REO Sales & Foreclosures

by Nick 10. September 2012 14:38

Recently we pulled a title exam on a property that the Seller purchased from a bank. 

They used the Bank's title agency to close their purchase, and they did not buy an owner's policy.

The problem, a $17,000 lien was filed 4 months before the foreclosure started, but was never mentioned in the foreclosure.

How did this happen?

When we checked the foreclosure, the title report used was 10 MONTHS OLD!!  They did not update the title to find the lien.

Because the closing was handled by the Bank's title agency, who also handled the foreclosure, they had no reason to double-check their work. If the Bank is paying for the title insurance, you should always get it. 

This resulted in the Buyer taking title to a property with a $17,000 lien on it.

At this point the Seller has to negotiate with the lien-holder for a payoff in order to close.

This is another example of the risk involved in dealing with REO sales and foreclosures. 

Keep your fingers crossed.