How to navigate REO buying hell. Currently stuck and do not know what the hold up is.

Question

I think I am involved in a crazy REO transaction. I get that they can take a while. I get that the ppl managing the property and the transaction are not in this business and do not care. I get that I am a "pimple on an elephant ass" in that the asset management co/bank is a large entity that has the right hand doing stuff the left does not know about. But, is it usual that when you are buying an REO you can be left i the dark for long periods of time? Is it usual that you get info that does not add up and or is "cloudy?"

Can anyone guide me to a source of info on REO sales and the types of conflicts that usually come up and why?

I can appreciate that I am trying to make sense from the senseless but thought I have nothing to lose but my time to type this up and post it here. Maybe someone has info that would be helpful bc they were involved in a similar transaction?

Id cut bait (which I can do bc we now have a violated contract due to the Asset management co letting it fall apart) but I really like the home and want to buy it, fix it up (it needs easily 250k worth of work) to live in as our primary and there just is not many homes in the area I want to buy in.

It is an "ok" deal in the sense of how much the house is + remodeling will = what I could turn around and sell it for in this market. This is not a great bargain.

Im TRYING to buy an REO property in an expensive golf course community in Boca Raton FL. The home has been foreclosed on 2x in the recent past. Once in 2022 and then again in Jan 2023. The home is in a costly golf course country club community in Boca Raton. Also, the HOA DEMANDS payment of 150k as either a "membership fee" (for use of the country club, golf course and other amenities) or they call it a "capital investment" (the right to charge this in their bylaws and has been confirmed by our attorney) in order to own a property in the development.

The estoppel from HOA came back with 177k we owe (we were expecting this) and 190k for the Asset management co/"bank" They were NOT expecting

History of title (roughly) -Im lucky this is in a county where docs are easily available online

1987 -The development built the home. Mr. Owner bought the home

2007- Mr.Owner puts Mrs. Owner on the title

2010- Mr and Mrs. Owner take out a 2nd on their home. This loan appears to be related to HUD. Very likely a reverse mortgage.

2011 -Mr. Owner died, but nothing was done with the title bc Mrs. Owner was already on the title.

2015-Mrs. Owner falls hopelessly behind on the 47k-a-year HOA dues. HOA moves forward to foreclose but I assume in some way Mrs. Owner dodged a bullet for a few more years

2020- Asset Management Co forecloses on the home

2022 -January -the HOA;Mrs Owner vs Mrs Owner;the HOA lawsuit happens and somehow some guy (neighbors, HOA and a couple of docs indicated he was a young guy that wanted to "flip" the house but was in WAY over his head) ends up on title as a result. We will call him Young Clueless Guy (YCG)

mid 2022 -YCG alls behind on bog HOA dues and HOA moves to lien, foreclose, etc. It is not clear how the HOA works with whatever Asset manager co owns/has interest but in the docs, they seem to be "in bed" HOUSE HAS CLOUDY TITLE

January 2023- Asset Management Co "takes back title" of the house by filing ownership of title but there are NO foreclosure efforts filed with YCG name. It seems like he walked away but there is nothing in writing that is filed with the county and or court to remove him officially

As it stands now, the home is owned by an asset management company that, after acquiring it on Jan 23, 2023, turned around and listed it on the MLS for sale.

There were several bids on the home; the seller agent did a final and best, and I won. We had a 30-day closing date that all parties were cruising along and pretty compliant given the complexity of these cases. My first closing date was Feb 27, but that has come and gone.

The snag holding up closing ended up being the estoppel the HOA returned with. We (my husband and I) were financially prepared to pay not only the HOA fees but a "buy-in" (in our case it is called a membership fee and gives us golf and country club membership privileges too) of 150k

Apparently, the seller/asset management co was not prepared to be charged this amount also when they sold the home but the HOA is demanding it. The HOA has a legal right to do this and my husband and hired an attorney that got the "bank" talking to the HOA.

The "bank" is stalling and we have NO IDEA WHY. They (Bank) have claimed that they are waiting for HUD-FHA to confirm that their company will be reimbursed but that should not hold up my deal AND I called HUD/FHA and this property address AND FHA case # (that I found on an old document) have no active involvement with HUD/FHA. HUD/FHA has confirmed this not once but twice and has given it to me in writing.

The seller agent refuses to give our attorney the Asset mngr 's info. No email or phone number. Ppl at the terrible title company that the bank chose (Solidifi=garbage title co) have been telling my agent basically gossip in that it all is just words but they claim that the title co ppl are "talking to" the Asset Mng co but the story is now going in circles bc there is no new info.

10 days ago, the Asset mng co asked for an extension to this last Wednesday but that day has come and gone and there was not a peep out of anyone except the seller agent telling my agent he wants an extension. We are not extending anymore unless we can find out what the heck is going on.

My attorney sent a letter over two weeks ago to inform them that they are in violation. We got back crickets except for the extension that has come and gone and now we are back to square one with us not really having a contract.

Does ANYONE HAVE ANY IDEA OF WHAT THE PROBLEM COULD BE?!?!?

Nathan Gesner · Answer

You are spending all this time and effort to purchase a property that you admit this "is not a great bargain."

So why are you fighting so hard and stressing so much? Is the juice really worth the squeeze?

Wayne Brooks · Answer

@Tanya SolomonI’m familiar with some of the high “buy in” subdivisions in Boca. A couple of questions though….

-You say the bank/current title holder “takes back title..” in Jan 2023. I assume you mean they got it back at the actual foreclosure auction, that they initiated to foreclose?

-Yuong Clueless Guy bought the property at the hoa auction….not realizing the first mtg stayed with the property….it happens often. I assume the bank foreclosure had been filed before this, so the bank had no obligation to modify the action to include the new YCG as a new title holder.

- when a bank takes a property back at foreclosure, they are only required to pay the hoa either 12 mo.s of back dues Or 1% of the original loan balance, whichever is less. The hoa has to eat the rest. It sounds like the hoa is also trying to enforce/collect the $150k buy in from the bank, as a new title holder. I’m guessing there a state exemption for this, but some hoa’s will try to collect dues they aren’t legally owed.

The bottom line is…the bank is going to have to work this out with the hoa and you can choose to either wait, or walk way. In the future do not Ever use the REO title company…..they suck and do sloppy title search work. If this does get near closing, have Your attorney review their title insurance commitment for exceptions/exclusions.

Tanya Solomon · Answer

2 months. Not a huge amount of time but the HOA requires at least 3 applications. 1 is for "internal purposes' and has a $2500 deposit. The 2nd is for a background check and costs $250. The 3rd is for the micro HOA that is farmed out to a 3rd party property management co and involved 2 checks for $100 a piece. The HOA approval process takes 30 days and I have certified approval.

The "bank" is dragging this out. They were "surprised" by the 150k buy-in that my husband and I have to pay but for some strange reason they thought they would either not have to or be able to get out of having to pay. All of the "worker bees" in the deal want it to go through but the "queen bee" decision maker is sitting on this and not signing off the expense even though they have agreed they have to pay it. There was "talk" that they were going to go to HUD/FHA to get reimbursed bc it was an FHA backed mortgage they foreclosed on but FHA/HUD would NEVER pay an expense like this. They should have done their due diligence and were prepared for it but I guess a company can tout that they handle 13 billion $ in assets a yr but struggle to cough up 150k bc they got caught off guard.

My attorney (another expense I'm out of) told me today that they will have to pay the 150k at some point. If I buy the home or if someone else does. In this market, I do not think they will be able to raise the price to accommodate the 150k by just raising the price if and when I totally bail out. It wasn't a super great deal or even a good deal. I am/was interested in the home bc I wanted a home within a mile of my synagogue that was 3000 sq ft or more that was/is a good investment.

This home is on a good street, is a two story (only a few on the street) and I just liked the energy and layout of the home. What I didn't like is due to neglect, there is about 1000 sq ft of mold remediation needed before the home would be HABITABLE. There is multiple points around the home where there are significant water intrusion areas. It will cost at least 100k to fix these problems. That is not dollar one towards remodeling the home. The last guy (young clueless guy) demo'd parts of the home and I estimate that it will take at least another 250k to make the home a nice one and bring it up to the standards of other homes in the area. All the work would take at least 2-3 months to do. That is assuming the HOA would not step in my way. I was going to site "health and safety" to push them to approve any plans the require HOA approval.

Its prob a blessing that this is falling through. Live and learn. I HAVE learned a lot.

Tanya Solomon · Answer

Thanks for the "shout out" and validation.

Ppl that think that real estate is "easy $" either have little to no experience in RE and or are quoting something their sister's MIL's best friend's hairdresser's stepson's father's dog walker. My point is that their "info" is far from the person that actually did the work, details are hazing, and they only pay attention to what is easy to remember and seems too good to be true bc ppl will NEVER stop WANTING to believe that there are magic bullets out there or ppl that ger rich overnight if in the right place at the right time. What they are ignoring is that EVEN IF their story is based in SOME kind of reality the success of the person they barely know was when the successful person had the opportunity meet their massive preparation.

David Sicherman · Answer

You need a specialist to deal with that kind of situation. Most regular real estate attorneys will not be able to drag that pile of grief across the finish line in a favorable way for you. You need someone to battle both the HOA and the mortgage and YCG, sounds like a lose-lose for you as you mention there's no big paydays, I assume this house is in StoneBridge, the HOA there is a nightmare.

Chris Seveney · Answer

@Tanya Solomon

Could be many things - they may be waiting for mortgage insurance to pay out as there could be a clause that they must get it prior to selling asset.

Account Closed · Answer

You want something to talk about to people (which is always fun) and you can see the obvious.

Or, there is a pending lawsuit they have neglected to tell you about and can't present clear title.

Jaron Walling · Answer

@Tanya Solomon 2 months isn't bad but there's red flags throughout the process.

"about 1000 sq ft of mold remediation needed before the home would be HABITABLE" - As if it couldn't get anymore interesting. Like they say on Shark Tank for those reasons I'm out. Take the attorney with you.

Jaron Walling · Answer

@Tanya Solomon Agreed.

So how many months have you been chasing this deal?

Tanya Solomon · Answer

Nope Boca Grove. Also a nightmare to deal with. HOA, POA, micro HOA with in the main HOA that is farmed out to a 3rd party property management co.

Believe it or not, I do not find them to be a total nightmare. If you want an example of a fifth ring of hell here on planet Earth, have a project with the building and planning dept in San Mateo Co (Silicon Valley). THAT is a nightmare!!! They can ignore, be incompetent, and malfeasant and they are the ever and ALL powerful GOVERNMENT. They can ignore LAW bc there is NO ONE holding them accountable. They are even in the same building as the courts. How do you sue the Gov? To give you an idea of my fortitude for these type matters, I have not only prevailed in SM co but set precedence.

Here, I have a great Board cert attorney with 25+ yr experience in Palm Beach Co. I talked to him and the Asset Management co on title is out of gas but doesn't have anything to lose by just ignoring the property and deal. They HAVE to pay the 150k. There's NO WAY OUT FOR THEM. They cant get $ from HUD or FHA bc those issues were resolved in other lawsuit/cases and they have no leg to stand on to expect $ from HUD/FHA. ESPECIALLY for a fee from an HOA. HUD/FHA would only insure the loan and the HOA fee has NOTHING to do with the HOA stuff. HUD is not going to pay that.

It all is what it is. My options are to walk or wait. The prob with REOs is a well-known prob. The asset management Co ppl that have decision-making power are buried DEEP within the labyrinth AND there are layers of rigmarole around them like layers of an onion. They can and will ignore bc they can. There is no accountability.

My attorney said that the contract could be as simple as a few sentences. "we the "bank-asset management" co can and will do whatever we want, whenever we want to do it. You (the buyer) have no power or recourse to sue for damages bc you know what you were getting yourself into with an REO." It could be a doc 3 pages long max bc at the end of the day, it is so simple. The only reason why there is a 27pg addendum from the bank attached to the offer, acceptance and "deal" is to have a bunch of legaleeze that intimidates most ppl.

I could pull the deal but I should do that only when I need the $ or just want to be 100% done and free. My EM is safe and a miracle could happen where all might Oz of the asset management Co finally decides to accept reality and get this deal done. This asset mngr is like a queen bee in a nest surrounded by hundreds of worker bees. The worker bees can want to close this and can be motivated but until the queen moves, this will just sit.

How to navigate REO buying hell. Currently stuck and do not know what the hold up is.

How to navigate REO buying hell. Currently stuck and do not know what the hold up is.

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