WATCH OUT! BEFORE YOU BUY THAT NEXT PROPERTY — TITLE ISSUES

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GRAVE PITFALLS IN BUYING A HOME TODAY

If you are paying cash, that is no protection against later claims of owners who never legally lost title or gave title notwithstanding what is recorded in the title registry. Those documents if false would return the prior owner to title and possession of the property. That would leave you literally out in the cold without home or the money you put into the deal. And as we have already seen, the fact that a title company or even an ACTUAL lender (actually lending their own money) is willing to close doesn’t mean that title is clear. Both have been consisting violating basic underwriting standards of the industry for at least 15 years.

If there is or was one or more loans going back perhaps 10-15 years in the chain title, they were probably subject to some claim of securitization. If securitization is an issue the plain truth is that the players in the securitization chain can’t tell you what you need to know about title. They just don’t know because they never cared. There is a big difference between

• WHAT THEY SAID THEY DID — that would be the closing documents with the borrower
• WHAT THEY SAID THEY WERE GOING TO DO — that would be the closing documents with the investor — the securitization documentation
• WHAT THEY ACTUALLY DID — that would be the actual money trail — where it came from, where it went, or kept it, or passed it on, and who was ultimately receiving the bulk of the payments or proceeds of payments from the borrower, the servicer, other third parties, insurers or federal bailout.

Each of these factor into title or potential claims on title. each of these factor into any foreclosure and subsequent sale. And ultimately each of these will need to be cleared through signatures and recorded affidavits of all the possible participants, a court order quieting title or both.

CASE IN POINT: I know of a situation in Phoenix where the famed foreclosure mill Tiffany and Bosco is involved. There was a foreclosure and then there was a deed from husband to wife. Obviously that raises eyebrows. If there was a foreclosure and it was valid then the husband to wife deed is a wild deed and can be ignored. But the husband and wife deed is corroborated by the fact that one of them or both were on the original deed and the original mortgage that was foreclosed. So the husband -wife deed is not clearly wild — it is questionable at best and at worst, part of the proof that the foreclosure sale was illegal, ineffective or invalid. 

Now the property went apparently from the party who submitted the successful bid at an “auction” that may or may not have been authorized because it was ordered or conducted by a “Substitute trustee”by virtue of a substitution of trustee that may or may not be an authenticated document. And the Notice of Default and Notice of Sale may or may not have named the actual creditor. In most cases, it does not appear that the substitution of trustee names the actual creditor, which is why the judicial states have a much larger backlog of foreclosures than non-judicial where the pretender lenders get away with substituting fabricated paperwork in lieu of actual chain of title.

Thus the highest probability is that if you are buying a residential piece of real estate, there are title questions that are overhanging the transaction. This is a bad thing that endangers your investment and your plans but not so bad that it can’t be fixed. I think I would get an affidavit from Bosco saying that to his knowledge and belief there are no facts, documents or circumstances under which any third party could claim an interest in the real property other than as stated in the commitment — and that he is in a position to know. That affidavit should be executed in recordable form along with the Warranty Deed when they close. Considering what we know, an affidavit from the witnesses and notary saying that Bosco actually signed it would be in order as well and also executed in recordable form and recorded as attachments to the deed. If they refuse to do the affidavits, then watch out.

The seller is said to be an LLC and the title company already wants to know who that LLC is, who formed it and  what chain of authority is present to convey title. There are a thousand reasons why title is being portrayed this way. But it is possible that Bosco was the successful bidder, that Bosco created the LLC and that Bosco named himself as Trustee. The conveyance from husband to wife indicates an outstanding interest in the property. If the policy contains an exception for this conveyance it is giant loophole in title and the insurance. The commitment says they want details on the incorporation of the LLC. I would ask for those documents as well.

But overall, this is not evidence, in and of itself that the whole thing is a sham. The 24 month period referred to in the commitment represents a common look back period for the commitment. It doesn’t mean that is all the work they will do. I think the whammy will come when they issue the actual policy. THAT will be materially different from this commitment. And they say so right in the commitment.

Leaving off Schedule A, considering the naming of the Seller and buyer later on, does not seem wrong and in fact is common practice so the commitment is not used in lieu of a policy. Many people if they read anything, read the commitment. The commitment is basically a preview but not the real thing. The practice in the industry is to issue the commitment with exculpatory language such that when they issue a policy that is materially different from the commitment, you probably won’t notice it.

I think you must take the position that the title to this property is probably hopelessly mired in doubt and clouds. But here is what you could do. You could file a quiet title action based upon the questions raised by the commitment, with cooperation of T&B et al and name everyone in the universe. After the time for answers has come and gone, the defaults are entered and final judgment is entered. Then title is clear. The burden of doing so SHOULD be on the seller, but they might insist on you doing it yourself.

The lawsuit should recite the fact that there are questions of title relating to the securitization or attempted securitization of the loan. It should be served on the last known servicer and the last “lender”. The lawsuit should occur BEFORE the closing which means that the seller LLC should be the plaintiff. And the deal should be that if the Judge doesn’t sign the order, there is no deal and all money is refunded.

If you follow this I believe that you will receive something practically nobody else has — clear title. As the title issues become more and more in the news, the fact that you received a clear title order from a Judge would increase both marketability AND price when you want to sell it. And remember, the Final Judgment signed the judge must (a) be clocked in with clerk who gives you a certified copy and then (b) the certified copy recorded in the title registry of the county in which the property is located. Do that as soon as you can lay hands on the Judge’s Final order.

Check with a licensed attorney knowledgeable in real estate and title issues and who has some working knowledge of securitization before you take any action based upon this article. This is for general information only and not meant as advice on any particular case. You should not proceed with the purchase of anything as important as a house without the assistance of an attorney licensed in the jurisdiction in which the property is located.

Tags: affidavits, bankruptcy, borrower, buying a house, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, title, title insurance, trustee, WEISBAND
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