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Purchasing a foreclosure? Full steam nightmare ahead.

By
Mortgage and Lending with Premier Nationwide Lending

I recently helped two seperate buyers with their mortgage financing buying bank owned foreclosures.  Only one of them closed.  The one that closed had to wait a week after signing paperwork for the sellers (bank) to get the docs back to the title company to fund.  The title company that was involved would not return calls, emails and seemed to be understaffed.  on the other one I did a favor for a realtor I work with and agreed to help with his clients manufactured home purchase.  When the file came out of underwriting there were 10 funding conditons.  I emailed my processor to send those conditons to the title company to verify they could meet them and we would have no hangups when it came time to fund this file.  We only had one prior to doc conditon.  Title company says everything is fine and I met the one outstanding condtion we had to get the file clear to close.  Two days after docs were at the title company we receive a phone call from the title company that states that they cannot close this transaction because the manufactured home was not foreclosed on.  The land was but not the home.  They stated that the bank would have to re foreclose on the manu home and that process could take 4-6 months.  During the past month or so the program I had the borrower approved on has changed and must now contribute 5% more to the downpayment.  To top it off the manufactured home was on the market for a year before the buyer made an offer.  I would like to think that foreclosures would be paid more attenetion to.  Due to the buyer not being able to qualify anymore is there any way to get the seller to pay for the survey and apprasial?

I would appreciate any feedback I could get.

Frustrated in Houston,

Jason Holter

Patrick Lambert
ALLY Real Estate - Waikoloa, HI
Hawaii Real Estate Expert

Sounds like the seller could not complete his end by providing clear title ... seems to be that it's not the buyers failure to close the deal but the seller. So, you go back to what is in writing ... the contract. Does the contract state that if the seller cannot provide clear title he will reimburse the buyer any costs incurred? If not, it's something to look out for next time.

Jun 21, 2008 09:06 AM
Patrick Lambert
ALLY Real Estate - Waikoloa, HI
Hawaii Real Estate Expert

Sounds like the seller could not complete his end by providing clear title ... seems to be that it's not the buyers failure to close the deal but the seller. So, you go back to what is in writing ... the contract. Does the contract state that if the seller cannot provide clear title he will reimburse the buyer any costs incurred? If not, it's something to look out for next time.

Jun 21, 2008 09:06 AM
J Perrin Cornell
Coldwell Banker Cascade Real Estate - Wenatchee, WA
Broker, ABR, VAMRES

Bank foreclosures can be good deals...usually much better than buying at the courthouse. BUT the banks documents always bother me... plus the cooperation can be less than perfect. A lot depends on the specalist (REALTOR) the bank uses to list the properties.... some are good and others...?

Jun 22, 2008 01:25 AM
Pam Simpson
Bob Leigh & Assoc., LLC - Senatobia, MS
GRI, Broker-Assoc.

Jason - an attorney in my area that closes a lot of foreclosure sales said that they are finding more and more title problems because of the volume of foreclosure actions.  Any of them that I have ever closed usually has the seller approve all the docs, sign and overnight for the closing so that they are ready for the buyer to sign. 

Jun 23, 2008 08:24 AM
Ted Lyons
www.nosurpriseloans.com - Livonia, MI

Jason, unfortunately it just comes with the territory.  In Michigan, over half of my files are foreclosure purchases.  Among the things that I've learned are that it's good to do a lot of "expectation management" with my customers.  I remind them that they are getting a steal, and that there can be a hidden "cost" in terms of the complications that we will encounter.  But I remind them that at the end of the road, they are getting a home for (generally) below market value, and so the twists and turns are worth it.

When it comes to title companies, Fannie, Freddie and most other lenders use about 3 of them here, each one has their challenges.  But the more you deal with them, the more familar you become with their quirks and eccentricities, and the easier it becomes.  But it's still good to keep a bottle of your preferred libation handy during the process!

Good luck - it does get easier.

Jul 26, 2008 04:23 AM