NOW the question is: if you buy a forceclosed house, it the sale legal?

[dixiegrrrrl]

Now there are questions about the legal chain of title for foreclosed houses, and if the sale can be legal,because of the way mortgages are sold to create derivatives.

This is a long read, worth reading it a couple of times to find the essential questions.

Here is the important part:

In the event that the loan goes into foreclosure at a later date, the then-current owner of the loan files the foreclosure and sells the property to a new owner, often at auction.

The land records would show a deed of transfer from the investment bank to the new owner.
This creates a break in the chain of ownership of the mortgage rights.
In many cases, the transfer of ownership of the mortgage loan has gone from the original lender, through several owners, and then to the foreclosing bank, none of which is recorded on the property title history.
Technically, the foreclosing bank has no recorded title rights to foreclose in the first place.

There are reports that some title insurers are indicating that they will not insure for this title defect.


But confirmation that this problem is real and potentially serious comes via a new “gotcha” practice by Wells Fargo on foreclosure sales.
Wells is sufficiently concerned about the risks of selling properties out of foreclosure that it is springing an addendum on shortly before closing, which effectively shifts all risk for any title deficiency on to the buyer.

Now why is this a big deal? Go reread the boldfaced sentence above
. If a bank like Wells does not have the right to foreclose, it cannot have clean title to the property. So the bank could conceivably be selling something it does not own.

Full story here:
http://www.nakedcapitalism.com/2010/09/latest-real-estate-time-bomb-title-of-foreclosed-properties-clouded-wells-fargo-dumping-risk-on-hapless-buyers.html


Plus another explanation on Denninger's site>

http://market-ticker.org/akcs-www?post=166915

[Ozymanithrax]

1. Thorughout our history it has been legal...the courts will decide this. n/t

[aquart]

3. Legal to sell what you cannot prove you own?

Link?

[dixiegrrrrl]

4. 2 links in the post.

[Ozymanithrax]

13. Well, that is for the courts decide, isn't it. n/t

[davepc]

2. Produce the note.

http://www.consumerwarningnetwork.com/2008/06/19/produce-the-note-how-to/

[dixiegrrrrl]

5. Not only the "note"

but it appears, from previous writings on this topic, that during the process of tuning mortgages into bonds, the TITLE got separated from the mortgage.
Thus an additional break in the chain.
I know one thing. When and if it comes time pay off the mortgage down the road, I am getting
a lawyer involved in the payoff letter, and before that, soon, in fact, I am going to our
courthouse and looking up the transfer process of our mortgage from Countrywide to BOA to, as it turns out, Fannie Mae.

[dkf]

Pure sloppiness.

Is it necessary that in order to securitize debt you screw up the chain like this? I doubt it.

[westerebus]

7. All the better to MBS-CDO with.

It's not like the all powerful, all knowing, all consuming dregs of Wall Street intended to mislead any one.

Oh, no. No one could see this coming.


I do need the sarcasm thingy for this one don't I?

[dkf]

6. Pure sloppiness.

Is it necessary that in order to securitize debt you screw up the chain like this? I doubt it.

[Vincardog]

15. Is it necessary that in order to securitize debt you screw up the chain like this? Yes if is if you

want to 'securitize' 10,000 times more debt than you own. The real secret behind the bubble bursting.

[westerebus]

8. Let's hope this never gets to SCOTUS.

I fear we will find none of us OWN anything. With the exception of the PTB of course.

[dixiegrrrrl]

9. Excellent point.

[Crazy Dave]

16. I own my house, no mortgage but....

Let me skip paying my property taxes and the county can and will take it away from me and they also have the right to send armed men with guns to force me out.

[SheilaT]

10. The reasoning here

strikes me as somewhat like the reasoning some people use to "prove" that the income tax is illegal.

[mopinko]

11. i suspect you are right. but things do go through some

twists and turns. i tried to buy a foreclosure which was originally a wamu loan. tracking where it went after the foreclosure was quite the adventure. in the end, tho, a lot of there properties are sold by fannie and freddie, so people would have to fight the federal government. not gonna win that one.

[dixiegrrrrl]

12. The reasoning is logical and has legal basis.

I assumed you missed some of the key points if you read both articles.

Title insurance companies are saying they cannot guarantee title to a house you buy, or sell.
THAT is a REAL problem.
among many many other real problems of this mess.

It looks like more and more people are finding out all the inherent problems.

[SheilaT]

14. Anyone who would buy a property

about which they're told the title cannot be guaranteed, would be a real idiot to buy.

Just my opinion.

[fasttense]

17. Good point. But are they told before they buy?

Or is it slipped into a little clause that you can't make heads or tails out of even when they explain it?

[SheilaT]

18. I would hope that there's something

in the law that requires disclosure of that nature.