buying a forclosed home and the title is in the owners name still not the banks

Asked by Ashley, Maryland Fri Feb 5, 2010

seller. Yesterday we were told the home is forclosed and bank owned. However because the title is still in the old owners name his name is listed on all of our paperwork. The home was forclosed on 8 months ago. Im not understanding why the title and everything isnt in the banks name. Its been a long process getting to this point on this home and im worried about title issues now that i know we are dealing with a forclosure, especially since its listed as being sold by the owner. Is there any good reason why the title is still in the owners name and not the banks?

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Vladimir Kats, Agent, Baltimore, MD
Fri Feb 5, 2010
If I understand the situation correctly, the home was listed as if it was being sold by an owner with no indication that it was an REO property. Is that the case? If so, it could have been simply a mistake of the listing agent. Many of them are so swamped with bank owned properties that putting in accurate information into MLS is simply not a priority.... unfortunately.

Now to get to the answer of your question regarding the actual ownership. Believe it or not, but some REO sellers actually list their properties before they have actual posession of the property. I do a large volume of REO sales with my buyers and I frequently see that in their bank addenda they put clauses such as "offer subject to final court ratification" or something to that effect. I am involved right now in one where I just got an email from seller's rep telling us that court ratification was delayed and we need to extend settlement by a month.

Furthermore, most folks do not realize that legal ownership of property actually transfers upon ratification of the contract or, in REO case, at the foreclosure auction.

So yes, the bank can sell the property even though the deed with transfer from previous owner to the bank is not recorded. In most cases that I've been involved in, the ownership from previous owner to trustee to the bank then to new owner happen in one transaction (when you buy the home). I have also been involved in cases where the bank, after a couple of months, simply tells the buyer that the foreclosure proceedings were not done correctly and the property can not be sold. That has happend to me twice in the last 3 years.

Bottom line Ashley.... Please make sure that you're working with competent individuals - your agent and your title co. REO deals are a lot more complicated then they seem and not everyone is equipped to handle them. I am not saying this to scare you at all. I am pretty sure that you'll be just fine. Lastly, I am not an attorney and if you feel something is seriously amiss, you should seek legal counsel immediately since I am sure you have some money at stake not to mention time.

I would be happy to answer any of your subsequent questions. Good luck!
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Ashley, Home Buyer, Maryland
Sat Feb 6, 2010
Thanks for the answers, yes i have a real estate agent. He is unsure why the bank doesnt have the title in their name. He says he has a few theories but he isnt sure. I did ask if their was a lien on the title and he said no. To clairfy my post, the home is listed by a real estate company and no where on the listing did it say it was a forclosure. We put in our offer and everything we signed had a mans name listed as the seller. Our offer was accepted and we had to sign more papers at which time our agent became aware that this is a forclosed home owned by a bank but everything up until the point after our offer was accepted was in the old owners name because the title is still in his name. Our agent said the home was forclosed on 8 months ago.
This bank is a big bank that i have never heard of and according to my agent they put a few clauses in our contract that he didnt like. One of which was we have to use their title agency company, our agent fought that and the bank took that out , they also have a clause that they can cancel our contract at anytime for any reason. The bank refuses to take that clause out.
It has been one thing after another with this house but my husband and i really want it and are taking the gamble, the only big issue i have is the title not being in the banks name. It's not making sense and our agent doesnt seem to get it either. We just signed the last of the papers yesterday and are now moving forward with our inspections.
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Keith Manson-…, , Milwaukee, WI
Sat Feb 6, 2010
I would be concerned too. It is unclear when you made the offer and when the bank became the owner. The title company should be able to tell you who the owner is currently. If this is a FHA or Va loan, there can be a delay in transfering the interest to the party that will be selling it (because the bank needs to file a claim before title transfers).

If something does not seem right, it most likely is not. Take what ever action you need to take to ensure the party selling you the property has the authority to sell the property.

Keith Manson
First Weber Group
Certifed Distressed Property Expert'
Metro Milwaukee
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Anna M Brocco, Agent, Williston Park, NY
Fri Feb 5, 2010
It's unclear if you signed the paperwork with the owner or with the bank's agent and was there any escrow money involved--Protect yourself and seek the advice of an attorney specializing in real estate--most professionals do offer a free consultation--
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Robert McArt…, Agent, Fallston, MD
Fri Feb 5, 2010
This sounds like a difficult situation, one that requires the Title Attorney's involvement as well as the Trustee's that handled the foreclosure auction. Are you represented by a Real Estate Agent? If so, what do they recommend? I would start with the Attorney handling the closing. You certainly want Title Insurance on this one!
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Ashley, Home Buyer, Maryland
Fri Feb 5, 2010
im not sure why all of my question didnt show. The top part has been cut off. It should start by saying my husband and i are in the process of buying a home. It has been listed as sold by the owner. Our offer was accepted and the sellers name is on all of our paper work. After signing more papers yesterday we were just told that its a forclosure and that a bank owns it. Im confused as to why it wasnt listed as an REO property and why the title is still in the old owners name. I dont want to pay all the money for inspections and so on just to find out the bank doenst have the title free and clear. Can they legally sell a home without having the title?
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