CAN A BANK SELL A HOME THEY DO NOT OWN? Tips and insider secrets revealed.

Todays question is regarding foreclosure deeds: "How can a bank sell a home when they did not record the foreclosure deed saying the bank is the owner?"

It is common occurance accross the whole country, The situation arises when the bank takes back or buys back the property at the foeeclosure auction. the problem occurs when the foreclosure deed does not get recorded after the bank takes ownership.

After the foreclosure auction the bank takes possession of the property if vacant. if occupied they will evict the occupant or offer them a cash for keys agreement to get them out. Once vacant, they take possession and secure the property.Once they have possession, they usually give it to an asset management company to sell. The property is put up for sale, an offer is accepted, the buyer will get a clear to close and the buyer closing attorney will conduct a title search.

The problem then is that if that bank has not recorded the foreclosure deed, the new sale can not close until it does. the solution is for the buyer attorney to get the foreclosure deed to record it and then be able to close the new sale to the new home owner. Unfortanately it is common, you can head this off by simply asking the listing agent to check and see if the foreclosure deed has been recorded or to complete a title search on your own. Sometimes they have the deed on file and just need to record it, other times it may cause a weeks delay in closing.

UPDATED August 8, 2010

AGENTS, BUYERS OR SELLERS PLEASE FEEL FREE TO POST YOUR COMMENTS OR SUGGESTIONS ON THIS HEATED TOPIC.

Blog written by:

Scott Godzyk
Godzyk Group Realty

Manchester NH

  • August 08 2010 - Manchester
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Answers (1)

Profile picture for ABBAUSA

Very interesting and informative.

In Texas we have a Deed of Trust and the trustee is really holding the deed, until the note is paid in full.

If your home or property is foreclosed on then the trustee is (or substitute trustee) is authorized to sell the property according to the terms of deed of trust. It is Non-judcial here in Texas. This normally wipes the slate clean and the lender now has the property back legally. 

Here is where the new deed would be, but the right to foreclose came from the deed of trust. Notices posted prior to foreclosure so their intention to foreclose. To me the prior posting gets them the deed back and the actual day of foreclosure where the trustee calls for  bids and accepts the highest bid or bids full loan balance and the lender retains the property.

(also in Texas for a land contract or contract for deed a Judcial Foreclosure is required that my fit the pattern you have described) 

Good Luck!

James Callas - Realtor®

  • August 08 2010
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