BoA Sueing Title Insurance
I was in the process of getting a Short Sale approved by BoA when I was informed on 11/9/10 by the lawyer handling the case that BoA thought they were in 1st place as a mortgage holder only to find out that they are actually in 2nd place and is a subordinate loan holder. They told my lawyer that their Title Insurance Policy shows that they are the primay note holder however, the county records indicate that SBA was recorded first and BoA was recorded 2nd. BoA has canceled the Short Sale and has turned the file over to their legal department for review or to file a claim with the Title Insurance Company for a "defective" title because the title stated they were in 1st place. My question is why BoA does not complete the Short Sale and go after the Title company for the difference? Is there anything I can do to get BoA to reopen the Short Sale?
Replies to This Discussion
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Permalink Reply by Alan Remigio on
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Can't do that. I'm not a lawyer, but the first has to allow the 2nd to either, proceed with compensation to the 1st (which is normally full value, if any) or have the 2nd buy the 1st note (which may not happen if this is part of an SBA collateral on a larger loan value). The easiest route and the route to maximum compensation is the title insurance claim. It may take some time and if I am the SBA I won't spend any money correcting this since I am in the first position where it counts, on record, mistake or not.
Bottom line, this is not going to be a short sale. -
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Permalink Reply by Bill Garrett on
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I have essentially the same situation on one of my files. BAC thought they were in 1st postition, but it turns out they are behind a small equity line. It was not supposed to have happened that way, of course, but someone failed to get the old equity line closed. In any event, once I convinced the Equator negotiator that they were truly in 2nd place, he acknowledged he didn't really understand these title issues, quickly closed the short sale file and presumably referred the whole matter to the BAC legal department.
I have not heard anything more on this file, and would be very curious if anyone has had success getting BAC to review and approve a short sale under these circumstances. My instinct is that the file will forever wallow in the BAC swamp behind the curtain until the equity line (in 1st postition) proceeds with a foreclosure and gets paid in full. BAC will then gobble the foreclosure residue and also perhaps pursue a claim against the title company.
Punchline is our short selling homeowners are left without an option to sell short. Anyone have a different outcome? -
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Permalink Reply by joe beauchamp on
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It doesn't take much to realize that this will just go to legal at BOA. The negotiator is incented to get files "done" asap. He had an out here - instead of dragging out forever, it has an anomaly so, like a hot potato, went to legal - he did his job - done. And on to easier deals.
You **might** find an interesting outcome by going through a forensic audit of the property. Something is wrong here - the forensic audit could put the owners in a much better position than they currently are. (Maybe the loan was incorrectly handled and they can just back out of it as if the loan never occurred because the sale was inappropriately executed - no foul, the bank/title co erred. Maybe something that can cause the bank to live with 1/3 the mortgage payment - who knows?)
On the other hand, until someone can show "who's on first", there cannot be a foreclosure - that can be cool for them... ;-) -
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