HUD REO Cloudy Title - Won't Release Deposit

[Brit Hale]

None of my local title companies will insure a particular title issue (BOA foreclosure and loan modification done improperly). I'm not terribly concerned about the $500 they won't return even though I view this as seller default. I take issue with them not providing "marketable title." I could still acquire the property and make a "lifetime" rental without likelihood of being able to provide marketable title and resell in the future- what would YOU do?

[Aaron Poling]

Every contract that I have seen with a foreclosure property will give you marketable title, or the ability to release so they have themselves covered. Not much you can do about holding them to it. 

If you want to move forward with the property I would talk to a real estate attorney and see what it would take to clear up the defect. If it is something that you can do after the fact, then possibly purchase now, rent it out and clear up the title after the fact. Otherwise I would personally release and find another property even if you have to walk away from the EMD. Unless of course you are getting such a great deal, and the rental potential is too good to pass up.

Good Luck! Aaron