Learned about Fannie Mae too late

Learned about Fannie Mae too late

Rusk, TX · Member since 2016 · 20 posts · 0 votes

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.  

0Reply
123 views

Most Popular Reply

Greg H.Pro Member
Moderator
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
10y

@Roy Oliphant

"I am not a lawyer disclaimer"

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

What do y'all think?

@Wayne Brooks

@Jay Hinrichs

@Bill Gulley

See this reply in the discussion

42 Replies

Jump to latestLatest
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    10y

    @Elizabeth Pharis

    Thought about this some more .  I am assuming that since you paid cash you did not get a survey ?  Based on that the current title company is saying that you signed their addendum which has an exclusion for "unsurveyed" property ".  I am also guessing that when reverse mortgage was obtained in 2004 no survey was required either .  The title company in 2004 clearly got the ball rolling in the wrong direction as they missed the error in the legal description. My guess is they will rely on the exemption for unsurveyed property as well. 

    Another question: Are you saying both agents work for the same company ?  If so was there an intermediary agreement in place ?  

    I know I am asking a lot of questions and obviously I am not a lawyer nor do I play one on tv. I am just concerned that your only option maybe to sue FNMA and my fear of that is their pockets are much deeper than yours. While I my opinion the listing and /or selling agent relied on the information given to them, they might be the way to make you whole i. That is hard to say as a broker but that is why we have E&O insurance. You relied on the picture of the house in the MLS and it was wrong. I am curious about the agents relationship as well

    @Kim Knox - MLS in Texas does not contain items you indicated such as a tax lot map. I would be interested in knowing if the agent auto populated from the tax records in the listing and if so the information was correct

  • Rockwall, TX · Member since 2014 · 380 posts · 211 votes
    10y

    @Elizabeth Pharis

    So sorry you are going though this.  I have shared this with a couple of my partners and everyone agrees this is a textbook example of how bad a deal can go.  I hope you find a solution that works for you and your family.

    I suggest you try to find someone at the original mortgage company who will provide a statement that makes clear their intent was to include the property with the house, not the subdivide for the driveway.  The earlier in the chain of transfers you can get this, the better your claim will be. 

    That said: @Greg H. @Kim Knox  Do either of you really believe there is any possibility of her winning this case?  (Sorry, Elizabeth) Real estate (in Texas) is always 'buyer beware' and based on the recorded documents not verbal or other agreements.  While it is 'obvious' to any reasonable person that the intent was never to make these transactions on a driveway, if all of the documents reference that as the legal what recourse does she have other than a long and costly legal battle that few lawyers would take on contingency?

    I hope she finds an equitable answer.  The lesson here for everyone else is to make sure you know what you are buying and do not trust anyone you are not directly paying to do the job for you.  Even then you have to be Reagan: Trust but Verify.

  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    10y

    @Roy Oliphant

    "I am not a lawyer disclaimer"

    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

    What do y'all think?

    @Wayne Brooks

    @Jay Hinrichs

    @Bill Gulley

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    10y

    @Greg H. All good points, and a good synopsis. I saw a similar case here, a newly constructed two unit, side by side townhouses.  The original recordings had the lot numbers reversed, so all mortgages referenced the wrong lots/legal descriptions.  It FINALLY got unwound during a foreclosure on one of the units, After the bank foreclosed with the wrong legal description.  In this case it took reopening the foreclosure case, vacating the prior foreclosure sale, and most importantly, got a ruling from the judge that the Intent of the original Mtg was for the other unit. Short of someone making a deal with the heirs in this case, which of course would be the most expedient, I suspect something similar must occur.

    @Elizabeth Pharis Has anyone talked to the heirs/other party yet?  I would start with a friendly, explain the situation, sit down talk with them.  That's the linchpin to the easiest solution.

  • Rusk, TX · Member since 2016 · 20 posts · 0 votes
    10y

    Like I said before, I have consulted with an attorney,  He pulled some friends in and now there are 3 who will and want to represent me.  But, i'm trying to give the companies at fault a chance to fix it.  I gave them 30 days for clear title and 7 days to let me know how they plan to get it.  Yesterday I heard from the agent/seller .( Yes @Greg H., they worked for the same company and never notified me of it.  So, no there was no agreement. ) 

    According to the agent, FM, the foreclosure company, and both title companies are meeting this afternoon to see how they can fix it.  No one is finding us at fault in any way,  because the contract clearly states the address with the house and not the driveway.  They have specifically asked me not to get an attorney, vowing they are going to make it right.   I should know more this afternoon.  

    Thank you all for your input, this has made the process a little easier on me.

  • Rusk, TX · Member since 2016 · 20 posts · 0 votes
    10y

    @Wayne Brooks,  Yes I have talked to one of the heirs.  He's the one who actually owned the driveway. And all the land around it.  He's willing to help however he can and wants us, when this is done, to buy the rest of the land too.  The original company who did the original loan has found the error.  They did a reverse mort. on the driveway description but clearly intended for it to be the house and other property.  They are either going to get a title correction based on that.  Or have stated they will ask the heirs to sign over the property.   There is a large lien against it right now, and none of the heirs will want to pay that off.  

  • Rusk, TX · Member since 2016 · 20 posts · 0 votes
    10y

    @roy 

    @Roy Oliphant The attorneys I consulted with looked over all the paperwork,  I guess they found what they were looking for because they said I had a good case against the title company, the agency, and FM.  The "get out of jail free card"  was missing from the deck.  I'm no attorney, but i know they wouldn't be taking this on if they didn't think I had a leg to stand on.  But as I've said all along, I just want my damn house.  I don't care about suing, and treble damages whatever the hell that is.  We have put more than just a lot of money in this place.  I'ts been almost a year of blood, sweat and lots of tears.  I will only do that if it's my last recourse.

  • Investor · San Marcos, TX · Member since 2015 · 272 posts · 360 votes
    10y

    I am sorry this happened to you. My advice is from personal experience and I am not a lawyer. I have been involved a few times in court actions and can add some very general advice.

    File on all involved parties, both individuals and entities as soon as possible; include the son, heirs, all title companies, agent, agent's brokerage, FNMA etc. Do not delay because these situations rarely self-remedy. You want knee jerk reactions and you want to motivate resolutions. Sit back and watch the finger pointing start.

    Separate yourself from this as much as possible. This has become a football, hand it off to the running back and walk away. Hire a knowledgeable and experienced lawyer and let that person handle it from here on out. Manage your lawyer and move on with the rest of your life. You have two choices you can lose money or you can lose money and have a tremendous heartache and stress about it. Stressing takes years off of your life.

    Know that these things can be resolved. I have never lost in court (knock on wood) and I do not think you will lose here. All of the professionals in this situation should have insurance to protect against situations like this. Even some of the individuals. These types of situations are often spread among insurance companies. You are not talking about big money, settling out of court with insurance companies is a fairly simple process. Brush up on negotiation skills when it gets to that sit down. I would guess that you have a high probability of settling out of court within a year. 

  • Plano, TX · Member since 2014 · 197 posts · 33 votes
    10y

    @Elizabeth Pharis That is awful, I am astounded the error was not caught by the Title Company....  I hope you get the process worked out.  

    Like @Chris Mason said Title Insurance sure cover this if they have it for the right address, that is crazy they didn't.  Can I ask who the Title Company is?

  • Rusk, TX · Member since 2016 · 20 posts · 0 votes
    10y

    @Mark S.

    I'm not sure if I'm allowed to say.  I wouldn't want to shoot myself in the foot.  

  • Plano, TX · Member since 2014 · 197 posts · 33 votes
    10y

    @Elizabeth Pharis that sounds very prudent, my fingers are crossed for you.  It is an awful situation to be in....

  • Rockwall, TX · Member since 2014 · 380 posts · 211 votes
    10y

    @Elizabeth Pharis

    I really do hope you get this resolved.  And treble damages would be a very good thing even knowing the money wont cover the worry and trouble you are dealing with. 

    Good luck and please do keep us informed as to how things progress.

  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    You should always get owners title insurance with an REO or estate sale. Many reo's are not forclosed properly and thus can have clouded title.

  • Rusk, TX · Member since 2016 · 20 posts · 0 votes
    10y

    @Russell Brazil, 

    We did get owners title insurance.  They're stating that the insurance we bought is only covering the driveway though....  I'ts a big mess.

  • Member since 2020 · 3 posts · 0 votes
    6y

    So it has been 4 yrs now? What was the outcome?

  • Rusk, TX · Member since 2016 · 20 posts · 0 votes
    6y

    The matter has been settled after a VERY lengthy process.  We received a clear title this year.  

Join the conversationCreate a free account to reply, vote on answers and follow this thread.