Short Sale--Deed Or No Deed
Hello all,
I have completed several short sales and I have bought several mortgages at a discount all with a signed purchase agreement. Never had to have a deed signed over before closing.
I am wondering if by having the owner sign the deed over before a closing, during a short sale negotiation, are you at an advantage or disadvantage with regards to your negotiations with the bank?
I have been told that by having the deed signed over and recorded that you are no longer in a good negotiating position with the bank--among other things they figure you own the house now so you are stuck with seeing the mortgage is taken care of or you lose the house to foreclosure.
Recently I have heard that by telling the bank that the people have vacated the house and they have signed the deed over to you that the bank will be more apt to work something out.
I do realise there is a differencre between just signing the deed over and having the deed signed over AND recorded.
Your opinions please?
Thanks
Marty
I would interested to have an answer to this at well because I was considering taking over that has has 20-25k in equity in it.
However to bring the not current would be 6k which would eat into my equity I would rather try and short and get some more equity out of it. I want to tie the house up and prevent the owner from dealing anyone else and the best way to do this would be to get the deed. However I am concerned this might make negotians awkward when trying to short.[ Edited by demosthenes on Date 11/20/2003 ]
There are those who advocate 'getting the deed' as a way of control. While that may be true, and there is nothing illegal about the snatching of deeds from financially unsophisticated and emotionally distressed homeowners, I don't think that it's an appropriate tactic in an attempted short sale transaction.
There are a couple schools of thought on this. Snatching the deed could invalidate eligibility for short sale consideration since the majority of mortgagee short sale approvals are contingent upon the Sellers' representation that they've done nothing to effect title (sometimes the language is more explicit, "have not transferred interest to a third party"
So, recorded or not, by giving a deed, in many cases the Sellers must avoid telling the truth (lie) to qualify for short sale consideration.
As a matter of practice, when I counsel distressed homeowners, I generally advise against selling Sub2, and against giving their deed until/unless the mortgage(s) are satisfied (except in divorce proceedings and the quit claiming of interest from one ex-spouse to the other).
But, that's just my opinion and probably not shared by those that advocate the practice.
Hey ShortSalePro--
Thanks for the reply. My particular case at this time involves a couple who are just going to let the house go to foreclosure and file for bankruptcy. They don't have all the necessary financials at this time to satisfy the loss mit dept. Have been prodding them but they just don't seem to be very motivated to get thier financials in order. Divorce is in the works also.
Nice couple fell on hard times. They have just said the house is yours if you can do anything otherwise we'll let it go to foreclosure.
Your thoughts?
Thanks
Marty
ENJOY the BEST of BOTH WORLDS!!!
MartyOH:
SSP is K-Rekt however their is more than '40 Ways' to skin a Creative RE CAT...
Iloook at all of PFL candidates, secure an agreement with them to UNLOED the NEGATIVE or LOW EQUITY Property visa via TRANSFER of DEED into a Simple Living Trust (w/Owners shown as having 100% www.Bene.Int.)
The docs are EXECUTED but not recorded and I Temporarly hold Trusteeship.
I say Temporarily b/c if I send out a completed SS Pkg to the lender I haven't ask my client to LIE about the Prop Trnsfr due to the color of Law dealng with Trusts does not imply a foul in regards to the keeping inliune with the Lenders Transfer of Title rules.
I know this can be debated BUT technically THERE IS NO TRANSFER OF TITLE (RECORDED)---yet! And Intent to Transfer upon approval of the SS is what ALL Parties Are AWARE of!
My assistance and involvement within the Living Trust of "Mr. SMITH" and his desire to LATER ON NAME ME as a TRUSTEE or BENEFICIARY is Absolutely, 100 % NONE of the Lender's business! (PERIOD)
As a mattr of fa ct b/c I will soon be nominated as a Trustee on behalf of "Mr. SMITH", I CANNOT be Compelled by an ATTY (or Judge) to take an action that could cause HARM to ANY Beneficiary (let alone myself)...
Next thing wuld be the proper Naming of the Trust...This is very important as well...
EXAMPLE:
"John M. Smith and Mary K. Smith Trust "
The RE Sales contract, HUD-1 and closing docs have the SAME NAME as on the BORROWER's MORTGAGE.
By working with the title Ofcr and closing ATTY for your new buyer...you can get by having the Trust itself being the Seller via a Statement of Identity+ the unrecorded Trust docs.
NOTE: You also should have already gotten a Power of Atty from the sellers so that you can manuever Freely at the closing and the check comes to YOU as TRUSTEE.
Sounds a bit complex (not really once you understand the process) however your next deal should be a breeze!!!
Hope it Helps!
Derrick
MartyOH:
I just read your reply to SSP...
Simply Get the Deed (NAMED as 123 Main Street Trust) , Pwr of Atty, Stmt. of I.D. from the Owners and present your offer to the lender---to NEGOTIATE a FAST ANSWER due to the NEW Circumstances!!!
There's more but if you need some guidance feel free to PM me.
Derrick