Reverse Mortgage Sheriff Sale

[Scott Schultz]

I was the successful bidder on a Sheriff Sale for $48K, value around $100K the foreclosing entity is Carrington Mortgage, its a federally insured Reverse mortgage, and they record the originating mortgage, and FHA records a mortgage in the same amount ($160K in this case 150% appraised value) USA was not identified in the proceeding, does anyone know how this plays out, will the FHA instrument stick, or does it get wiped out? I spoke with several foreclosure attorneys, and title companies, and no one seems to know, they assume the title will clear but are not sure. I could forfeit my 10% or roll the dice. any input would help.

[Scott Schultz]

@Tony Wooldridge

I have learned to abstract my own title, and in this case I called a ton of people in REO title and closing field for advice ( was an REO Listing Broker for 10 years) and to see if any one would insure title, Knightbarry title was willing to insure, with a Stewart Policy and I pulled a loan on the property.

its imperative you learn the laws of the state you plan to buy in, and know your rolling the dice. in Wisconsin, unless its a junior lien foreclosing most things get wiped out other than taxes and municipal charges. Here a Sheriffs Deed is pretty much Virgin Title, but there are a few things with HUD and USDA, and other that can survive, and USDA has a redemption option for as much as 6 months after you take possession of the property, I havent had to deal with this, and its rare, I have heard of it happening, but they make you whole if they exercise this.

  I would suggest, find a title company that will do a quick search for you, right before sale, get the bid the afternoon before, and then do your leg work that night. you should be able to search back taxes, septic system info if applicable, and valuations or at least get you in the ball park.  Just know you need a little extra fluff in these deals due to the added risk of many times they are occupied, or cant get in to inspect, with that you may not be able to get a loan for the purchase either. Its a different ball game, but i have done well with it, I have purchased 10 at sheriff sales in the past 12 months