Foreclosure in Seattle>Question Details

bak0310, Home Buyer in Seattle, WA

REO Clouded Title

Asked by bak0310, Seattle, WA Tue Jun 19, 2012

We placed an offer on an REO and our offer got accepted. Then we get a call from the listing agent saying he got an email stating there is a problem with the title and they have to pull it from the market right now. Once they clear the problem it will come back to us however I am wondering what this means. Can the title be cleared and ok'd for sale? What happened to the title that they have to pull the property off the market? How long will it take?

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Answers

9
Ken Urman’s answer
There are many possibilities. In this case the delay may have been related to the method and procedure of foreclosure. Occasionally with REO properties the seller holds up the transaction to audit title. With robo signings and recent settlements many banks (lenders) are being very careful. Often at the last minute they send files back to review of the steps that led to the property being taken back.. As an REO listing agent I've personally have had closings held for weeks after original close date waiting for files to be audited. In all the cases I've experienced buyers were eventually able to close and received clear titles.
0 votes Thank Flag Link Tue Jul 31, 2012
Solutions to a cloud on title can vary depending on the source of the problem and what the prevailing laws are in your state. Typical REO title clouds can be previous tax sales which the bank was unaware of, errors in the original recorded mortgage documents, etc. When easy remedies are not available, a quiet title action may be needed. In SC, this takes approx. 3 - 6 months and costs approximately $1,200 if no problems arise. I would suggest you (a) get legal counsel, and (b) speak directly with the attorney (or title company) doing the title work to get a reasonable estimate of the time delay involved, then try to extend your closing date on the purchase contract with the bank to accomodate clearing the title. Many contracts give the Buyer the option to stay in the deal when the Seller is obligated to provide marketable title and the title is at issue.

I am working with a client on a 25-lot REO purchase that has been extended four times (original closing date was March, 2012) and were still awaiting title to clear. The buyer is patient and willing to wait to have clear title to the properties, especially given the attractive purchase price at auction.
0 votes Thank Flag Link Thu Jul 26, 2012
Hi Greg,
I'm curious how long this transaction did end up taking? We've been under contract since the first week of January for a REO home. Its now the middle of April and we just received an email saying that it's going to take a very long time to resolve the issues with the title. We're trying to be patient for the house that we really want, but I'm trying to get a hint at what we're dealing with.
Flag Sun Apr 21, 2013
The CLOUD probably was found by the Title Company; YOUR Title Company:
The Title company works bi-laterally for the Buyer and the Seller.

Go in to the Title Company and ask for your Escrow Officer and ask her (probably a her) what the problem is and how long it take to clear it.

Good luck and may God bless
0 votes Thank Flag Link Thu Jul 26, 2012
Look up Dave Krieger's book, Clouded Titles, which investigated and now has case law that shows the title clearing company, MERS, is a fraudulent agency with a "wink and nod" authority from the Justice Dept and Atty General Eric Holder. People with paid off mortgages have been foreclosed on!! Mr. Krieger's law firm shows how to find whether there are inconsistencies that point to fraud on your title, and if so, how to fight it and win. Go to www(dot)cloudedtitles(dot)com

I hope this helps. Spread the word!! We need to fight back!!

JPSerino
lic NJ home inspector since 1993
http://www.JSerinoInspections.com
0 votes Thank Flag Link Thu Jul 26, 2012
There are many possibilities. In this case the delay may have been related to the method and procedure of foreclosure. Occasionally with REO properties the seller holds up the transaction to audit title. With robo signings and recent settlements many banks (lenders) are being very careful. Often at the last minute they send files back to review of the steps that led to the property being taken back.. As an REO listing agent I've personally have had closings held for weeks after original close date waiting for files to be audited. In all the cases I've experienced buyers were eventually able to close and received clear titles.
0 votes Thank Flag Link Tue Jun 19, 2012
Although I do not have all the details, I'm somewhat surprised a seller would want (or need) to cancel your sale and take the property off the market. Most title issues can be resolved with a little patience and cooperation by all parties.

While you are still in-contract, ask your agent to provide you with a copy of the title report. Your agent should review the title report with you. Your agent should also discuss the title issues with the listing agent. Your agent can also contact the title company that prepared the title report if there are questions.

If you agree to cancel the sale, then you have no contract and nothing that entitles you to any preferential treatment when the title issue is resolved and the property is put up for sale. With rising property values, and more buyers in the market, there's a good chance the property you have under contract will sell for a higher price in the future. Why not offer to extend the closing date to allow for the title issues to be resolved? That seems like a better solution in your position.

Good luck.
0 votes Thank Flag Link Tue Jun 19, 2012
Great advice... Thanks.
Flag Sun Jan 20, 2013
Bak,
Both of the previous responses are good. I second Kary's suggestion for the "homeowners" policy, even if you are requested to pay the difference. If you were planning on financing the home, your loan could not be approved without all Title issues being cleared, otherwise you could be responsible for liens from previous contractors, HOA's or other creditors. It is clearly in your interest to get these resolved before you move forward.
I suggest you keep one eye on this property and the other considering other options on the market. If the issue resolves quickly, you will be back on track, if not; you could miss out on some good opportunities.
0 votes Thank Flag Link Tue Jun 19, 2012
Clouded titles are fairly common and can be easy (in a few days) or difficult (in a few months/years) to clear.

Get a copy of the title to determined the problems severity and how long it will take to clear.

Rember don't buy anything without clear title or you are taking on a legal expense down the road.
They most likely pulled the property because they felt it would be a longer period to repair the clouded title.

Eventually the title will get cleared, but is it worth the wait? Only you know.
good luck
David Marcoe
0 votes Thank Flag Link Tue Jun 19, 2012
This could be any number of things, and how long it will take to fix could be anywhere from 1 week to 1 year.

On REOs I recommend paying the extra premium to get the "homeowner's" level of title insurance. That would be especially prudent where here there are already issues.
0 votes Thank Flag Link Tue Jun 19, 2012
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