Deed recorded, but banks says short sale was never accepted!
I closed a short sale on 12/10/2009 (Grant Deed recorded with Alameda County), and I've been working hard on fixing the place up personally.
Last Friday night, I found a note on my door from a realtor saying the ownership of this property has been transferred as a result of a foreclosure proceeding and I need to vacate the premise! I called the realtor Friday night, and he called back today and said the bank involved, IndyMac, claims they didn't accept the short sale! Have you guys ever heard of such a thing?
Incidentally, I heard that my property now shows up on Foreclosure Radar as a bank-owned property, sold on 1/27. How can this be? The grant deed is recorded in my name, but it's bank-owned? Didn't they do a title search before the trustee sale?
Comments
Hey,
Question, When you purchased the property back in December...Did you or your agent recieve the Approval Letter, which is how lenders provide a short sale approval...If the negotiator recieved a verbal...The next step is to get it in writing, Always in writting, remember paper trial ...Please keep us posted...One final idea you can possible call thier REO department and request they recind the forclosure...Either do it yourself....But as you know consult with an attorney first...Good Luck
Interesting idea about requesting IndyMac to rescind the foreclosure. It would seem in my right as the deed holder to give IndyMac 90-day notice to rescind the foreclosure, rather than IndyMac give me 90-day notice to vacate the property. :) However, I'm not ready to spend my own money on a lawyer yet. I hope my title insurance will do that.
I've purchased houses at foreclosure sale that have >overturned< recent escrows. Needless to say the new owners were quite surprised to learn they no longer owned the house, but that can in fact be the case.
You need to immediately contact your title company. One of two things has happened: 1) your title company goofed and didn't pay off the loan and it was foreclosed on, in which case the title company will either have to buy the house for you and fix title, or reimburse you for their mistake, or 2) the lender goofed and foreclosed even though they accepted a short payoff, in which case they will have to rescind the foreclosure.
Regardless of which situation it is, you need to contact your title company immediately as the lender's trustee's deed WIPED OUT your deed and you no longer own the home until the title company buys it back for you, or the IndyMac rescinds their deed.
Thanks for the honest response, Sean. Yes, I've contacted everybody involved in the transaction, but I haven't seen much action yet.
I've now heard, off the records, that IndyMac now acknowledges the short sale was approved at some point, but claims it did not close. They said a wire was attempted, but they did not accept it.
So, like you said, there are two basic possibilities. Either IndyMac is mistaken (they did accept the wire and lost track of the money), or the escrow manager messed up BIG TIME (wire was returned, but transaction was pushed through anyway, and they've been sitting on the money for two months without telling anyone).
Now, which is more likely? I would hope the former is much more likely than the latter.
Sean, so you said you've actually bought homes at auction that have overturned escrows. What were the outcomes in these cases? Did their title policies buy the homes for them?
Yes, the title companies bought the homes from me in order to deliver clear title to the homeowner.
So, Sean, were there any problems with the title company buying the properties from you? Could you have set any price you want or not sell at all?
And, how did these cases in your purchases arise? Were they due to errors made by the title company?
No problems - but certainly a tough negotiation on price, they aren't dumb, and they no your alternative is to have to evict the person they sold it to, and resell it, pay realtor fees etc. Usually easiest to just agree to the net proceeds of the escrow (sales price - closing costs).
Primarily due to escrow errors. Usually a delay in the escrow company getting the payoff to the lender.
Well, it now sounds like there were some escrow errors, though IndyMac might have been at fault as well.
I would very much prefer to get the house than a refund. I've already spent $2,000 in material costs renovating and countless hours working and moving. I'm just afraid IndyMac is going to "stick it" to the title company with the price, making it tough to for them to give me the house.
And, if IndyMac doesn't sell it to the title company, what happens to the other escrow payments (agents, HOA, taxes paid, etc.) and my costs of moving and renovating?
Sean, may I dare ask how long it took the title companies to buy the properties from you?
I’m in the middle of unpacking and remodeling and don't know if I should continue with these plans or live out of boxes until this is settled. I hope it's not a long process. =P.
OK, I'm beginning to smell the rat... IndyMac knew they had a tough property to sell after foreclosure, with two years of delinquent HOAs and back taxes owed. So, they approved the short sale, splitting the payoff of the liens between the parties. Then, they reject their payoff on the day of the close, leaving the property clear to sell after my escrow pays off the other liens. Seven weeks later, they foreclose my property after I've renovated it. Of course, it didn't help that I had a title company incompetent enough to not notice the payoff was returned until I reported a foreclosure notice on my door. Short sale buyers beware!!!
I hope you were able to work things out.
What title company did you use? So I'll know to avoid it.
Thanks!
I have kind of the same problem i bought a house in april2010 but i found out because of my friend just told me the bank returned the money to the title company and i am paying a mortgage to chase but bank of america returned de money after two months the realtor says they talked to the bank and are going to do short sale again but i don't know how because in the county is under my name and please i would like to know what is happening with your case. the bank still owned my house not foreclosure yet .and i'm paying the mortgage to chase so i don't know what to do. the company title think that i don't know anything yet.
Your owners title policy will take care of this and represent you. This is a classic reason why it is so important to purchase an owners policy. Continue to make your payments but feel free to contact the title company for additional info on the case. As long as you have the title policy then you are protected.
thanks, for your comment it helps me a lot and i'm going to do what you said since they are going to make the process of a short sale again.
Bargain Hunter, Daniela;
Was this ever resolved!? After I found out about these problems, I contacted the Mercury News Real Estate beat writer and they are very interested in writing a feature on it! It might help put your lenders to shame if the story had legs and goes viral.
Let me know if you want to talk to Mercury News folks.
I am going through the same thing, I am a frist time buyer, I bought a short sale on March 17, 2011 with a conventional loan, 20% down for myself as a primary residence. My realtor contacted me yesterday afternoon and informed me that my escrow check was returned from Bank of America, twice. I have had the home for two weeks and have had a ton of demo done to the master bedrrom and bath. Not to mention the clean up that was left from the previous owners. I AM IN COMPLETE SHOCK. Apparently the "negotiator" that I was forced to pay $10,000 to (my realtor payed him $3000 of that) told the escrow company to go ahead and close escrow but the bank had told him not to one day before escrow closed. DO I STOP RENOVATIONS, GET A LAWYER ? I own the home, its registered in my name in every way possible. CAN THE BANK TAKE IT BACK? Please respond asap
I am going through the same thing, I bought a short sale on March 17, 2010 with a conventional loan, 20% down. My realtor contacted me yesterday afternoon and informed me that my escrow check was returned from Bank of America, twice. I have had the home for two weeks and have had a ton of demo done to the master bedrrom and bath. Not to mention the clean up that was left from the previous owners. I AM IN COMPLETE SHOCK. Apparently the negotiator that I was forced to pay $10,000 to (my realtor payed him $3000 of that) told the escrow company to go ahead and close escrow but the bank had told him not to one day before escrow closed. DO I STOP RENOVATIONS? I own the home, its registered in my name in every way possible. CAN THE BANK TAKE IT BACK? Please respond asap
ps: of couse Bank of America is not getting back to anyone, the negotiator has gone as far as posting the situation to twitter to get their attention
Hi Jessica,
Provided you have an owners title policy then you should be in good shape. This is a prime example of why you would not want to purchase a short sale or any property in foreclosure without getting an owners policy. Make sure your title company knows. That said, you may want to stop any additional renovations until this can get worked out. Provided you have an owners policy you should either get clear title to the property or your money refunded to you including the repairs. Keep us posted on how this works out.
Just one thing I want to add to Michelle's post -- if the lender didn't approve the short sale, and did not accept the payoff from the title co. then the sale of the home to you was never completed, and although you do own the home (the prior owner gave you their interest), it is not free and clear of their mortgage. The lender can only take it back by foreclosing on the loan and forcing payment of the remainder. Your title company has insured that it was paid off. As such your title company will either have to pay them off, or negotiate with you to settle your insurance claim. As Michelle said, you simply need to open a claim against your title insurance policy.. they should handle the rest.
Thanks Sean and Michelle,
I have since spoken with my title insurance co. and opened a claim. I will allow the contractors to finish up my bathroom so that I can proceed with moving in next week. Everyone I have spoken to says they "have never heard of anything like this happen" so I dont have any answers as of yet. Just piece of mind that I have an owners title policy b/c it seems it is their problem to fix at this point along with the negotiator (who I paied $10,000 to) b/c I found out he did not pass along the correct information from BofA to the title co.
p.s.: If anyone knows anyone from BANK OF AMERICA tell them to answer the phone! All of my people have been trying to get a hold of them but are getting no where!
A buyer should not need to pay their Realtor, in fact such a payment not disclosed to the lender could be a problem. Also, if the negotiator is not a licensed Realtor or attorney, they may have violated the law by providing such a service.
Shouldn't impact your claim - but you might want to make sure this "negotiator" is properly licensed and operating within the laws in your state and nationally. And regardless, it is probably best for you to work directly with the title co from this point forward. They should be able to take care of you from here.
HI Jessica,
Sadly, this is not the first time we have heard this story. This is why so many professional Realtors subscribe to ForeclosureRadar. Even after closing on a short sale many of our Realtors will continue to track the foreclosure of the property to make sure that the sale is officially canceled.
Got in contact with a "Customer Advocate" from Bank of America, after I sent a mass email to the head's of Band of America last week. She actually worked in the offices of the president and CEO in Texas but she told me absolutely nothing she said because I was "not a customer of Bank of America"; she also told me they would not communicate w/ my title co. or realtors. Why would they refuse to talk with us, how will anything get resolved if we have no communication? I informed the title co. and have gotten nothing so far. Still no idea what will happen with my new home or why Bank of America returned my escrow check in the frist place! I dont know why there doing this, they agreed to everything and the day of escrow decided to send back my check. Im so confused. Seeing an attorney tomorrow :(
Jessica - I'm confused. Did you close escrow or not? You saw above they sent your "escrow check" back. If there were still funds in escrow then the sale never closed, and you likely wouldn't have title insurance.
Were the funds you deposited into escrow used, or were they returned? And did your new loan ever fund, and are you making payments?
Hi Sean,
I have heard from many of my title company friends and they all say that the banks require them to send a physical check for payoff on short sales and that they will not accept a wire of the payoff funds. Interesting isn't it??
Escrow closed, days later the check was sent back w/ no explanation. Yes the sale did close, I do have title insurance with Fidelity and they have been working hard to get a response from Bank of America. The funds are sitting in escrow, they have not been returned to me. My new loan funded, I have made my first two mortgage payments. It is on public record that I am the owner.
This is a situation, no one has ever heard of. Very frustrating. Im thinking about using the media to get my story heard and information out there.
This is what my title co. has told me regarding this issue:
4. Our Choices When We Learn Of A Claim
a. After We receive Your notice, or otherwise learn, of a claim that is covered by this Policy, Our choices include one or more of the following:
(1) Pay the claim.
(2) Negotiate a settlement.
(3) Bring or defend a legal action related to the claim.
(4) Pay You the amount required by this Policy;”
Hi Jessica,
This is probably not going to be resolved quickly. You can rest assured that your title company will represent you against BofA. Keep in mind that they are an insurance company so their interest is in resolving the matter since they have insured your title to this property. You are wise to seek legal counsel on this matter. Obviously you want the property and are not willing to "settle" the claim for anything less. This is why you would need an attorney representing you in this matter.
I wish this was the first time I had heard of this happening but I am afraid you are in good company.
Actually, I've heard of it lots. Not new at all. I've personally purchased multiple foreclosures at the courthouse steps that had previously "closed" escrow. In each case the title company purchased the house from me in order to protect their policy holder (the new owner), and then I imagine the title co worked with the foreclosing lender to resolve the financial issues.
At the end of the day, these cases are the reason why title insurance exists. Your purchase is likely invalid since the lender didn't accept the payoff, but you are insured, and you now just need to work with the title company to get to a settlement.
Ok, I have now talked to a 3 real-estate attorneys. All said they had never heard of escrow closing & on the day of closing the short sellers bank backing out of the deal. They did say that these types of things take months to be resolved, to continue my construction, and the title company (Fidelity) should fix this. If not, I have the re lawers on speed dial..just dont think I need them yet ($400/hr +$1900 retainers fee omg I shoulda went to law school! RN's are so underpaid!!)
We were ready to sign loan docs to close escrow when I was notified by my realtor that the bank that accepted our offer on a short sale property sold the loan to a new bank! Our offer and contract is with the old bank but my realtor is telling me that we need to make an offer to the new bank and have it accepted to proceed with our purchase. We were less than a week away from closing escrow, where do we go from here? We have insurance in place and a signed lease for the tenants that were going to rent this property.
HI Ed,
A short sale is never a done deal until the escrow is closed. The new lender may be willing to work with you but there will be additional delays.
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