Fannie Mae Homepath Foreclosure - problem with deed description

[Greg Ghunt]

My closing attorney wants to walk away from this Fannie Mae Foreclosure property, get my deposit back and forget it. Essentially, the deed does not describe the property boundaries, but rather refers to a lot number on a builder's map, held in the Assessor's Office at the time of the tax land auction. The map is now in Registry of Deeds and the deed has not been updated with the new location of the builder's map with property lot. My closing attorney has his own title company that he works with exclusively. He says this description makes it sound like the Assessor's Map is used as a description which is illegal and won't transfer ownership. Here is what the closing attorney wrote me, "Our title exam revealed there are serious title issues with this property. I had our title insurance company take a second look and they confirmed the property is not insurable..This could potentially be cleared through the land court, but it would be a very lengthy and costly process..Our office requested that seller have a land survey performed that would result in the language in the deed being formalized and corrected so you would not run into any issues in the future.The seller is not willing to do this because the seller's title insurance company (which is one that we do not use) is stating that they will issue clean title insurance policies to you. You can choose to purchase the property, however our office cannot be involved as the closing attorney because we are not comfortable with the title on this property as it currently stands. I am also not sure if your lender will accept the title insurance policies issued through the seller and not through their closing attorney office. If you are still planning to pursue purchasing this property, then that question would need to be presented to the lender. We are required to follow the direction of our title insurance companies and the way the deed is written is very much out of the ordinary. There is also a potential issue with the foreclosure that we did not have a chance to thoroughly explore yet because we could not get beyond this first obstacle. I will also be letting your mortgage originator know that our office cannot serve as the closing attorney on this property given the state of the title.."

So if I switch to a different title company that agrees to insure this title, when I try to sell the house, the buyer may be denied title insurance and back out. Do I live with this and try to correct this through a "quiet title" motion or some deed correction on my own cost which might be $5,000+ and take more than six months? I would not want to live with anxiety of not having my property boundaries written into the deed, although that is possibly correctable by surveying the lot it refers to, and most importantly having problems selling and refinancing. 

[Guy Gimenez]

Others will certainly feel differently but I would walk. If FNMA says they have a title company that will insure title, rest assured the policy will have one or more exceptions that will make it next to impossible to collect on a claim. Find another deal.