Kentucky widow is forced to file for bankruptcy to save her home after husband’s death froze his bank account and mortgage payments and triggered foreclosure

a Kentucky The widow has detailed how she had to file for bankruptcy to save her home after her husband’s death.

Carol Haynes, 80, offered the story to a local news station in Kentucky as bankruptcy rates continue to rise across the country in the wake of the pandemic.

She said the financial hole created by the crisis has affected her and her husband for 25 years, after the deadly virus claimed his life in 2022.

His death caused a freeze on his bank accounts as automatic mortgage payments on their two-bedroom home in Florence were stopped.

This happened without her knowledge – and led to the bank filing for bankruptcy, she said Local 12 WKRC-TV. Haynes then received a letter stating that the house would be auctioned on May 23, which would prompt her to file for bankruptcy.

Carol Haynes, 80, offered the story to a local news station in Kentucky — as bankruptcy rates continue to rise across the country in the wake of the pandemic

She received a letter stating that the house would be auctioned on May 23, forcing her to file for bankruptcy

This put an end to the sale despite having relatively healthy finances, she said — because she hopes evidence of a loan modification his daughter made that allowed them to make payments will appear in bankruptcy court.

“I want to be around his stuff,” she said of the Northern Kentucky home once shared with longtime love Ed Haynes.

‘I feel him here. “I think if I left here, I wouldn’t live much longer,” she added.

Now that she could pay the mortgage, she remembered the beginning of the crisis – when she was not only reeling from the loss of Ed, but also recovering from a battle with Covid itself.

A freeze on his bank accounts followed and automatic mortgage payments to the bank stopped, she said.

“Did you think these things were just taken care of?” a Local 12 reporter asked, referring to how this all happened without her being aware of it.

Stepdaughter Tiffany Tormey, the one who was able to negotiate a successful loan modification, was the one to answer.

‘Yes I did that!’ said Tormey, 42, adding: “I thought [my mom] was okay and just didn’t want to bother me.

“It was just a little miscommunication.”

It started with the death of her husband of 25 years – after the deadly virus claimed his life in 2022.

That miscommunication caused her late husband’s bank to initiate foreclosure proceedings on the home — a process that usually results in a lender repossessing the property before attempting to sell it to recoup losses.

However, when Tormey heard the news months later, he was able to successfully negotiate a loan modification that would “bring the loan current.” [and] End the delinquencies,” she told Local 12.

“And we would just make the payments.”

But the bank was already in the process of selling the loan, both said, leaving them in the lurch when it came to rectifying the situation.

Meanwhile, Tiffany helped her stepmother make the payments while the bank transferred the deal to a new owner.

However, the new mortgage holder never received the amended agreement, so he filed another bankruptcy petition.

Tormey proceeded to send evidence of the change to the mortgagee, without result.

Her mother feels unable to avoid the bureaucratic red tape that large banks are known for received a letter stating that her house would be auctioned on May 23.

Stepdaughter Tiffany Tormey (left) managed to negotiate a successful loan modification, but the red tape that the big banks are known for left them without a leg to stand on

Her plan would have ‘[made] the current loan [and] End the payment arrears,” she told Local 12. “And we would just make the payments.”

But the bank was already in the process of foreclosing on the loan, her elderly stepmother said, leaving them in the lurch when it came to rectifying the situation.

That prompted her smart, senior stepmother to file for bankruptcy, even though she had the money to make the payments.

A day earlier, the man alleged to have carried out the sale, Boone County Chief Larry Dillon, said the only thing that could save the couple was an injunction from a local judge.

“If I have an order from the county judge directing me to sell a property,” Dillon said in a video interview a day before the widow halted the sale. “I have to sell it.”

‘Of course you don’t want an old lady to be evicted from her house… but I cannot unilaterally take the step to cancel a sale.

“If I do that, I’m violating a court order,” Dillon said.

He added that Carol could file for bankruptcy – advice she apparently followed.

She now hopes that proof of the loan modification will clear everything up in bankruptcy court — even though the stage is usually for people who can no longer pay their debts.

By offering a fresh start by liquidating assets to pay off their debts or setting up a repayment plan, the practice has saved Haynes for the time being.

That spurred her smart, senior stepmother to file for bankruptcy — even though she had the money to make the payments, she explained

However, the loss of her husband still looms large. “It was a beautiful wedding,” Haynes told the station from her home in Florence. ‘A cheerful one. I’ll see him again.’

A day earlier, the man alleged to have carried out the sale, Boone County Chief Larry Dillon, said the only thing that could save the couple was an injunction from a local judge.

Another foreclosed home, this one in Pleasant Hill, California. Foreclosures are currently affecting thousands of homeowners across the country

A miscommunication caused her late husband’s bank to initiate foreclosure proceedings on the home – a process that usually results in a lender repossessing the property before attempting to sell it to recoup losses. Pictured is another foreclosed home in Miami

However, the loss of her husband still looms large.

“It was a beautiful wedding,” Haynes told the channel from her home in Florence. ‘A cheerful one. I’ll see him again.’

She added: ‘I lost him quickly, but I think it was better than him suffering for a long time.’

Foreclosures – which can take the form of notices of default, auctions or repossessions by the bank that underwrote the loan – are currently affecting thousands of Americans.

ATTOM’s latest February 2024 Foreclosure Activity Report showed a total of 32938 US properties with foreclosures – an increase of 8 percent from a year ago.

Rob Barber, CEO of ATTOM, said at the time: “The annual increase in foreclosure activity in the US signals changing dynamics in the housing market.

“These trends could mean an evolving financial landscape for homeowners, leading to adjustments in market strategies and lending practices.

“We continue to monitor these trends closely to understand their full impact on foreclosure activity.”