The home I want to buy is lost in paperwork somewhere

Buying & Selling Real Estate
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The home I want to buy is lost in paperwork somewhere

Donna Drake
Member since 2010 · 24 posts · 1 vote

Here I am at BiggerPockets again looking for answers. You guys are great and maybe you can help.

I finally sold my house. I have had my eye on a empty home for over six months. It has be empty since April 2009.

The owner of the house passed away, and the children didn't want the house as it is not worth what was owed on it.

National Bank of AZ sold the house in 2007 to a mortgage company in NJ. I called them, and all they did was ship me to a web-site for pre forclosure and foreclosure homes. It wasn't there.

They didn't have the house under the National bank loan number and that is the loan number I have.

Now I'm not even sure NJ has it. I called the family attorney of the deceased owner, hoping he will call me back with current loan information, but I have not heard back yet.

I also was told by this lawyer that it should be no problem to buy the house right away, even if I have to rent it from them while paperwork is completed.

I have to be out of my house by Sept 16, and I need this information now! I have hit a brick wall!

This is my question. The mortgage company in NJ deals with Mortgage-backed securities! this company seems so big! I don't understand what that means, and why the previous owner would choose them.

They offer things like Private label Solutions and I think all properties are pooled. HELP! What is all this? I think they have the house I want, and I need to buy it. They just don't seem to want to help me at all.

Right now I am homeless!

this would also be a cash sale. Nothing difficult.

Do any of you know how I should proceed? This little house is my dream home. I want it so badly, and there was recently a sign on the door from a company called safe guard saying the property has been abandoned and the lender would be notified they have to clean up the yard and the locks would be changed. Nothing ever happened with this either.

All information any of you have will be very much appreciated! I am so stressed and just need to know what to do, and what kind of mortgage company I am dealing with!

Thank you all so much,

Donna

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Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y

Donna, here's some advice you're not going to want to hear. You say "I have to be out of my house by Sept 16". You seem determined to buy the house you're talking about here. And you want to move into it on 9/16. Its not going to happen. As you're figured out, this house is lost in limbo of loan services, investors, and CDOs. It's going to take time to unravel the ownership and responsibilty and get the property to a position where someone can buy it. That could well take many months. That's when it could be listed for sale. After that, an offer has to be made, accepted and closed. Even if you could make that offer today (8/27/10) I do not believe it could possibly be closed by 9/15/10. That would be an amazingly quick close. Possible if all the paperwork and title was clean, but that's not the case here.

Further, even once there sort it out and get it listed, there's a good chance someone else will buy it. My standard advice to anyone trying to buy a REO is to find 10 REOs they like, makes offers on all of them and their odds of buying one are pretty good. The odds of buying a specific one are very low.

I realize you say this is your "dream house" but ultimately its just a house. Are there ABSOLUTELY no other houses that would make you happy? Have you looked? You're stressing yourself out by trying to buy this specific house. And I just don't think you will, in the end, be able to buy it.

Certainly I believe there is zero chance of you moving into this house on 9/15 by any means other than breaking in a squatting. Maybe that works. Maybe nobody ever sorts out the ownership and 10 years from now you can claim it by adverse possession. More likely someone does eventually figure out who owns it and they come and evict you.

Here's what I would do, given you're determined to buy it. Find a title company in the area and pay them to run a title search. If you tell them you need it quick, that should be just a few days. That will tell you definitively who owns it. I think you will find one of three cases:
1) The deceased person still owns it. In this case it still needs to go through probate and get transfered to someone else. Perhaps you can contact the executor of the will (that lawyer you've been in contact with, perhaps) and buy it directly from the estate and let the executor divide up the cash. I'm pretty sure the heirs are going to need to OK that transaction, but its sounds do-able.
2) The property has been transferred to the heirs. Contact the heirs and make an offer.

In either of these cases, you're going to just write an offer, either to the estate or the heirs, and take that to the title company. The title company will try to short out who's owed what, and will request payoff statements from all the lienholders. If you're determined to buy this house, you need to make your offer high enough to cover all the costs (including the ones normally paid by sellers) and to make all the lienholders whole.

3) The thrid possibility is that its been foreclosed. Doesn't matter if a lis pendens or notice of default has been filed. It only matters if its been foreclosed. If the process is in progress, its one of the situations above. If its been foreclosed, some bank or investor owns it. The title search should tell you who, although that may be a long way from having a contact and a phone number. But at least its a starting point. If it is a REO, the most likely outcome is that you will just have to wait until its listed. But if you can find who owns it, and wade through their bureaucracy, you might find a contact. Unlikely they will actually sell it to you, but they might tell you the agent they will use to list it. Then you can contact that agent and tell them you will pay any price they ask.

I would make other living arrangements so you're not on the street on 9/15.

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  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    16y
    Originally posted by Donna Drake:
    ... there was recently a sign on the door from a company called safe guard saying the property has been abandoned and the lender would be notified they have to clean up the yard and the locks would be changed. Nothing ever happened with this either.

    ...


    Start with that sign on the door, it didn't just randomly get placed there. Somebody assigned the "safe guard" company to secure the premises. So, you start at "safe guard" and ask them if they would be able to put you in contact with the "asset manager" for that property address, because you would like to make a purchase offer to that asset manager. Just because the bank sent somebody to protect the abandoned property does not mean that the property is owned by the bank yet; the bank is taking measures to protect the collateral for this loan.

    But there is still something about this that is uncertain. Who really owns the house NOW? Is it the estate of the deceased, or the bank who made the loan, or ... (Fannie Mae, Freddie Mac, FHA/HUD to name a few others)? The bank can't sell you this until they take ownership, via foreclosure most likely (although deed in lieu might also happen).

    Now once the bank repossesses the property, they might still not be the ones to sell it, if there was some mortgage insurance or guarantee that gives the property to that guarantor (who pays the bank as part of the guarantee).

    1Reply
  • Sam M.
    Real Estate Investor · Craigmont, ID · Member since 2009 · 564 posts · 239 votes
    16y

    I agree with Steve.

    It looks to me like the owner may still be on title and the LOAN got sold to a mortgage company in NJ. If foreclosure has not been filed the home will not be on any list, pre-foreclosure or otherwise. In addition to this the mortgage company will not talk to you about the loan without an authorization from the home owner to do so!!!!!
    There may be a way in through an attorney because the owner is deceased but I can't even point you in the right direction.

    0Reply
  • Donna Drake
    OP
    Member since 2010 · 24 posts · 1 vote
    16y

    Thanks guys! The phone number for "Safe Guard" is ALWAYS busy. I've tried so many times.

    At this point the family no longer owns the house. Probate is complete. It is now owned by the lender. NJ maybe.

    I am now on hold (phone) with the NJ mortgage company. They say it is a 167 minute wait, I've waited 20! I think this is government, fanny mae, etc.

    I'm going to see if this gets me anywhere.

    I tried to hire two different lawyers. Both experiences were so bad, ya really don't want the details.

    There is a reason for their rep's.

    If this is Fannie Mae or something do you know if they will sell to me before foreclosure? Will they rent with rent applied to purchase?

    When I told the NJ operator that the neighbors were upset that the property was abandoned is when I started to get some action.

    What do you all think of squatting? Not kidding.

    Someone is paying the taxes on this property, and it is not the previous owners family.

    Thanks again,

    Donna

    0Reply
  • Kevin Yeats
    Lender · Fort Pierce, FL · Member since 2009 · 825 posts · 486 votes
    16y

    Try calling FIRST thing in the AM. Like 7 AM

    0Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    16y

    Donna, here's some advice you're not going to want to hear. You say "I have to be out of my house by Sept 16". You seem determined to buy the house you're talking about here. And you want to move into it on 9/16. Its not going to happen. As you're figured out, this house is lost in limbo of loan services, investors, and CDOs. It's going to take time to unravel the ownership and responsibilty and get the property to a position where someone can buy it. That could well take many months. That's when it could be listed for sale. After that, an offer has to be made, accepted and closed. Even if you could make that offer today (8/27/10) I do not believe it could possibly be closed by 9/15/10. That would be an amazingly quick close. Possible if all the paperwork and title was clean, but that's not the case here.

    Further, even once there sort it out and get it listed, there's a good chance someone else will buy it. My standard advice to anyone trying to buy a REO is to find 10 REOs they like, makes offers on all of them and their odds of buying one are pretty good. The odds of buying a specific one are very low.

    I realize you say this is your "dream house" but ultimately its just a house. Are there ABSOLUTELY no other houses that would make you happy? Have you looked? You're stressing yourself out by trying to buy this specific house. And I just don't think you will, in the end, be able to buy it.

    Certainly I believe there is zero chance of you moving into this house on 9/15 by any means other than breaking in a squatting. Maybe that works. Maybe nobody ever sorts out the ownership and 10 years from now you can claim it by adverse possession. More likely someone does eventually figure out who owns it and they come and evict you.

    Here's what I would do, given you're determined to buy it. Find a title company in the area and pay them to run a title search. If you tell them you need it quick, that should be just a few days. That will tell you definitively who owns it. I think you will find one of three cases:
    1) The deceased person still owns it. In this case it still needs to go through probate and get transfered to someone else. Perhaps you can contact the executor of the will (that lawyer you've been in contact with, perhaps) and buy it directly from the estate and let the executor divide up the cash. I'm pretty sure the heirs are going to need to OK that transaction, but its sounds do-able.
    2) The property has been transferred to the heirs. Contact the heirs and make an offer.

    In either of these cases, you're going to just write an offer, either to the estate or the heirs, and take that to the title company. The title company will try to short out who's owed what, and will request payoff statements from all the lienholders. If you're determined to buy this house, you need to make your offer high enough to cover all the costs (including the ones normally paid by sellers) and to make all the lienholders whole.

    3) The thrid possibility is that its been foreclosed. Doesn't matter if a lis pendens or notice of default has been filed. It only matters if its been foreclosed. If the process is in progress, its one of the situations above. If its been foreclosed, some bank or investor owns it. The title search should tell you who, although that may be a long way from having a contact and a phone number. But at least its a starting point. If it is a REO, the most likely outcome is that you will just have to wait until its listed. But if you can find who owns it, and wade through their bureaucracy, you might find a contact. Unlikely they will actually sell it to you, but they might tell you the agent they will use to list it. Then you can contact that agent and tell them you will pay any price they ask.

    I would make other living arrangements so you're not on the street on 9/15.

    3Reply
  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    16y
    Originally posted by Jon Holdman:
    ...
    Further, even once there sort it out and get it listed, there's a good chance someone else will buy it. ...


    Jon's advice is on target. I just want to elaborate a bit about the piece in this quote.

    When multiple offers come in on REO property, the bank and listing agent will typically give an opportunity to all potential buyers to produce their "highest and best offer". As an investor, I usually reply that they already have that from me. But for somebody looking to buy it to live in, winning the bid is part of what they are hoping for, and so to win the bid the offer has to have the price set above the others PLUS be favorable to the bank in contingencies (no contingencies basically). It would have to be a true "all cass" offer too. So there is this bit of an advantage that an owner occupant purchaser has over an investor bid.

    But Jon has nailed this with regard to timing. Banks will set a closing date, and then request an extension, and possibly followed by even more extension requests. This happens because of thier bureaucratic nature, and that they don't handle paperwork as well as they need to close fast. The fact that this one is "lost in paperwork somewhere" likely means it will take them forever to close (OK, so I exaggerated a bit there).
    0Reply
  • Account Closed
    OR · Member since 2008 · 1k+ posts · 845 votes
    16y

    While you are sorting out the ownership of that house, find your self a nice inexpensive house to rent on a month to month rental agreement. Take a rental that is the cheapest you can tolerate living in, to conserve your money.

    Contact a real estate agent and ask them to take you around and show you what is available in your price range.

    You never know, you might find something that you like better at a decent price. It doesn't hurt to look while you are taking the time to sort the other one out.

    0Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    16y

    It seems that its often title issues that cause REO closings to be delayed. My buddy in the next office spent about a year trying to buy a REO for a residence before finally succeeding. One of the properties came onto the MLS, then disappeared a few days later. Looking at the title, it turned out the second had foreclosed, taken it as a REO, and put it on the MLS only then to discover there was actually a first that had never been notified. Since this ones been through or has to go through probate, the possibility of title issues is high.

    Another problem you may hit is that REO agents appear to maintain lists of their good investors. Buyer's they have worked with in the past and that they know can close quickly. When a property is coming, they can alert their buyers ahead of time. If its a good deal, the offers can be on the table as soon as it hits the MLS. Frustrating, but par for the course with REOs. They will make you cry.

    0Reply
  • Donna Drake
    OP
    Member since 2010 · 24 posts · 1 vote
    16y

    Thank you all!

    I got the loan number from the family's attorney and called the mortgage company.

    Jon, your 1# response nailed it. I spoke to a great guy at the mortgage co, and the family still owns it. It's sort of in limbo, but no title is transferred yet.

    The only way to get the house soon is to do a short sale with the family's attorney serving as Realtor. Otherwise it will be another 6 to 8 months before it is on the market.

    I will call the attorney on Monday and see if he will help me. He stands to make a good commission, which of course is good motivation!

    Things are moving alone. Finally!

    Thank you all! The information you gave me will be studied well!

    I'll let you know how it all turns out. This could have a very happy ending!

    0Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    16y

    Congratulations on tracking it down.

    You don't need to do a short sale. Just pay them enough that they can pay off the loans. That may make it a terrible deal, but if its your dream house, perhaps it worth it. "Dream house" and "great deal" rarely go together.

    You're not going to pull off a short sale in three weeks.

    0Reply
  • Donna Drake
    OP
    Member since 2010 · 24 posts · 1 vote
    16y

    Yeah, Jon, I thought that was quick for a short sale. The lender told me since this will be a cash sale, I could probably have the house within 30 to 45 days.

    I cannot afford to pay off what is owed on the house, I have to go this route and hope that I get it for a comparable price. Even though it is my dream cottage, I can't afford to make my dream come any quicker.

    I asked the REO agent if he could keep my name and notify me when the house went into foreclosure, and he said they couldn't do that. You say they can. Interesting, but this guy stayed on the phone with me for a half hour, so fun and nice, I trust him......

    P NW... you are right on. this is what I am going to do. I know of a total dump that I could rent month to month right now, but it's just really awful! I can't do it. I will look for a cheap place to rent, and continue to look at other houses, but in the last 6 months, no houses have held the charm this one does, but ya never know.

    The house I want is small. 942 sq ft. It's not for everyone.

    Now, I just have to find out if the family attorney will work with me. I don't want to hear "NO" at this point.

    When things were in probate he told me he couldn't work with me, but I hope he gets that he can now.

    He already told me no once. Just one last thing I have to push through, and I'm not the aggressive type. I'm learning to be more assertive. Makes my tummy turn!

    Thanks, you guys!

    0Reply
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