| Once escrow closes, the issues of the prior owner | | | | new buyer takes possession and a new lender |
| cannot affect the new buyer of the property. Every | | | | becomes the only lien holder. In most cases that is the |
| purchase that includes financing must have a title | | | | entire process. No matter what happened before, if |
| insurance. The title insurance company is responsible | | | | the bank accepted a short pay off and the new buyer |
| for the transfer of a clear title to the new owner, and | | | | bought the property, no other procedures should |
| the only lien should be the new mortgage that the | | | | happen for many years to come, and it will be up to |
| buyer acquired in order to buy the property. | | | | the new buyer and lender to do whatever they want, |
| In a typical transaction when a borrower stops making | | | | a process entirely independent of the prior sale. |
| payments, a Notice of default (NOD) is recorded 90 | | | | In this unusual case in Fremont, California, the bank |
| days after missing the first payment. A Notice of | | | | approved the short sale, signed the closing documents, |
| Trustee Sale (NTS)is recorded 90 days after that. In | | | | got paid and then conducted the trustee sale anyway, |
| the meantime, the seller can opt to sell the property if | | | | and become the new owner of the property it just |
| the bank approves what is called a short sale, meaning | | | | sold. As a matter of fact, the lender send the check |
| that the total amount of the mortgage owned against | | | | back to the title insurance company, 30 days after |
| the property is going to be short of the full amount. A | | | | escrow closed and ask to have the sale rescinded. |
| short sale can only be initiated when there is an offer | | | | Title company send the check back saying it cannot |
| on the property. | | | | do that. Meanwhile the title of the property still shows |
| When there are two or more lenders, they negotiate | | | | Indymac as the new owner, in other words, it shows |
| an agreement between them, based on how much | | | | as an REO. How can this happen? |
| money from the proceeds each will take in order to | | | | What can we do to prevent this situation from |
| sign off the lien and allow the property to sell to a new | | | | happening? Escrow closed in December 2009, |
| buyer. During this time, however, the trustee might | | | | Trustee Sale happened on January 2010, it is mid |
| schedule the sale of the property using the powers | | | | March 2010 and we still have no resolution to this |
| granted by the Note and Deed of Trust. When lenders | | | | problem, the title company says they are negotiating |
| are negotiating an offer, they postpone the Trustee | | | | with the bank and that the issue will be resolved soon... |
| Sale in order to allow the short sale to conclude. The | | | | Needless to say, the new buyer is not happy at all, he |
| trustee sale can be postponed many times. When a | | | | is receiving visitors that look at the property as an |
| short sale is finally approved and the escrow closes, | | | | REO and think it will be available for sale. This particular |
| then the trustee sale is canceled completely. It is the | | | | buyer looked at over 50 properties, wrote 27 offers |
| banks responsibility to notify the trustee that the sale | | | | and after almost a year, he moved into his new place... |
| has occurred. | | | | I wonder when he is going to start truly enjoying his |
| A recording of the new deed should signal the end of | | | | new home. |
| the entire transaction, sellers move out of the house, | | | | |