BEWARE OF LAND TRUSTS WHEN DOING FHA SHORT SALES!
MY PREVIOUS POST:
I've been working for almost 3 months on this short-- hud-1s, BPO, all financials etc.
The bank became aware of a deed transfer to trustee and asked to see the warranty deed and the trust agreement.
I had seller place deed in a land trust via a Warranty Deed to Trustee (my wife's maiden name). However, on a separate exhibit I showed that the beneficial interest remained 100% in the seller's name. (I did not supply the assignment of the interest to me).
THEY SENT ME THIS EMAIL:
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We regret to inform you, based on the following criteria, we are unable to approve your request for a Presale or Deed-in-Lieu of Foreclosure:
Unauthorized transfer of deed.
Not acting in good faith.
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MY EMAIL RESPONSE TO THEM:
The deed was put in trust in order to protect the property from any further liens and judgements. The property is still 100% owned by the seller as evidenced by Exhibit “B”.
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THEIR EMAIL RESPONSE:
"Besides the deed the mortgagor also signed a land trust agreement which HUD does not allow in the short sale.
The mortgagor again will not be placed in the HUD pre-sale program."
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I totally got blind-sided on this one. Most out there recommend taking deed to in a trust. They denied me the short because of it.
Has anyone else had a lender who had a problem with trusts?
Comments?
What can be done now?
I'm actually willing to pay near the payoff to get the property, but I'd like to know if there is a way I could get it for less.
Does anyone think I could purchase the mortgage for a discount or would they view it as the same?
"Most out there recommend taking deed to in a trust. "
I've never said that on this or other boards, and I've got hundreds upon hundreds of successful shorts to my credit over the course of the last 20 years.
I guess that you didn't read A Short Sale Primer, or probably didn't take to heart what I've been consistently saying in my posts....
The transfer of title will cause an application for short sale consideration to be inelligible. This holds true with most mortgagee imposed servicing criteria, and especially so in the case of Gov't insured loans.
In my opinion, and has historically proven to be the case, transactional problems arise when the Speculator tries to combine acquisition techniques.
No offense, but that was a forseeable event.
Great tip ssp.
I got a deed to trust and wondering if I should record it.
Now I think I will just sit on it.