Seller transferred title to another person leaving mortgage in place

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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Permalink Reply by Jeff Payne on January 3, 2012 at 6:52am
What does the person that recieved title to the property say? What does the borrower say? Will the person that recieved title deed it back to the actualy borrower?
Permalink Reply by Teresa Keeler on January 3, 2012 at 7:06am

No they will not deed it back - I believe it was an investor who got involved some time ago - and now the property is a short sale.  The investor's attorney feels that he should not be subjected to the limitations of the borrower, i.e. - the "new" seller can receive funds at closing whereas the borrower who signed the note cannot.

 

I'm thinking the seller needs an attorney. I am also thinking of asking someone I use at Chase for escalations to do me a favor and tell me how to handle this.

Permalink Reply by Smitty on 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.

Permalink Reply by Teresa Keeler on 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.

Permalink Reply by Smitty on January 3, 2012 at 9:25am

There is a right way to flip a short sale and a wrong way.  This screams wrong.  Where is the pocket buyer?  The lender is going to want this listed so has enough work been done to the property for it to be sold effectively?  This investor better do the right thing and help with this sale.  Where are all the contracts and agreements for this deal? I would start having the "previous seller" take them to a lawyer and review immediately.  What a nightmare. 

Are you saying they did a subject to deal to avoid seasoning?  There are PLENTY of lenders out there who have no seasoning.  This guy mucked this one up good.  I think you can salvage it, but you need to know exactly what happened and how to go forward.

Permalink Reply by Bryant Tutas on January 3, 2012 at 9:27am

Your seller needs an attorney. They cannot sell the property with out the permission on the investor who has a recorded deed. There's really nothing you can do until the seller sorts out ownership.

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on January 3, 2012 at 2:12pm

 

Lawyer-up ! 

 

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

 

Permalink Reply by Smitty on 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.

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on 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.

Permalink Reply by Maria Cristina Esquibel on 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

Permalink Reply by Paul Antonelli on 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.

Permalink Reply by Bryant Tutas on January 8, 2012 at 1:39am

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