REO with Title Issue

[Sharukh Ahsan]

Hi everyone,

Recently went under contract with a Wells Fargo REO.

Upon title search my attorney has discovered the following:

Previous owners of the house transferred the ownership title to their living trust prior to any foreclosure proceedings and Lis Pendens (husband and wife both named on the living trust on the deed). Obviously this was also a breach of their mortgage deed as there is no evidence the owner obtained permission from Wells Fargo to transfer ownership to their trust.

The Lis Pendens was served to both the owner and the living trust, however the actual foreclosure judgement only named the owners and not the living trust.

So technically the living trust still has ownership on the title as the foreclosure judgement omitted naming it.

My lawyer said Wells Fargo may need to do a strict foreclosure on the living trust to clear the title unless they can provide some sort of documentation the trust was included.

Wells Fargo had the property listed on their REO website, had a realtor list it on MLS etc.

At this point what should I do? Technically at the moment the trust still has claim to the property. Has anyone been in the similar situation as this? Worst case scenario will Wells Fargo have to now foreclose on the trust to obtain a clean title?

We are in a extremely competitive market on Long Island, NY (the current house under contract had over 15 offers on it) and would likely be willing to wait if Wells Fargo needs to foreclose on the trust to clear the title.

PS: My lawyer has been in contact with 3 large title insurers and they have declined to give title insurance until this issue is clarified. He also stated the bank’s title company may be able to provide title insurance but that is still pending.

Thanks for the help