06. Foreclosure on Second MortgageIt0i ��Ilvllf
Incorporated 1892
Planning, Economic &
Community Development Department
P.O. Box 1997
Kalispell, MT 59903-1997
MEMORANDUM
M
DATE: August 4, 1994
TO: Larry allagher, Director of PECDD
Glen Neier, City Attorney
248 Third Avenue East
(406) 752- 7491
(406) 755-8017 (office fax)
(406) 752-6639 (City Hall fax)
OM: Susan Moyer, Housing Manager
Planning, Economic and Community Development
SUBJECT: Michael F. and Shelia F. Jenson -- Mortgage Foreclosure
I have managed to locate and communicate with the Jensons and they have
agreed to come in on August 12th to sign a Quitclaim Deed on the property.
BarclaysAmerican/Mortgage Corporation has provided us with a payoff
amount of $48,910.04 if they receive our check no later than August 15th.
If the City Council concurs with paying off the first mortgage in order to
protect our second, we will process a voucher immediately so that a check
can be mailed the day the Quitclaim Deed is signed and we won't incur
further interest and penalties.
Once we have legal access to the property, we will make arrangements for
the structure to be professionally cleaned, the repairs done and then made
available to Farmers Home Administration for purchase by a qualified family
on their waiting list.
Glen, for your information I am enclosing copies of all the paperwork
involved in the Bensons' purchase and financing of the property as well as
previous correspondence with Barclays/Mortgage Corporation.
Lot 12 of Block 188 of Kalispell Townsite Company's
Addition Number One (1) to Kalispell, Montana,
according to a map or plat thereof, records of the
County Clerk and Recorder of Flathead County,
Montana.
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6W." r.:)VSING
OPPORTUNITY
e I 0 H IS
Incorporated 1892
Planning, Economic &
Community Development Department
P.O. Box 1997
Kalispell, MT 59903-1997
DATE: July 22, 1994
248 Third Avenue East
(406) 752- 7491
(406) 755-8017 (office fax)
(406) 752-6639 (City Hall fax)
TO: �.pa11�gher� Director of Planning, Economic and
-'Nmmunity Development
Glen Neier, City Attorney
OM: Susan Moyer, Housing Manager
Planning, Economic and Community Development
SUBJECT: Foreclosure on the Jensen Property
705 Seventh Avenue West, Kalispell, MT
There is a first mortgage on the above subject property which, as of July 7,
1994, had a payoff of $45,862.92. The City holds a second mortgage in the
amount of $29,940.66. As of this date the Jensens have entered their fourth
month of delinquency with BarclaysAmerican/Mortgage Corporation and the
fifth month of delinquency with the City. In addition to the mortgage
payoffs, the following debts have been incurred todate against the property
due to the default status:
Attorney Fees $610.00
Property Inspection Fee $19.90
Escrow Shortfall $13.28
The anticipated payoff todate would be somewhere in the range of $47,000;
however, the interest continues to accumulate at $11.47 per day.
Unfortunately, the Jensens left the structure in deplorable condition. Staff
does not have legal access to inspect the property and can only make a
general determination through the windows. It is a guesstimate that it will
take between $3,500 and $5,000 to repair, replace and clean before the
property would be in condition for resale.
When the severe delinquency was discovered the lst of June, department
staff quickly attempted to work with two separate eligible and qualified
borrowers to assume the Jensen's first mortgage and restructure the second
mortgage to an affordable, assumable point for qualified LMI buyers. The
repair/replacement costs on top of penalties and interest, and 4 to 5
months of back payments precluded these aforementioned potential buyers
from being in a position to assume the first mortgage.
OPPORTUNITY
The investment the City will have in the Jensen property should be fully
recoverable -- even with the clean up and repair/replacement items. The
Jensen property is 1-1/2 blocks away from the Diane Hall. The City
purchased the Hall property at the fair market appraisal of $75,000. The
Hall house has the same number of bedrooms and bath, and the lot had the
identical square footage. The Jensen property is on a corner lot and has
approximately 411 square feet more of living area than the Hall house.
BarclaysAmerican/Mortgage Corporation filed a "Motion for Relief' with the
Butte Bankruptcy Court on July 1st of this year. If granted, the first mortgage
will be excluded from re -affirmation in the bankruptcy procedures, and they
will be able to initiate foreclosure procedures. From that time until the
property is actually sold on the courthouse steps there is nothing the City
can do to protect our investment unless we purchase or assume the
Jensens interest beforehand. If the property actually is placed for sale on
the courthouse steps, the City could possible be present with a check for the
amount of the first mortgage and still loose out to someone who submits a
higher bid.
Glen and I spoke this morning about the best way to proceed. He feels we
should continue to seek contact with the Jensens in a friendly manner. It
would be preferable to have them provide us with a Quitclaim Deed and we
proceed from there to pay off the first mortgage.
The Jensens receive Social Security Disability payments; and, while S/S will
not release a mailing address directly to us, they will forward a letter from
us to the Jensens at the time of the next S/S payment. Staff delivered a
letter today in which it was explained how it would be to their benefit to
work with the City on resolving the foreclosure issue and asking them to call
for an appointment to go over this.
Staff contacted Farmers Home Administration to inquire if this structure
would be a suitable candidate for any of the eligible low income buyers who
are on their waiting list. Once we have a key and can gain access to the
property, FmHA can make a determination whether the structure meets the
square footage requirements for the particular family size it can
accommodate and that it is structurally sound and suitable. FmHA can
inform families on their waiting list the property is available and can the
provide the low interest financing affordable to their client. The City then
would be paid off on both the first and second mortgage amounts.