UPDATE - Bank Says I Don't Own House - Posted by Elizabeth NJ

Real Estate Investing Real Estate Financing
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Re: Thanks Elizabeth - Posted by JohnB

Posted by JohnB on May 12, 2006 at 09:43:34:

Elizabeth,

Did you pull a complete Chancery Abstract? Also, ask the Sheriff to open the file for you and look at the Final judgement and Writ of Execution. The sheriff’s file can tell you a lot about what transpired with the foreclosure.
JT said it best. We are not being critical of you or giving you a hard time. Your experience can benifit others here. I do wish you the best in this deal and I do hope it works out for you.
Again, I do sheriff sales for a living and the research that goes along with it.

The point I just can’t get past is, why does the former owner have any ownership rights anymore? I would be a fighting for my ownership rights if a former owner of a foreclosed home that I purchased at sale tried to deed the house to someone else after the sale. Heck, even if they deeded the house prior to the sheriff sale to someone else that new deed would also be extinguish because it was transfered post lis Pendens.
Another question I have for you is, if this was a VA loan why would HUD be involved? And if the Lender didn’t want to utilize the HUD insurance, isn’t that ok. I mean, isn’t their choice? Only reason I asked is that you mentioned it a few times in your post about the lender not transfering the property to HUD (again, don’t know why HUD would be involved with a VA loan). Does not tranfering the property to HUD or VA make your position stronger?
Elizabeth, I appreciate your posting. It is educational for all that read it. Heck, you even made me take a closer look. I grilled my attorney yesterday just so I am more informed about my rights as a deed holder of a sheriff sale property.

Again, I wish you the best of luck and I do hope the bank just give you a pay off and a quit claim deed. Keep us informed and thanks for posting.

JohnB

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Re: UPDATE - Bank Says I Don’t Own House - Posted by Joe Kaiser

Posted by Joe Kaiser on May 12, 2006 at 01:48:49:

One more thing . . . I suspect if indeed the race to record concept
matters (I don’t believe it, but couldn’t say for sure), there’s an
argument to be made that the loan was extinquished at the time of the
foreclosure.

If they attempt to jerk you around with payoff figures, you may want to
have at the ready the statute that describes what happens to a loan
once foreclosure takes place . . . and then tell them you don’t owe
them a thing.

Can I hire you to check out some NJ stuff?

Joe

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Re: House - Posted by Natalie-VA

Posted by Natalie-VA on May 11, 2006 at 10:03:40:

Elizabeth,

Thanks for sharing your experience with us. This subject matter really tweaks my interest. I put a post out a long time ago about the race issue, but didn’t get a lot of discussion at that time.

http://www.creonline.com/legal/wwwboard7/messages/26006.html

Your analysis has cleared that up somewhat. I hear you saying that the first purchaser who records his deed prevails, but I’m not sure that I have the language correct.

Would I be correct if I said, “A bonifide purchaser must receive his deed AND record it”?

Would I be considered the owner if I had the deed, but didn’t record it? If not, what would I be?

I’m probably focusing too much on the language, but I really want to understand the issue better.

Thanks for your time.

–Natalie

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Re: House - Posted by Ken-Orlando

Posted by Ken-Orlando on May 10, 2006 at 16:53:50:

Congratulations Liz and good luck in your dealings with Ocwen

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Re: House - Posted by Nike

Posted by Nike on May 10, 2006 at 16:25:08:

I hope this works out for you and that you will post more information as you go forward. You may be right that the bank would prefer to be a secured creditor rather than an owner, however there’s the inconvenient fact that there’s been a judicial proceeding and a subsequent sheriffs sale in which the bank was awarded the deed.

You wrote: “the bank is not the owner of the property because the bank’s deed was never recorded.”–do you really belive this? The deed conveys ownership and does not require recording. Recording the deed protects purchasers from subsequent claims by BFP’s.

Regarding BFP’s and race-notice you still ignore the requirement that the purchaser (BFP) must not have notice/knowledge of third party claims. Notice includes actual notice as well as constructive and inquiry notice. There was a judicial foreclosure and a public auction all matters of public record. Knowledge of such public acts can/is imputed to a party claiming to be a BFP.

Good luck.

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Re: Wild Deed issue - Posted by johnB

Posted by johnB on May 10, 2006 at 23:28:33:

JT,
Again, i agree with you. I just don’t see how her seller was vested with any title to the property. Her seller had no ownership interest.

Lets see how this one turns out. This could set a precedence and new case law would be churned out. Personally, I like Elizabeth and I think she is very knowledgable and a “go getter” but if she wins it could muddy up the waters for future foreclosures.
I sometimes don’t record my deed right away. If I dont recorded the day the sheriff hands it to me do I have to worry about the foreclosed owner selling (deeding) the house to someone else.
Hey, the bank just might play her ballgame just to get paid and get the liablity off their books. And for Elizabeth’s seek, I hope they do but if it goes to court, I do not want to see her win because, like I said, that will muddy up the waters with bad case law and that isn’t good for me or my fellow sheriff sale buyers. Hell, we have enough problems already with the Chancery Judges over turning sales that aren’t done perfectly.
I will be awaiting the outcome of this situation. I hope it doesn’t make it to court and the bank just gives her the payoff.
But the fact the the sheriff sale occurred and deed was passed (not recored, just passed) then I feel the bank would have to deed their interest to Elizabeth because I still stand by my belief that her sellr didn’t have any vested interest in the house and therefore her deed is not valid.
Again, just my point of view.
JT, I was looking forward to chatting with you at the convention. see you next year.

John

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Congrats Eliz… - Posted by JT-IN

Posted by JT-IN on May 09, 2006 at 15:13:39:

Elizabeth:

Nice going on being there to handle the Atty at L/T court of evictions. Your Tenant must know that her Landlord walks on water… Huh-rah… I’m sure that the Tenant was almost as relieved as you were… following that session.

There is something here that I am still a bit puzzled over. You are now going to receive a Payoff statement from the lender… You mention that you are going to negotiate down the interest… What makes you think that the Lender will be willing to do so… especially since they are at odds with you, for one, and secondly and more importantly here, they will likely feel that they have a culpable party on the hook with something to lose, if you don’t pay the interest…? Also, I can’t imagine taking a property Subj 2 w/o having a payoff statement, or at least a very recent statement from the lender, so that you aren’t blind sided by a payoff which may contain a defaulted interest rate, and excessive late and Atty fees. You must know that they will attempt to lay off any charge on you that they can…

Maybe it is such that from the date of the auction the loan, and any interest thereon was muted, but I would doubt that the Lender will see it that way, until you prove that to them as well… I happen to be concerned for you that your swimming up stream on this case isn’t quite over yet… You may well prevail, and we certainly hope that you do, but be fully ready for a payoff figure that might re-sink the Titanic…

Just the way that I view things…

JT-IN

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Thanks John - Posted by Elizabeth NJ

Posted by Elizabeth NJ on May 12, 2006 at 11:59:02:

You are definitely one of the experts in foreclosures on this board. Like I said, I avoid them like the plague so imagine how surprised I am to be caught up in the middle of this. LOL

I know it was an FHA loan, not VA, sorry to all. My mistake.

It was my understanding that an FHA property would revert to HUD after a foreclosure, but I was unclear about it. So I called a local HUD office and spoke with a rep there. I initially posed the question as theoretical & asked him to explain to me the process by which a foreclosed property with an FHA loan would revert to HUD. He explained the process including the part about the bank?s attys? right to file a claim with HUD upon the turnover of the property. He also said that the bank has a responsibility to first offer the property to any tenants in the building. If they don?t buy, then the bank must empty out the property and turn it over to HUD at that point.

I know some reading this are going to say isn?t that why the bank took the tenant to L/T court. No, it?s not. The bank’s mgmt co. actually gave the tenant a month to month lease more than a year ago, acting as a landlord, which is of the big red flags in this whole mess. In fact, one of the management co.'s employees told the tenant that he owned the house. Of course, the tenant took advantage of the fact that there was noone there to collect the rent. The bank, acting in its purported landlord capacity, took the tenant to court because she didn?t pay rent to them.

The HUD rep then asked if this was a real property. I gave him the address & he looked at his records, found the property and agreed with me that the bank should have turned the property over long ago. He was as surprised as I to find that the bank?s attys had been sitting on the property so long post-foreclosure. And that’s one of the big points on my side of the ledger.

Thanks for sharing your level of experience with me. I?ll keep you updated on this.

Elizabeth

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Re: UPDATE - Bank Says I Don’t Own House - Posted by Elizabeth NJ

Posted by Elizabeth NJ on May 12, 2006 at 02:07:55:

Joe,

I’ve been getting this suggestion from other posters here – that there is no lien at this point. In fact, I just answered Jim and mentioned to him that this bank has been sued over and over by homeowners claiming mortgage fraud, fraudulent foreclosures, and the bank seems to be settling. One settlement stip I read had a clause requiring the plaintiff to maintain strictest confidentiality about the settlement

Also I mentioned to him that I read somewhere a while back that if a bank cannot produce the original mortgage and note signed by the borrower, that it cannot foreclose or seek payment of the lien of which it may be assignee.

This bank is not even an assignee of the mortgage. Experience and my gut [which I trust more} tells me there was something fishy about the mortgage to begin with. The company that wrote it may have been a predatory lender and, as we all know, large banks routinely buy up these kinds of loans in packages, intentionally or otherwise.

– Mortgage co. wrote mortgage in January.
– Co. license suspended 2 months later.
– Assignment of mortgage to a servicer in December & assignment is executed by an officer of another bank [not my bank] as “atty in fact” for the defunct mortgage co. The bank whose signature block appears on the assignment has nothing to do with the property or the mortgage.
– My bank is nowhere to be found on original mortgage or the subsequent assignment and no further assignments are to be found on title.

I know that NJ is very lax on enforcing recording of assignments, unlike NY. However, it would seem that if the bank intended to foreclose, it should at least ensure that it’s name shows up somewhere as the authority to commence the foreclosure.

I’m determined to unravel this mess.

As to hiring me to check out something in NJ, it would be my pleasure to assist you. Let me know what you need.

Regards.

Elizabeth

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Re: House - Posted by Elizabeth NJ

Posted by Elizabeth NJ on May 11, 2006 at 23:11:27:

Hi Natalie,

I always enjoy reading your posts.

As you can see from the many posts here, while I defend my ownership of the property, there is still the matter of the “wild deed”, that of the bank which was never recorded.

Race notice jurisdiction is a statute in some states and under that law the deed must be recorded.

JT’s response to you gave a good explanation about how the race issue is used.

There’s tons of information about race notice jurisdiction, but as sure as one might be about the intent of the law, there’s always someone else who can make a case that the intention of the law contradicts our interpretation of it.

I’m clear about the race notice jurisdiction issue. By the time my deal is finished, I hope to be much better educated about how jurisdictions actually apply the law.

Stay tuned for the next chapter. LOL

Regards,

Elizabeth

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Race issues and Deeds - Posted by JT-IN

Posted by JT-IN on May 11, 2006 at 21:40:20:

Natalie:

Let me give you a brief set of real-world circumstances about Deeds, and recording of same. This is an active case and situation, that exists as we speak…

Party B. being the Grantee of a QC Deed received from Grantor, Party A, on 8/15/05. Grantee did not record the deed for unusual reasons.

Party C. being the Grantee of a Warranty Deed received from Grantor, Party A, on 11/30/05. The Deed was recorded on 12/3/05.

On Feb 15, 2006, Party B, being the Grantee of QC Deed, and unknowing of a Deed from Party A to Party C, recorded the QC Deed.

In the county records the parcels of property in question are now owned by Party B.

How can this be…? It is a Race State. Both Deeds are valid. Party A has a real problem here, as Party A signed a Warranty Deed, and at the time of signing that Deed also signs an affidavit to the title company which says that there are NO other claims to the property. This was NOT the case, as the other VALID deed existed…

There is NO doubt that Party C would preval in a quieting of title action, due to the underlying circumstances here. However, in order for the party C, who has a Warranty Deed, to obtain clear title, either Party B must agree willingly to step aside by conveying a Deed back to Party A, or Party C will need to Quiet the Title.

Not story book or theory, this situation currently exists… and it will only go away one of the two described above. Of course, Party C is not even aware of the facts, as they exist above. If they were to attempt to convey the property, they would become aware of the situation rather quickly.

So much for race states and clear title… and Wild Deeds. It isn’t exactly as it is written about, especially by those that have never been in the middle of such matters.

Just another interesting RE situation…

JT-IN

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House - Posted by Nike

Posted by Nike on May 11, 2006 at 19:07:18:

The deed transfers the sellers interest–recording the deed is not necessary but will protect against a subsequent BFP.

A BFP must have no notice of third-party claims. If he has notice then he’s not a BFP and he takes subject to third-party claims.

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Re: House - Posted by Elizabeth NJ

Posted by Elizabeth NJ on May 10, 2006 at 22:45:19:

Ken,

Thanks, but it’s not Ocwen, although they can be hell to deal with.

Did you have a run-in with Ocwen?

Elizabeth

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Re: House - Posted by John Corey

Posted by John Corey on May 11, 2006 at 05:09:07:

Nike,

I think there is some logic to what you are saying. Transfer of ownership and notice can happen without s deed being recorded. Messy and subject to a challenge but …

More interesting is the bank has no real interest in owing a residential property. They are prevented from doing so given their charter (if they really are a bank).

Hence the motivation of the two sides is actually aligned. They gain little by fighting if Elizabeth is prepared to pay off the lien. As this property should have been transferred to HUD the bank has even less reason to want to argue compared to collecting the pay-off amount.

So, it is less about the law and more about what it takes to settle.

John Corey

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Re: House - Posted by Elizabeth NJ

Posted by Elizabeth NJ on May 10, 2006 at 22:44:06:

Nike,

Thanks for your comments. I’ll let you know how much they’re asking for when I get the payoff figure.

Elizabeth

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Re: Wild Deed issue - Posted by Jim V

Posted by Jim V on May 11, 2006 at 01:18:19:

John,

As I remember when Elizabeth first posted this, JD replied that it was probable the lender would sell the property for the amount they were owed, including past due payments. It seems a little unusual that there is absolutely no record of any foreclosure action against the former owner either in property records or in a general index search. I’d think that there would have to be some record, otherwise the sheriff wouldn’t complete their sale.

I really haven’t read anything that would indicate to me that a change in case law is imminent.

People screw up foreclosure purchases all the time, it’s why the common recommendation is to stay away from foreclosures until you either know what you are doing, or can afford to take the occasional bath.

I haven’t sen enough information to honestly say what might be the probable outcome, I’ll suppose we’ll find out in time.

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Re: Congrats Eliz… - Posted by Elizabeth NJ

Posted by Elizabeth NJ on May 09, 2006 at 15:44:51:

Thanks JT.

The payoff at the time of the foreclosure in 2002 was $235,000 according to the Sheriff’s records. I know there will be interest & attorneys’ fees added to that.

You’re right of course. The lender may fight tooth and nail to “sock it to me” just out of spite because of my position in this.

I knew at the time I bought the property that the original mortgage was only for $198,000 and the date it was issued, so I was able to estimate a range for the payoff figure at that time.

You said you couldn’t imagine buying sub2 without a payoff figure. I guess you don’t want to know about the 3 family I bought sub2 for $2,500. I had run title and pretty much knew what was out there. Plus, I’m usually successful at negotiating liens or getting them wiped out entirely, so I wasn’t afraid of the deal.

I’ll wait to see what the bank’s lawyers send my attorney. Hopefully, it won’t break me.

Thanks again.

Elizabeth

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House - Posted by Nike

Posted by Nike on May 12, 2006 at 07:28:44:

Good grief. The Recording Act does not require the deed be recorded for it to be valid. Recording puts the world on notice that you own the property and precludes subsequent claims by BFP’s.

Again you, and others, merely focus on the race aspect–what about the requirement that you be a BFP- with no notice of prior claims. You will prevail only if you’re BFP. Are you a BFP? Did the prior foreclosure action (including the public auction) provide notice to all that a third-party claim exists? Did the tenant living in the building who had a lease with a party other than the record owner require you to investigate further? These are open issues. Has your attorney even discussed these isues with you?

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Wild Deeds and Quiet Titles - Posted by Anne_ND

Posted by Anne_ND on May 12, 2006 at 09:53:41:

Hi JT-

[“Wild Deeds and Quiet Titles” sounds like a bodice-ripper written by Nora Roberts for summertime reading on the beach. Someday I’m going to write a real estate murder mystery and make a frillion dollars…]

Ahem.

I have a pretty basic question for you, and I don’t mean to hijack this very interesting thread, but can you give me a quickie explanation for what it takes to quiet title? I realize it’s probably state-specific, but it appears to me that when you quiet a title, it’s just a time-frame and expense thing, right? It can’t be contested as adverse possession can be? Is that why in your example you state: “either Party B must agree willingly to step aside by conveying a Deed back to Party A, or Party C will need to Quiet the Title.” Is Party B out all their money if Party C gets quiet title? Does Party A go to jail?

Thanks for the interesting example and any light you can shed for me.

Anne

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Re: Wild Deed issue - Posted by JohnB

Posted by JohnB on May 11, 2006 at 08:53:30:

Thanks for your post Jim.
I buy at sheriff sale in 3 counties in NJ. I have seen the case law being made. Actually, if I locate my file on a house I purchased from sheriff sale in Stafford Township I can give you more information about the case law that was made by Judge Cline (Keep your Castle Cline, as he is affectionally known as by us investors).
I purchase the house, got the deed, recorded the deed and mortgaged the property. After I filed my Writ of Possession against the former owner, she filed a pro se Motion to Show Cause to have the Sheriff Sale overturned. After 2 years of litigation she won and was able to redeem her house. I did receive my money back except for the interest i paid on my loan and my attorney fees. I then sued Chase Manhattan ( the foreclosing bank) and they settle with me out of court.
Jim, case law is case law.
In this case, the sheriff tendered the deed. I would love to dive into this file and take a closer look. Elizabeth would have to reveal the address and/or the defendant.
I could pull the Chancery abstract to see if the foreclose was completed correctly. If it was not then she could have a case but not recording the deed…I just can’t see how that makes her seller’s deed valid. If his ownership right were extinguished due to the completed sheriff sale.

I am sure we will find out soon enough.

I wish Elizabeth the best and I hope she prevails without having a judge decide.

Oh btw, I agree with you about staying away from foreclosure sales until you know what you are doing. just for the record, I have been buying at sale for 8 years…I dont’ know it all and that is why I am interested in Elizabeth’s situation.

take care