Facing Foreclosure - even if you pay your mortgage

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by Chris Nagus

KMOV.com

Posted on February 22, 2012 at 11:19 PM

(News 4 Investigates) -- Try wrapping your head around this: you pay your mortgage on time but still get a foreclosure notice.

How about this one: you paid cash for your house and you still get a foreclosure notice.
Think it can't happen, think again.
 
Neighbors John Wottowa and Kevin Fries have a lot in common, both their homes where in foreclosure and they did not know it. They bought new homes in Columbia, Illinois back in 2008.
The developer, Ralph Range, filed for bankruptcy, and failed to pay the contractors who put in their garages, bathrooms, furnaces among other big ticket items.
 
The contractors filed Mechanics Liens to recover their cash.
Wottowa and Fries closed on their homes with Columbia Title.
They thought the title company would handle the mess.
Wottowa was told “don't worry about this we are making arrangements with him (Ralph Range) he always comes through, he pays (his bills) late”.
 
But months dragged on, liens showed up and then a foreclosure notice.
 
Wottowa told us “probably most scary item was my house up for public auction and I didn't know it”.
He was even more upset because he was paying his mortgage on time every month.
 
Wottowa and Fries spent thousands of dollars in legal fees.
Fries even went to the bank to inquire about a new loan to pay off debt that wasn't his, in fear of losing his house. 
They say the underwriter on the title policy, Attorney Title Guarantee, took a “wait and see” approach and waited until they were forced with a foreclosure notice to pay off the debt.
In the St. Louis area, these men are far from alone.
 
Wendy Cromer is a title expert with Security Title, which has no involvement in this mess.
She says the problem happens most often with new construction, but also on flipped houses.
Those buyers need to be very specific at closing.
“Number one thing you need to do is ask for: Mechanic Lien coverage on your policy” said Cromer.
 
Fries says his policy only included mechanic lien coverage on the land, not the structure.
Both families thought they did everything possible to protect them at closing.
There is a lot of blame to go around, but they also feel Illinois law should be clearer and protect citizens against these types of situations.
 
In the end, these homeowners say the underwriter finally stepped up and paid the liens to avoid foreclosure, but they feel this dragged on way too long and cost them way too much money out of pocket.
Repeated calls from News 4 to Columbia Title went unreturned.
 
News 4’s Chris Nagus left a message for the developer through his attorney, but didn't hear back. 
The underwriter, Attorney Title Guarantee, had no comment because of pending litigation.

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