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Seller transferred title to another person leaving mortgage in place

Posted by Teresa Keeler on January 3, 2012 at 6:39am in Short Sale Discussions

I am working on a short sale, and when I did my preliminary title search, I was surprised to learn that the seller had previously transferred title to another person doing a "subject to" existing mortgage closing.  Now I have a siutation where the seller is not the borrower.

 

How do I reconcile this with the approval letter and get a short sale completed when the seller and borrower are two different people?  Does the fact that title was transferred "subject to" the existing mortgage leave the other seller subjected to the terms of the approval letter as if he were the actualy borrower?

 

I always get the fun ones.  :)

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Replies

  • Michael Ackerman, CRS, SFR, January 8, 2012 at 6:38am

    Teresa,

     

    There is a simple reason why I pull AND READ the preliminary title report before putting the property on the market, before accepting an offer and before submitting anything to the bank.  It is with diligence we navigate these treacherous waters despite the sirens of the Lorelei calling us towards the rocks.  You're boat may have scraped up on a big one.

     

    Now that you're here, I feel for you.  You've read the remarks, LAWYER UP and be prepared to be squeezed to get out of the situation and go make money on another deal.  This one sounds like its a shipwreck on the river and the tax collectors and robber barons haven't even yet arrived!

     

    Good luck!

     

  • Paul Antonelli January 8, 2012 at 3:25am

    Bryan is correct here. Your client probably knows what they did but dont want to admit it. They probably answered one of those rip-off ads, "Sell Yous Home and put $5000 in Your Pocket". I've had it happen to one of my clients. Have your client Run and not walk to their attorney.

  • Bryant Tutas January 8, 2012 at 1:39am

    Going out in the newsletter today

  • Maria Cristina Esquibel January 6, 2012 at 4:08am

    Does anyone got a Bofa short sale  with those $20/$30k seller incentive? Who qualify for that incentive?

    I got two with Chase but never with Bofa. I have a potential short sale with this lender and the seller wants to know if he will get some incentive....

    Thanks

    • Paul Antonelli > Maria Cristina Esquibel January 8, 2012 at 3:28am

      I just had another approved for the New BOA Florida Incentive. On my PreLinHud I only put down the HAFA $3000. BOA Called me last week and said; the seller is allowed to get $7600 more don't they want it?  I asked them "How was I to know how much BOA was going to allow when it says "Could" qualify for between $5000 to $20,000"? I couldn't get a straight answer on that. Yet.

  • Thom Colby CA Brkr 888-391-5245 January 3, 2012 at 2:12pm

     

    Lawyer-up ! 

     

    Has anyone looked at the Deed of Trust ?  Does it have a "Due on Sale" clause?

     

    • Smitty > Thom Colby CA Brkr 888-391-5245 January 3, 2012 at 2:29pm

      GREAT point Thom.   Most do have a due on sale clause.  I agree with everyone here...get a lawyer.

      • Thom Colby CA Brkr 888-391-5245 > Smitty January 3, 2012 at 2:40pm

        Thanks Smitty - this one sounds to me like a flip-gone-bad. 

         

        Teresa, best course is to be up-front with the lender - Hide Nothing / Disclose Everything you know.  Your deal might "go south" but you'll come out clean.  You better chat with an attorney and make sure your file is impeccable and your notes are extensive.

  • Smitty January 3, 2012 at 8:00am

    I would say I'm the most liberal on this site when it comes to investors and short sales and I personally would RUN from a subject to deal.  They NEVER benefit the homeowner.  What did this buyer do to get the deed?  I'd ask the previous seller for a copy of the contract and find out what happens if the investor didn't follow through on his end of the deal.  It's likely the previous allowed this to happen because the investor was going to pay the mortgage and now look what happened.  Subject to deals are the WORST!! They don't help the homeowner in any way.

     

    Aside from my personal opinion above, the previous seller is going to have to fill out all of the paperwork but cannot sign the P&S.  The P&S is for who is on the deed.  I would seriously tell the "previous seller" to get a lawyer if they can afford one.  The "investor's lawyer" is clueless too.  He can "think" all he wants that his client should get some funds at closing, but NOPE, he is going to be treated by the lender as any defaulting homeowner.

    • Teresa Keeler > Smitty January 3, 2012 at 8:54am

      OK here is more information....she deeded the property to an investor who had a "pocket buyer" for the property once the short sale was approved.  The investor recorded the deed by paying both sides of the transfer tax totalling 12K. The investor also paid for repairs made to the property totalling 18K. The investor took title to avoid the end buyer's mortgage seasoning issue and to prevent future liens from showing up against the previous seller while he did his rehab work.

       

      Just to complicate things.

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