of 2018, either. And he doesn't need to pay it all at once, either. He could send the county a smaller amount each month, and they would apply it to the past due amount. They always apply it to the most recent year due first (so that people can't constantly be 3 or 4 years behind with no consequences), but he would have caught up eventually.