Do I The Deed?
On a short sale, I have heard from the "Short Sale Primer" that you shouldn't grab the deed while trying to negotiate a SS.
On the other hand, I have a friend that always takes the deed and says that even if the bank doesn't like it so what? it is in foreclosure anyway and numbers speak louder than anything else. Other courses line up on one side or the other.
What is your experience??
I don't see how they would even really know that you took the deed. Even if you recorded it (which I don't think would be the best way, if your short sale goes through), they wouldn't know unless you told them. They aren't going down the Recorder's Office to check.
That said...I wouldn't do it.[ Edited by sgtphilko on Date 03/31/2004 ]
The reason they would know is that you would record the deed so that you were the owner of record and thereby had the right to negotiate a short sale in the first place.. Otherwise I would have to have either a letter from the owner of record or a power of attorney authorizing me to do so.
Randall[ Edited by Stockpro99 on Date 03/30/2004 ]
THere must surely be more interest out there than this?
Just a newbie here, but wouldnt you have less risk by just getting the POA and an Authorization to Release from the current owner, rather than putting your name on the deed?
According to the "short Sale Pro" POA is a very dangerous way to go. As you are not an attorney and are acting as one for the seller if the deal goes south then guess who they come after. He suggests the letter. The advantage I see to taking the deed is control over the property and not having the owner back out of a deal quite as easily since you own the property (subject to the mortgage
I see what you mean. Thanks for the insight.
What happens though if you cant get the short sale approved? Does the bank continue the foreclosure process and then you have a foreclosure on your name? Or am I just totally oblivious to how this all works? :-?
While the act of taking a deed from a distressed homeowner is not illegal,
it does fly in the face of conventional real estate practice. Much has been written about the subject, and many have quoted specific legislation to rationalize the process. I know that other learned investors predicate an entire acquisition strategy on this, but personally, I wouldn't do it. If your 'deal' and relationship with the Seller is so tenuous
that you have to take the deed.... I would pass. I don't do Sub2s for the simple reason that it exposes the mortgagor to potential risk....
Perhaps it's my background as a 'failure analyst' performing research for the Mortgage Bankers Association's consumer complaints department. I have conducted investigations into allegations of predatory lending, untoward real estate practices, and acts of fraud....
An expert practitioner will have all his bases covered... and pay close attention to details... but it's the average guy.... who pushes forward without fully understanding the repercussion of certain actions... who get into trouble.
Especially in the pursuit of a short sale, which is what this forum is all about. I try to limit and restrict my comments to the practice of short sale acquisition.
Straight short sales should be simple, and yield mutual benfit for the Buyer and Seller.
Most problems occur when acquisition strategies are combined.
Getting back to taking the deed. Did you know that most loan servicers run a pre-closing title search.... if the deed has been transferred and recorded, it will show up. And possibly invalidate the short sale.
If the deed is taken, but not recorded, the Seller must still sign a statement (terms of mortgagee short sale approval) such that he /she have not transferred title to a third party.
If the Seller knows that he has given the deed, he/she would have to lie on the acceptance document.
Personally, I wouldn't place my Seller in a position that requires he/she to lie in order to facilitate a short sale.
So, to avoid potential problms, it's my policy to not take the deed. Who needs more problems?
Also a good point