Reverse Mortgage Sheriff Sale

5 Replies

I was the successful bidder on a Sheriff Sale for $48K, value around $100K the foreclosing entity is Carrington Mortgage, its a federally insured Reverse mortgage, and they record the originating mortgage, and FHA records a mortgage in the same amount ($160K in this case 150% appraised value) USA was not identified in the proceeding, does anyone know how this plays out, will the FHA instrument stick, or does it get wiped out? I spoke with several foreclosure attorneys, and title companies, and no one seems to know, they assume the title will clear but are not sure. I could forfeit my 10% or roll the dice. any input would help.

Not sure what you mean by "USA wasn't mentioned". The FHA "double recording" happens on HECM's. If you read the FHA instrument, it references the Carringron Mtg. It's one Mtg, if they foreclosed....they're out.

Thanks thats what i get out of it. the USA part, I mean that United States of America under Secretary of HUD was not named in the foreclosure proceeding but i have seen others and none of them do. Wayne, have you purchased one of these at sheriff sale before? does HUD record a release or satisfaction?

Well I rolled the dice, and KnightBarry title got me a title policy, underwriting removed the second HEMC mortgage as an exception, and im GTG, and today I'm not only a little richer, but a lot more educated.  

@Scott Schultz was hoping you could share more on how this all played out.  I recently was going to bid on a Sheriff Sale but through DD found out it had multiple liens and being a newbie didn't want to roll the dice that these would be dissolved.  

How do you typically run your lien searches prior to putting in a bid?  Do you use title companies after you run it down yourself or do you have someone else do the work for you all together?  Sorry for all of the questions and do appreciate any and all time you can contribute to them.  Well, thanks for your insight ahead of time.  Here is wishing you well in your future ventures!

@Tony Wooldridge

I have learned to abstract my own title, and in this case I called a ton of people in REO title and closing field for advice ( was an REO Listing Broker for 10 years) and to see if any one would insure title, Knightbarry title was willing to insure, with a Stewart Policy and I pulled a loan on the property.

its imperative you learn the laws of the state you plan to buy in, and know your rolling the dice. in Wisconsin, unless its a junior lien foreclosing most things get wiped out other than taxes and municipal charges. Here a Sheriffs Deed is pretty much Virgin Title, but there are a few things with HUD and USDA, and other that can survive, and USDA has a redemption option for as much as 6 months after you take possession of the property, I havent had to deal with this, and its rare, I have heard of it happening, but they make you whole if they exercise this.

  I would suggest, find a title company that will do a quick search for you, right before sale, get the bid the afternoon before, and then do your leg work that night. you should be able to search back taxes, septic system info if applicable, and valuations or at least get you in the ball park.  Just know you need a little extra fluff in these deals due to the added risk of many times they are occupied, or cant get in to inspect, with that you may not be able to get a loan for the purchase either. Its a different ball game, but i have done well with it, I have purchased 10 at sheriff sales in the past 12 months