Bizarre Issue in Wholesale/Subject To Deal - What do you think?

[Linda Weygant]

So the weirdest thing has happened and would love some insight from those of you who work the foreclosure process.

I bought a condo that was going into foreclosure. I got a cashier's check for the wholesaler to take to the trustee's office and then paid the wholesaler their fee. My purchase is Subject To the owner's mortgage as well as a whole bunch of past due HOA dues.

I am confident that the wholesaler is legit, for various reasons, so please don't point fingers there as your first reaction.

After I got the deed in my name and it was filed with the county, etc., I got a call saying that the public trustee did not accept my cashier's check, but they did halt the foreclosure auction.  I just needed to get the check and cure the past due amount directly with the mortgage company (Wells Fargo).  I had until December 12 to cure this or it would go back into foreclosure.

On December 5, I went to my local WF branch and tried to cure the mortgage.  They refused to accept the cashier's check and asked that I wire the money to their foreclosure center instead.  I was nervous about doing so (for reasons that, in retrospect, probably don't make sense), so I asked if I could mail in the cashier's check.  They said yes and gave me the address to do so.  I mailed the cashier's check in on December 6.

On December 12, I called my bank to make sure that the cashier's check had been cashed.  It had not.  I called the automated phone system for Wells Fargo and it indicated that the mortgage was now current.  No late fees, no balance due, next payment due January 1, 2018.

OK.  Great.  Check is probably just pending.

On December 14, I received a letter from Wells Fargo, dated December 12, stating that they were returning my cashier's check and gave no reason why.  I immediately called them to find out why.  They stated that they had already received payment for the past due amount on December 10.  I asked who sent that money in and they indicated that they did not know, that the funds came in on a wire.

So I called the wholesaler and asked what was going on.  They called the seller to make sure he was not confused about who was going to cure the arrears.  The seller confirmed that the seller did not cure the arrears.  

So I'm sitting here with several thousand dollars in my hand, a cured mortgage and a whole lot of confusion.

My next phone call is to the attorneys who are handling the past due HOA fees. I ask them for a payment plan and lay out something that I think is reasonable. They say that they'll need to talk to the Board of the HOA for approval. OK. I'm pretty confident that the plan I've outlined is reasonable and that they'll be happy getting payments on an account that is something on the order of 4+ years behind.

The attorneys contact me back, stating that the original owner was something of a scam artist and has made many promises in the past that never happened.  They also say that they've had people in the past contact them claiming to have purchased the condo and they would now be responsible for the bill, but then nothing would ever happen and it would always turn out that there was no purchase.  In short, the board has denied my payment plan proposal and wants the full amount up front or I risk them starting foreclosure (sigh) because they don't believe I'm legit.

In the meantime, I requested a title search on the condo and it comes back with the most bizarre thing.  There's a letter filed with the county, by the seller, indicating that the seller has been the victim of a "Quit Claim Scam" wherein somebody filed a quit claim deed for this condo back in 2010 claiming the owner quit claimed it over.  That quit claim has been removed from the record, but this letter explaining the attempted theft of the condo remains on the record.

Weird, right?

So now I've got a property that has this weird history and some unknown person has paid off the past due mortgage. (Sure wish they'd payoff the past due HOA fees too!)

So forgive me for being a little paranoid, I'm now just really nervous that something, somehow, is going to bite me in the butt on this.  I've ordered a title report every 2 weeks to make sure that nobody is going to file anything with the county that further complicates this issue.  It's only $5.00 for the report, so certainly not something that's going to break me.

SO my questions are these:

1.  Is there any way to find out who paid the mortgage company?

2.  If there is a way, do I even care?

3.  What's my exposure here?  If somebody else paid this thinking they could then take over the property, that's their problem.  

4.  Am I morally/ethically obligated to track down the payer and give them their money back?  (Part of me thinks yes, but another part of me feels like this is probably some scammer that got bitten by their own ploy).

5.  Other than pulling a title report every two weeks, is there anything else I could or should be doing to protect myself?

My intent on this property (as of now - could change) is to flip this property.  What are the odds that the title is going to be FUBAR and will affect my ability to sell/convey clean(ish) title at closing?

Thoughts?  Ideas?  Suggestions?