Replies to This Discussion

Permalink Reply by Chad Gelsinger on January 28, 2014 at 7:42am

Shannon, I would have a few questions before commenting. Is the surviving spouse on the deed as an owner of the property? (sounds like it is a 3rd Party owner-how did they get possession?) Was there an estate opened for the deceased spouse? Is the 1st lien being paid in full OR are you short with them? What type of loan is the 1st? (FHA/CONV/Fannie/Freddie)

Just a note, the BK filing could offer protection from a potential lawsuit, but it will not release the mortgage liens and allow you to complete a Short Sale(at least that is how it works in PA). 

Permalink Reply by Shannon Renner on January 28, 2014 at 8:11am

Hi CHad and thanks for your time.  The widow is not on title....the 3rd party investor is (he mistakenly foreclosed thinking he would own the property himself but he and his estate are now being named in the judicial foreclosure lawsuit).  The 3rd party is giving up his rights to title and has agreed to participate in the short sale.  Can't seem to get the 1st to understand that there is no need to have the widow on title at this point.  There is no estate, no probate, no will, etc.  The widow has about $1000 to her name and the home has been vacant for over 5 years while Wells has tried to decide what to do.

I almost had the 1st approval but then they wanted the 2nd to release their lien (owe about $70k) and said I had to get the 2nd's approval to do so and only gave me 10 days to do it.  Couldn't get it done and so 1st kicked file out and is making me start over.  Now I am back at the same spot I was a year ago trying to prove chain of title.  I could understand this requirement if the 3rd party investor did not have title now.  But he does so what does it matter if the widow was never on the note nor title??

Conventional note btw.  Any ideas on how to get the timelines in order for the 2nd to approve what they want and the 1st to give more time for that approval?  I just spoke with the attorney for the 1st who is wanting to know if she should move forward with the judicial foreclosure.  She is also trying to help but doesn't know how to get around the timelines issue.

 

Permalink Reply by Chad Gelsinger on January 28, 2014 at 8:48am

I have tried to complete these in the past and WF will NOT allow the Short Sale to happen without an estate. I spent several weeks with their legal office...Their view was since the surviving spouse is not on the note, legally they could not discuss the file with anyone and there was nobody legally allowed to sign the Short Sale docs. Jim's response is accurate and is the same info I have received in the past. I no longer accept these types of situations, because there is nothing we can do. 

Since someone else is now on title/deed, it will cause additional time/money for WF to foreclose. For a Short Sale, it does not matter who is on title/deed, as long as they are willing to transfer ownership when the time comes. (In PA, if a 3rd Lienholder files for foreclosure, they can obtain title to the property, but the liens above are still on record against the collateral (property). In essence, the investor now owns a property that is encumbered by other liens. Again in PA, the investor would not have any financial liability to the 1st and 2nd, but either of them could foreclose since the payments are not being paid.)

If it makes financial sense to open an estate, open the estate. In PA, I have seen probate costs anywhere from $2000-4000. In addition to the opening costs, there could be estate taxes that need to be filed depending on the financial status of the "estate". I'm not sure if your surviving spouse is eligible to file BK and what the costs would be to go that route, but it may be less money. In PA Ch 7 costs are $1200-2000 and Ch 13 costs are $4500-5000. I would suggest talking with an attorney.

Unfortunately you may be stuck with a file that cannot close. IF the loan is CONV with no Fannie/Freddie, send me an email and I can provide you with a WF contact that may be able to give some additional info/assistance. Email: Chad at MYclosing.com 

Permalink Reply by Jim McCormack on January 28, 2014 at 7:59am

I had the same type of situation and 2 attorneys told me that the widow would have to open probate to get title of the property.

Permalink Reply by Shannon Renner on January 28, 2014 at 8:15am

Hi Jim.....Yes i can understand that if the widow had rights to the property.  She doesn't because the 3rd party investor foreclosed on it so he is on title now.  But he and his estate were named in the judicial foreclosure lawsuit so he wants no part of the property and has agreed to let me short sale it.  I can't seem to get Well's 1st and 2nd to get their timelines to coincide with each other.  2nd needs about 15-20 days for an approval (widow is on that note so it will be easier) but then 1st takes up a ton of time as I have to start over and the hangup is always that chain of title thing.  I had them understanding it this last time and it appeared they were accepting it, but they only gave me 10 days to secure the lien release from the 2nd.  2nd would not abide so 1st threw entire file out.

Permalink Reply by Jim McCormack on January 28, 2014 at 8:16am

Just get the 3rd lien holder and now title owner to deed it back to the widow.  Also, has the widow filed bankruptcy?  It sounds like the best option for her.