Showing posts with label deed-in-lieu. Show all posts
Showing posts with label deed-in-lieu. Show all posts

Monday, January 4, 2021

Vested Land Services Title Topics the Deed in Lieu of Foreclosure

From the Vested Land Services LLC newsletter Title Topics - Deeds in Lieu of Foreclosure

How is the deed in lieu transaction approached by a title agent?  This is from a recent edition of our client newsletter:

 We’ve been asked to insure a title that was obtained by deed in lieu of foreclosure.  Are there any special requirements when insuring a title which was obtained by deed in lieu of foreclosure?


Well, yes, there are. And there are some underlying legal issues, too.

       First, is the creditors’ rights problem.  If we are insuring the grantee under the deed in lieu of foreclosure’s title and we are issuing the ALTA 2006 Owner Policy, the pre-printed Creditors Rights Exclusion will cover this concern and no additional exception need be added; but, if we are using the ALTA 1987 Residential “Plain Language” Policy, we must include the following exception on Schedule B: 

 Consequences of an attack on the estate or interest insured herein under the Federal Bankruptcy Law or any creditors' rights law or state insolvency law. 

        If we are insuring a conveyance by the grantee under the deed in lieu of foreclosure we must run the deed in lieu of foreclosure grantor in upper courts through the date of the insured transaction; if that grantor has filed for bankruptcy protection after the date of the deed in lieu, the stop sign is illuminated and the bankruptcy proceedings have to be reviewed.

      Second, the mortgage for which the deed in lieu of foreclosure was given may remain open until the grantee in the deed in lieu of foreclosure conveys title.  In that subsequent transaction, the mortgage must be cancelled of record.

      Third, we cannot insure a title being conveyed by a deed in lieu of foreclosure which had been previously executed and held in escrow in case of a future default.  Only deeds in lieu of foreclosure which have been currently executed may form the basis for owners’ title coverage in favor of the grantee in the deed in lieu.

      Fourth, the realty transfer fee must be paid upon recording of deed in lieu if the underlying mortgage is not discharged.

*  *  *  *

If you would like to be added to the Title Topics newsletter, please send me an email.

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!


For your real estate purchase or mortgage refinance or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Land Services LLC
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-808-6130 - Fax 973-227-0645
E-mail sflatow@vested.com
@vestedland
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Monday, May 20, 2013

Facing foreclosure? 4 tips for homeowners

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.
Foreclosure is defined as the "process of taking possession of a mortgaged property as a result of someone's failure to keep up mortgage payment." This is a simple definition for a very complicated and overwhelming process. Consumers facing the possibility of foreclosure suffer both financially and emotionally from losing their homes.
So, what is to be done? Arm yourself with knowledge that will help increase your chance of a loan workout or "amicable walk-away."

Here are 4 tips from Realty Times:

1) State Programs For Homeowners
2) Deed in Lieu of Foreclosure
3) Short Sale
4) Cash for Keys

None of this is actually for the faint-hearted but it does pay to know your options.  Read the full article Four Tips for Homeowners Facing Foreclosure.

For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Land Services LLC
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-808-6130 - Fax 973-227-0645
E-mail sflatow AT vested.com
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Saturday, September 29, 2012

The Rental Alternative to Foreclosure

refinance New Jersey mortgages title agency
The New York Times reports
FOR homeowners who have been buffeted about by the foreclosure process, the suggestion that they willingly hand their deed to the lender and rent the home instead may only add insult to injury.
But such an alternative to foreclosure — variously called “deed for lease” or “mortgage to lease” — is an option for a select few. Fannie Mae introduced a rent-back program in 2009, and this year, both Bank of America and CitiMortgage announced that they would try a similar approach in a handful of markets.
The programs are basically an extension of what’s known as “deed in lieu of foreclosure.” In this process, the lender agrees not to foreclose if the homeowners simply hand over the deed to their property.
An interesting idea and in some markets it might work very well if homeowners can rebuild their income.

There is a scam similar to this legitimate program.  In the scam, the "buyer" or "investor" gives you money for your home, usually enough to pay off your mortgage, and then agrees to rent you the house back at $X.  The problem is that the monthly payment is too steep for the former owner to maintain payments.

In the meantime, the investor has borrowed against the home, ceases to make payments and the former owner is on the street.
 
Read the full article here.
For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Land Services LLC
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-808-6130 - Fax 973-227-0645
E-mail sflatow AT vested.com
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Tuesday, September 8, 2009

Short Sale, Foreclosure, or Deed in Lieu: Which is Best for the Borrower?

Writing in Realty Times, Bob Hunt, a director of the National Association of Realtors, and Realtor in his own right, addresses the "benefit" to the borrower between a short sale, foreclosure, or deed in lieu transaction. It's an important article, here it is in full:

Short Sale, Foreclosure, or Deed in Lieu: Which is Best for the Borrower?

If only the President’s foreclosure-prevention plan worked as well as “cash for clunkers”. But it hasn’t. When the Administration announced the Making Homes Affordable plan in February of 2009, officials said they hoped it would help 4 million distressed homeowners to stay in their homes. As of this writing (8/2/09), the Administration has acknowledged that there are only 200,000 trial loan modifications under way.

Clearly, lenders have been reluctant to modify loans. (Moreover, there are good reasons for their reluctance according to a recent study by the Boston Federal Reserve.) Also, many borrowers have turned out to be ineligible for the programs or – because they are so far ‘under water’ – uninterested. Whatever the cause, the result is the same: a distressed borrower typically needs to choose between (1) a short sale (where the lender agrees to take less than the amount owed) in which, among other things, a commission (paid by the lender) is generated. (2) a foreclosure, or (3) a deed in lieu of foreclosure (where the borrower ‘gives back’ the property to the lender without a foreclosure proceeding). Which is better for the borrower?

Many real estate agents will say and advertise that a short sale is clearly preferable. In support of this view, two claims are usually asserted. (1) A short sale is less damaging to the borrower’s credit than a foreclosure. (2) A short sale provides the borrower with a shorter ‘waiting period’ until the borrower will be able to purchase a home again.

It is important to note that these are two different claims. For example, in a period of time a borrower could become eligible for a purchase loan under Fannie Mae/Freddie Mac guidelines, but he or she might still not have sufficient credit or income to qualify for the loan.

While many say that a short sale is less damaging to one’s credit than is a foreclosure, documenting that claim is another story. This writer has looked hard, but can’t find any verification from Fair Issac (the developer of the FICO scoring system) or any of the major credit providers. That is probably no surprise, because their systems are proprietary. Nonetheless, one wonders what might be the source of the claim.

On the other hand, people who apparently should know deny that there is any difference. Greta Guest of the Free Press (Freep.com) quotes John Ulzheimer, president of consumer education for Atlanta-based Credit.com. Ulzheimer spent seven years at Fair Issac. “The credit bureau sees those all as equal,” Ulzheimer said. “They are all essentially in the eyes of FICO a major delinquency.” Elizabeth Razzi wrote in the Washington Post (July 20, 2008), “A foreclosure and short sale inflict equal damage to your FICO score, according to Fair Issac…” though she provides no specific citation.

Moving on from the credit score issue, there is the question of being again eligible to buy. More precisely, it is a question of when, in the future, the defaulting borrower could get a loan that would be purchased by Fannie Mae or Freddie Mac. The issue is dealt with in Fannie Mae Announcement 08-16, released June 25, 2008.

When it comes to foreclosures and deeds in lieu of foreclosure, the policy distinguishes between events that were precipitated by extenuating circumstances (e.g. job loss, major illness) and those that were not (e.g. financial mismanagement). If you’ve had a foreclosure without extenuating circumstances, you can’t purchase with a Fannie Mae – backed loan for five years. However, if there were extenuating circumstances, it drops to three years. Suppose you chose the deed in lieu of foreclosure option. If there were no extenuating circumstances, the period would be four years, but with such circumstances, it drops to two. Fannie Mae doesn’t draw the distinction when it comes to short sales: the period is two years, the same as doing a deed in lieu with extenuating circumstances.

May 15, 2009, the Treasury Department issued an update to the Making Home Affordable plan. Among other things, it provides for financial incentives (e.g. a $1,500 moving allowance) to distressed borrowers who meet the general eligibility requirements for a loan modification and who will engage in an approved short sale or who will give a deed in lieu of foreclosure. Distressed and underwater borrowers face a minefield of options for resolving their problems. Not the least of their problems is the vast amount of misinformation floating around. They need to step very carefully.


For your next title order,
or if you have questions about what you see here,
contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com
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