REOs, unclear ownership, and clear title (foreclosed, agent, investment, mortgage companies)

[scone]

I was looking at an REO listing, and the tax roll shows Argent Mortgage, acting as an agent for Deutsch Bank, as the "owner" of the house. I understand that Argent has become semi-infamous for collecting mortgages, chopping them into "slices," and repackaging them as investment vehicles.

Evidently, the bankruptcy courts have been using this "spread ownership" (my term, I don't know what else to call it) as a loophole to prevent some foreclosures, because the "agent" mortgage companies can't prove they actually own the property. So my question is, if the mortgage on the foreclosed property has been sold in slices into several different portfolios, who actually owns the house? How do you clear the title if Argent is just an "agent" for another party, which was just acting as a re-seller anyway, such that the mortgage "flowed through" them, got "shredded," and then went out into other portfolios?

I'm deeply confused, and I don't see how you could get the cloud off the title here. Am I just misunderstanding the nature of the beast?

[sonarrat]

I'm in the same situation. The title docs show US Bank on behalf of Terwin Mortgage-Backed Securities 2006 or something to that effect. The title search (which they pay for) and title insurance (which is part of your closing costs, about $1700 in my case) will take care of any problems.

[bentlebee]

The short sale i bought was still owned by the seller but the bank had to agree to the short sale. As I understood it the seller negotiated with the investors and not really with the bank. She knew how it worked since the selelr was a real estate lawyer specialized in foreclosures. She tried to get us go higher with our offer but we denied and told her husband the realtor in this case that he could call us back if they changed their minds, and he called very quickly to tell us that his wife would try to work it out with the investors of the bank who really owned the mortgage. She ended up with a $ 23,5 K judgment and we closed for our offer price in Febr. '08.

Since we got title ins. which is done in every transaction in Fl. (as far as I know), we shouldn't be affraid that something is wrong, that is why the ins. is in place.

[pghquest]

Originally Posted by scone

I was looking at an REO listing, and the tax roll shows Argent Mortgage, acting as an agent for Deutsch Bank, as the "owner" of the house. I understand that Argent has become semi-infamous for collecting mortgages, chopping them into "slices," and repackaging them as investment vehicles.

Evidently, the bankruptcy courts have been using this "spread ownership" (my term, I don't know what else to call it) as a loophole to prevent some foreclosures, because the "agent" mortgage companies can't prove they actually own the property. So my question is, if the mortgage on the foreclosed property has been sold in slices into several different portfolios, who actually owns the house? How do you clear the title if Argent is just an "agent" for another party, which was just acting as a re-seller anyway, such that the mortgage "flowed through" them, got "shredded," and then went out into other portfolios?

I'm deeply confused, and I don't see how you could get the cloud off the title here. Am I just misunderstanding the nature of the beast?

Essentially whats happening is that the paperwork is all in the name of Deutch Bank, but because the files are electronically transferred to Argent Mortgage, that package up the loans and then resell them to a 3rd party, again electronically, issues have been coming up because of the lack of paperwork from Deutch Bank, to Argent, to the 3rd party. There has to be a paperwork in order to proceed with a sheriff sale showing that the 3rd party has legal authority to foreclose.

What will happen is that the sheriff sale is simply delayed and eventually the paper trail required is created and the sheriff sale proceeds.

Who legally owns the house is still the home owner, until the sheriff sale or bankruptcy court deems that the 3rd party can legally take title.

[scone]

Originally Posted by pghquest

Essentially whats happening is that the paperwork is all in the name of Deutch Bank, but because the files are electronically transferred to Argent Mortgage, that package up the loans and then resell them to a 3rd party, again electronically, issues have been coming up because of the lack of paperwork from Deutch Bank, to Argent, to the 3rd party. There has to be a paperwork in order to proceed with a sheriff sale showing that the 3rd party has legal authority to foreclose.

What will happen is that the sheriff sale is simply delayed and eventually the paper trail required is created and the sheriff sale proceeds.

Who legally owns the house is still the home owner, until the sheriff sale or bankruptcy court deems that the 3rd party can legally take title.

Yes, I understand that part. However in this case the original owner is long gone, but it's not clear that the mortgage has reverted in its entirety to Argent Mortgage or Deutsch Bank, because the mortgage has been split into pieces, and resold to several parties. So each party might have a piece of the pie, and might have to sign off on the sale, if all the pieces can even be tracked down. Argent has a bad reputation for losing the paperwork, and they have lost a lot of people, so I imagine it's pretty chaotic over there. So even a "quiet title" motion might not clear things up.

And while the title insurance ought to take care of this, I don't think the remaining title companies (many have gone belly-up) have ever dealt with this issue on a large scale, because this splitting and repackaging of mortgages is relatively new. And, sad to say, I can easily imagine a title company trying to weasel out of the policy if this starts to become an issue in the next wave of mortgage defaults.

I'm beginning to think that properties like this one might have a permanently tainted title, or at least until the courts get some of these cases and can start setting down some guidelines.

[pghquest]

Originally Posted by scone

Yes, I understand that part. However in this case the original owner is long gone, but it's not clear that the mortgage has reverted in its entirety to Argent Mortgage or Deutsch Bank, because the mortgage has been split into pieces, and resold to several parties. So each party might have a piece of the pie, and might have to sign off on the sale, if all the pieces can even be tracked down. Argent has a bad reputation for losing the paperwork, and they have lost a lot of people, so I imagine it's pretty chaotic over there. So even a "quiet title" motion might not clear things up.

And while the title insurance ought to take care of this, I don't think the remaining title companies (many have gone belly-up) have ever dealt with this issue on a large scale, because this splitting and repackaging of mortgages is relatively new. And, sad to say, I can easily imagine a title company trying to weasel out of the policy if this starts to become an issue in the next wave of mortgage defaults.

I'm beginning to think that properties like this one might have a permanently tainted title, or at least until the courts get some of these cases and can start setting down some guidelines.

Title insurance would have nothing to do with this because it deals with pre-existing liens when a title is transferred, in this instance the broken up title is stopping a transfer from home owner to the bank (sheriff sale)

Eventually the original bank will have to get involved and re-buy back the lien, and then go through the sheriff sale process, or they need to create the proper paper trail.

There are other ways to go around the system to get a clean title, but those methods vary state by state.

[scone]

Originally Posted by pghquest

Title insurance would have nothing to do with this because it deals with pre-existing liens when a title is transferred, in this instance the broken up title is stopping a transfer from home owner to the bank (sheriff sale)

Eventually the original bank will have to get involved and re-buy back the lien, and then go through the sheriff sale process, or they need to create the proper paper trail.

There are other ways to go around the system to get a clean title, but those methods vary state by state.

So in that case, putting it on the market, as they have done, is kind of deceptive, because it can't sell at all right now. I wonder how many REOs have this type of defect, and whether that's affecting the DOM and closed sales figures?

[DMenscha]

This is NOT a defect in the title. There is an entity that owns the property. Whether it's a corporation, even a mutual fund, or whatever. They may have agents/officers or asset managers who would be authorized to convey the property.

A preliminary title report will tell you who the vested owner is.

[olecapt]

Yup as D'mensha suggests there is always an entity that owns the property...it is the moneys paid to this entity that end up split up.

The screw up on the mortgages has been failure to properly cross ts and dot is as the property moves between various entities. And in fact some operations have gotten into substantial troubles by claiming ownership that they can't prove. The ownership however is not actually split...just not properly forwarded to the current owner.

[scone]

Originally Posted by olecapt

Yup as D'mensha suggests there is always an entity that owns the property...it is the moneys paid to this entity that end up split up.

The screw up on the mortgages has been failure to properly cross ts and dot is as the property moves between various entities. And in fact some operations have gotten into substantial troubles by claiming ownership that they can't prove. The ownership however is not actually split...just not properly forwarded to the current owner.

Yes, I get it. Still, it sounds like it's just more potential trouble than its worth. Especially if Argent Mortgage goes completely implode-o-meter and Deutsch gets unstable. There are just too many "migraine scenarios" in it for me. Pass.

Thanks everyone.