Hello to all SSS...I need some help with FHA Short Sales in general and I'm sure we are not the only ones seeing this issue arise. The scenario is happening over and over again with Bank of America and Wells Fargo. The Properties have an FHA Loan and the Servicers (Bank of America and/or Wells Fargo) will not allow the file to be opened because there is an outstanding Lien or Judgment. BEFORE submitting any information to the Servicers, we clear title in an effort to save time. In PA, many of these judgments can be simply cleared due to our laws, but neither of these lenders will proceed unless the judgment is removed or reasonable proof can show removal from the record books.

WF has allowed the following as reasonable proof: 1) Lien Release 2) Settlement Letter 3) Payoff Statement 4) Demand Letter 5) No Lien Affidavit-Not Me Affidavit. BOA allows: 1) Judgment Satisfaction and Title Commitment (from their in house title) reflecting matter is resolved.

Our most recent title issue is a credit card judgment on record for $5,200 in wife's name only. Title to property is in both husband/wife and therefore the judgment does not affect the sale of the property (as long as they are still both alive and married to each other).

BOA REFUSES to allow the Short Sale to proceed with the judgment showing on record (again, it does cannot legally attach to the property at this time). We have given them the state law/statutes showing it can be cleared, title reports, and a title commitment...NONE OF WHICH are acceptable to Bank of America. We have escalated to the VP levels of the Loss Mitigation Department. HUD/DEVAL has given these Servicers free reign when it comes to title reports.

It seems as though Bank of America and Wells Fargo are NOT concerned with clearing title to see what is actually going to be a problem. They both simply read what is showing up on record.  

How have you worked through these types of issues, where the Servicer is misinformed on how liens/judgments affect title? I believe we all need to work together on this one OR eliminate all FHA Short Sale with any defect on title, be it real or imaginary. Thanks for your input, Chad.

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Hi Brian, thanks for your input. I would agree with you that each state is different. The million dollar question: How do we get the Short Sale Lenders or their Title Departments to recognize this fact? It seems as though either; they are not current on the laws affecting title in each state or they are choosing to ignore them. Chad

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