Unfortunately we didn't fall under the category of "deal fell through at the last minute." Ours went through. Long story short, we found a house on Coldwell Banker. Drove 4 hours to look at the property....twice. Put in a low ball offer, it was sent back, made another, it was accepted. Drove back again to give a check for earnest money. It was a major fixer upper so we immediately started with contractors bids, no one could find the address. I emailed our agent and asked to make sure we're buying the right house on the right property. She stated it was a 911 address change but, assured me, "they did extensive research through the appraisal district" and it was correct. Sent a wire transfer to the title company and paid all cash for the house. Went to closing, got the keys, and started the repairs, another 60k later in repairs, and we find out Fannie Mae never forclosed on the property. They took payment on a house they never owned. Now everyone is playing the "not it" game.
Ultimately I think she will win but is a win a win with a protracted lawsuit?
Here is what I see as the roads to recovery by ease:
Heirs- I think the term is unjustly enriched. She has a lien on the property so they would not be able to do anything with it until she is made whole at least for the upgrades. They could do the right thing and deed it to them but if the estate has any creditors there is potential issues. The heirs could let her foreclosure as well on their vendors lien
Agents- Claim against the agents for misrepresting a property. Even though they relied on info provided to them. If they work for the same firm and did not provide an intermediary agreement they probably need to dust off their E&O policies
Title Company- IMO they need to step up and solve the problem but they could rely on the "unsurveyed property " provision. I probably would file a complaint with the State Board of Insurance. Title Insurance companies have deep pockets and I would prefer not to get in a lawsuit with them
FNMA- if the upgrades were not done I would think it would be easy to unwrap the transaction. How are you going to convince a pseudo government entity to pay for the upgrades in addition ? Another potential litigant with deep pockets
The title company is blaming the real estate company, the real estate company is blaming Fannie Mae, and Fannie Mae is blaming the foreclosing attorney....nightmare doesn't begin to describe it. I'ts a real life game of "not it"..only with incompetent professionals, and I use that term loosely.
We have consulted with an attorney, who after looking at our paperwork said the same thing. "Whoa"... he suggested i put them on notice for 30 days to repair it before he files with DTPA suit. And yes we have title insurance, but they claim the insurance is to a lot that's not even part of our property. Some how they gave us a policy and title insurance to some poor guys property!
The title company is blaming the real estate company, the real estate company is blaming Fannie Mae, and Fannie Mae is blaming the foreclosing attorney....nightmare doesn't begin to describe it. I'ts a real life game of "not it"..only with incompetent professionals, and I use that term loosely.
The good news is that it doesn't appear that anyone is blaming you, which of course they shouldn't be.
As was suggested, if you haven't already, I'd be speaking with an attorney and see what recourse you could seek. I'm generally not in favor of litigation, however, you're entitled to more than the dollars you've spent IMO....assuming you don't end up with the home.
The title company's attorney actually suggested I approach the heirs to the property and ask them to sign it over to me...Seriously? Maybe they would have 9 months ago when it was falling apart, now its worth considerably more. Someone would have to pay them off. I'm hoping the case is that we get to keep our home. We've put every thing we have into it. Months and months of remodeling, practically rebuilt it from the ground up. All of this so we could live debt free w/o a mortgage and enjoy our lives.. I't blows my mind.
A few questions so I can help point you in the right direction
- The legal address on the contract was incorrect ? Not the physical address or 911 but the legal address
- Since you received title insurance, does the legal on the title policy and the contract match ? And did it show FNMA in title ?
-Does the deed reference a physical address and if so is it correct or incorrect ? Deeds in Texas are not required to show a physical address but more and more deeds are referencing an address
Does the tax certification match the correct property ?
-Has anyone identified the property that FNMA actually owns ?
The legal address on the contract was correct, so was the lot ID#, the legal description is not. It's meets and bounds and it's the description to a driveway that belongs to the persons son. It could not have been foreclosed on because it was not part of the original reverse mortgage. The tax cert matches the property address, but the taxes were not paid for some reason at closing...not our responsibility. FNMA owns nothing, neither the property they signed over to us, nor the property listed on our contract. And yes it's all FNMA, they received all of the money. The title company said the person who got the payment was the seller...Fannie Mae.
When i spoke to the clerk at the appraisal district, she showed me a large folder about this property. It was put up for sale earlier last year, That title company found the error and sent it back to the lender stating "can't get clear title needs proper description". The listing was pulled. They turned around and sent it to another agent who listed it without verifying any information. Had the Agent or the title company contacted the appraisal district she would have told them immediately to refuse it...it's flagged. This is a very small town, only a couple of people handle these transactions at the appraisal district and they're very familiar with this property.
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
10y
Backing up let's start with what had to have happened
A mortgage company loaned money to person A via a reverse mortgage. Person A passed away(assumption) and the property was foreclosed on by the mortgage company. The mortgage company collected on their mortgage insurance and transferred to FNMA. FNMA listed the property for sale
The original mortgage company did and appraisal and require title insurance on the reverse mortgage to Person A. Where is that property ? The legal description should have been wrong on that sale as well
This is what we've learned so far. In 2000 the original owner of the home signed over .03 of an acre drive way to her son because it connects to the rear of his business. In 2004 this 80+ year old woman got a reverse mortgage on the property. The RMF put the legal description (metes and bounds) of the driveway that had already been transferred on the mortgage contract and not the actual property. In 2014 in went into foreclosure and sold at auction. Now this whole time, it's had the address of the house and lot number of the house, just the wrong legal description. The tax office has been sending letters and making phone calls to Fannie Mae's attorneys to get it corrected for almost 2 years with no response. Instead Fannie Mae just put it back through the system again...this time the incompetence of our agent and title company pushed it through.
Correct Greg, the legal has been wrong all along. They are either going to have to amend the first reverse mortgage, and foreclose again. Or they will have to get the heirs to sign over the property ...she didn't leave a will. And someone will be responsible for the back taxes and what ever the fees are involved in correcting it. The problem is, no one wants to take responsibility.
Lender · Marion, IA · Member since 2014 · 59 posts · 27 votes
10y
Not to defend the agent....but how would he have known. He would have depended on the seller and the title companies to discover this. He just put his sign in the yard.
When i questioned this from the beginning, before money changed hands, my agent emailed me and said they had done "extensive research on the property with the help of the appraisal district " and everything boiled down to just a 911 error. Had they honestly done ANY research, even a phone call they would have been able to prevent this. IMO. Also we only learned recently through this process that the agent and broker were representing both FNMA and us.
Please don't think i'm speaking negatively about the real estate industry...Not at all in any way shape or form. We have had amazing agents...amazing. This was not the case however, this was pure negligence.
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
10y
So the title company in 2004 made the error that has carried on this long. Being a small town, are the title companies the same ?
While it looks like this may very well be litigation bound, you might want to consider sending a notice to cure to all parties giving them 10 days to cure or you will be filing complaints with the Texas Dept of Insurance and the Texas Real Estate Commission. While the listing and selling broker may have relied on the information given to them they will definitely be in the loop if this comes to litigation. The letter may get you the help you need to unravel this. You might want to consider filing a memorandum with the county clerk to prevent the heirs from selling their as of now unemcumbered house.
I have done a lot of closings in small town Texas over the years, if you want to PM me the town and or address, I will be happy to help if I have any contacts
I have given 30 days to rectify this situation, and 7 days to notify me of how they plan to do it. The county clerk and appraisal district have put a vendors lien on the property so no one can sell it or try to take it from us. As far as the title companies, none of them are in this area, there were 3 different ones since 2004 and they're all in Dallas and Houston. I tried to pm but it didn't go through yet.
Lender · Dallas, TX · Member since 2015 · 283 posts · 128 votes
10y
As a former Fannie asset manager, You need to push Fannie to give you your money back. Fannie has a real problem here because they really can't foreclose on the property. The title error means that they either had a mortgage on the driveway in which case they just sold you a driveway, unfortunately, I do not think that it was a valid mortgage since the owner (the son) did not sign the mortgage.
I have been through these kind of situations and title issues can be complicated. I realize you may want the property but this is going to take some time to clean up and your best option is to get your money back and then follow the litigation to see if and when it comes back on the market. Alternatively, you might investigate "squatters rights" and see if you can over time establish your ownership that way (not advisable).
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
10y
@Account Closed
Normally it would be relatively easy to "undo" the deal and FNMA refund the purchase price. This deal is complicated as the OP has indicated that they have completed $60K in repairs
Have you spoken with the heirs as they obvious provide the simplest solution provided the estate has no other debtors ? Have you taken any measures to protect your improvements to the property?
Has the title company from 2004 been put on notice to cure the issue as they set the wheels in motion ? I never received your PM
The title company from 2004 has been on notice from the tax office since August of 2014. Instead of fixing the title, they just kept selling it off. From what the current title company told me, the original reverse mortgage comp has the house and address listed as part of the loan. They just never added the legal description correctly. So now it's back to the original company to add the legal description to the original contract. As far as "getting money back". They will have to agree to make us whole. All of the money we're out of pocket on this house, etc.
It's easy to say, " just get your money back and walk away." This is our entire life savings. We cannot just simply tell them to give us a refund for purchase price.
As far as taking steps to protect our improvements, i believe so. We have a vendors lien against the property, with us listed as 100%.
Real Estate Broker · Jacksonville, OR · Member since 2009 · 199 posts · 155 votes
10y
Elizabeth, Let me just take a minutes to tell you how sorry I am for this absolutely shocking situation, it is one of the worst real estate stories I have heard. It is truly shocking, I just can't even believe it.
They have the metes and bounds, but the title reports in my area are always accompanied by a plat map, highlighting the tax lot being insured. They do this because no one can read and interpret a metes and bounds description. Did you get a copy of the plat map showing the tax lot being insured? Also, were the property taxes on the prelim the same as the property taxes on the listing? Was the insured Seller Fannie Mae on the preliminary title report? Was the the street number physically posted on the home somewhere when it was for sale?
In my area, listings are identified by street address, then further described with a legal address within the listing. A legal address generally looks something like 36N4WCC Tax Lot #400. Was a specific tax lot listed through the MLS? Further, the size of the parcel is also indicated, and my guess is, it was NOT listed as 0.03 of an acre lot offered for sale.
The current title company can blame the title company from 2004 all they want, but your grievance is with the current title company because they offered YOU clear title. If the title company has to pay out, they can then file a claim against the previous title company if they like. You have no reason to involve yourself in their fight.
You have so many things going for you in this case. The biggest item is that you get to sue two parties with extraordinarily deep pockets. The Title Company, and Fannie Mae! Pardon my excitement, but if this story involved only broke people, it would be financially devastating for you. In I believe this is a punitive situation because of the time and money you spent on the home.
So many things on your side in this situation that I can see. 1. the mls listing i presume had photos of the house, and the house data, along with photos of the home you purchased. 2. your sales contract had the street address of the home. 3. You cannot be expected to interpret metes and bounds description, that is the title companies job. 4. You bought a home in good faith. 5. You improved the home in good faith. 6. You hired a professional to assist you in a safe purchase. 7. You purchased title insurance.
I don't blame the listing agent at all, because they are actually not allowed to research a property they list UNLESS they are representing the Buyer. It is really up to the Buyer, and the Buyer's Agent to perform due diligence regarding an REO purchase.
Lastly, is the driveway the only access to the son's house, or does he have access another way?
I want to say, that the series of events that took place that created this problem is so unbelievable, it is not typical in the most complicated of REO purchases.
Those are some very good questions. I'm going to look through the paper work and find out whether or not Fannie Mae was the insured seller. As far as the Agent, what I found out recently through this ordeal is the Seller's agent is her partner. They work together. We had no idea they were working for us both. My agent is the one who assured me the sellers agent ( we now know to be her business partner) . Had gone to the tax office to verify the proper house and address. When we we made the first offer on the property she made it seem like she had to wait to hear from FM. When she was just asking her partner. The driveway is not access to anything but the back of a building the son owns. He never uses it. I think he did back in 2000, but since has just left it sitting. In fact, we keep up the mowing, etc.
Yes the tax lot # is listed, the sellers agent sign was in the yard of the house, with what ended up being our Agents name and number listed. We found the house online through realtor.com and got a hold of her that way.
Real Estate Broker · Jacksonville, OR · Member since 2009 · 199 posts · 155 votes
10y
@Elizabeth Pharis Trust me, you were waiting for Fannie Mae, not for the Listing Agent. Offers are submitted from your Agent (Selling Agent) through a computer system that communicates directly to Fannie Mae's Asset Manager. The Listing Agent is simply notified via email when an offer is received, then the Fannie Mae Asset Manager determines how and when to respond to an offer. The Listing Agent has little to no impact on the sale, or which offer gets accepted. The Listing Agent and Selling Agent are notified of Fannie Mae's response via email, then it gets communicated to you, by your Agent. It usually takes Fannie Mae about a week to formalize a bank addendum and sales contract, then you sign, then it is sent to them to execute. Once executed, you are in contract.
It is possible that the Selling Agent tried to lure you into a sale that would harm you, but I find it hard to believe. I think the mistake your Agent made, was not recommending you call the appraisal district yourself to confirm the address issue had been resolved. It sounds like she took someone's word for it ("we" did extensive research), when she should have done the research herself AND involved you. I never do research where I get verbal answers without the involvement of my Client. My client must be present so they can see and hear where I am getting the info (or misinformation) directly.
You might keep friendly with your Agent, instead of blaming her. I say this because she saw the sign in the yard, she saw the agent detail through the MLS that indicates the home was the sale. She knows whether the prelim included a tax lot map. She got the information about the address issue and conveyed to you (she can say where she got this info, and when, and why she believed it, and so on). She is your best witness, as far as I can tell. Your attorney will have the best advice for you, obviously. I would like to think that most Agents would be absolutely devastated to know something happened like this, I just can't imagine doing it on purpose.
Disclosed limited agency is not uncommon, and it does not automatically mean anything improper or shady is happening. In my state, in every contact, it spells out relationships between principal and agent/broker. It is called Agency Disclosure, then their is a final Agency Disclosure as well. They did this a long time ago when Buyers started having their own representation in transactions.
It is my feeling that you actually might be smart to align with Fannie Mae, (and their attorneys) and pursue the title company together. Not only did Title allow the recording of your sale, they also allowed the recording of a mortgage on the wrong tax lot! Fannie Mae will likely realize you could easily pursue them as well, and might appreciate the opportunity to work together to resolve. Just my opinion. Something to consider. Whatever you do, make certain that your attorney fees are paid for you. Title companies and Fannie Mae have attorneys on staff.
I have shared this story with my Agents at my office, it is something we can all learn from. Interested to know what direction this takes. i will be watching for your updates and wishing you the best.
Thank you, will do. And I appreciate your input. As of this moment things are the same. No one is returning calls or emails. And when they do, it's more of the blame game. I'm having to take a step back for a bit just to get my head on straight. This has been devastating to my family, and caused us more stress and heartache than anyone should have to endure. I will definitely keep you updated.