What to do if I bought a house with wrap-around mortgage and the original owner stopped making payments 6 months ago but still took our payments?

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What to do if I bought a house with wrap-around mortgage and the original owner stopped making payments 6 months ago but still took our payments?

We learned of this from a letter from his bank stated that the house would go into foreclosure in 15 days and that the original owner had waived his right of redemption. Then 2 months ago he started hounding us to pay off the balance of our loan with him. What are our legal options? Is there any way we will be able to keep the house? What legal actions can we take against him for his broach of our contract (which specifically stated that he had to make payments on the underlying mortgage so long as we made our payments to him)?

Asked on May 16, 2012 under Real Estate Law, Kansas

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Please, please, please get yourself an attorney as soon as possible.  I am assuming that you have a deed and mortgage with the seller, correct?  Understand that that deed and mortgage is secondary to the original lender and may in fact violate the selller's mortgage with his bank. That would invoce a "due on sale" provision in his mortgage.  Good luck.


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