All Forum Posts by: Billy Ross
Billy Ross has started 1 posts and replied 2 times.
Maybe I should not have asked the question, because what i suspected could happen has happened.
Seller did a deed in lieu of foreclosure. Signed a deed back in July. Bank did not record the deed, but instead just let it sit.
In the meantime, the former owner had judgments on him which attached to the house.
We went under contract and have been sitting here waiting to close, and the bank has to negotiate the judgments. they cannot foreclose them out, as they have agreed not to foreclose on the property.
A previous post had said the title transfers upon the signing of the deed, not the recording of it. I agree, and at the same time these are bona fide valid judgments against the owner of record of the property. You cannot simply record a deed months later and have those judgments go away.
Still does not answer my question on why a bank would not want to get the house back in their name as soon as possible. This is not an isolated case.
We purchase 5-7 REO's each month, and I have always had this question...
On at least 80% of the deals we do, the bank has not recorded the deed or CT, and they do not until right before closing. While it does not affect me, just always wondered why they did this. As an example, we are under contract on a deal where the original seller did a deed in lieu. The bank has not recorded the deed. Now, many sellers in financial trouble have other issues or pending judgments. If the bank does not record the deed and get themselves on title, there is the possibility that a judgment from the previous owners could potentially attach to the property. Now the lender has agreed to NOT foreclose on the property, but there is another lien attached, forcing the lender to move forward with a foreclosure action or negotiate the judgment/lien.
If I had to guess, I would say the lender does not want to be on title due to them doing something odd with their books and not actually taking ownership of the property, but that is just a guess.
Would welcome anyone with true insight on this.
Thanks!