In Ticking Time Bomb, Wells Fargo Dumps Risk Onto Unsuspecting Buyers of Foreclosed Properties | Crooks and LiarsShare / SaveEmailAdd to FavoritesMySpaceDeliciousGoogle BookmarksYahoo BuzzStumbleUponBeboWordPressOrkutEvernoteStumpediaPosterousMSDNExpressionTipdPlurkYahoo MessengerMozillacaTypePad PostMixxTechnorati FavoritesCiteULikeWindows Live SpacesFunPPhoneFavsNetvouzDiigoBlogMarksStartAidKhabbrYoolinkTechnotizieMultiplyPlaxo PulseSquidooBlinklistYiGGSegnaloYouMobFarkJamespotTwiddlaMindBodyGreenHuggNowPublicTumblrCurrentSpurlOneviewSimpyBuddyMarksViadeoWistsBackflipSiteJotDZoneHyvesBitty BrowserSymbaloo FeedsFolkdNewsTrustPrintFriendlyTuentiGoogle GmailHotmailFacebookTwitterDiggGoogle BuzzRedditWindows Live FavoritesYahoo BookmarksMister-WongGoogle ReaderXINGNetvibes ShareStrandsDailyMeTechNetArtoSmakNewsAIMIdenti.caBlogger PostBox.netNetlogShoutwireJumptagsHemidemiInstapaperXerpiWinkBibSonomyTailrankKledyMeneameBookmarks.frNewsVineFriendFeedPingProtopage BookmarksFavesWebnewsPushaSlashdotAllvoicesImera BrazilLinkaGoGounalogDiglogPropellerLiveJournalHelloTxtYampleLinkatopiaLinkedInAsk.com MyStuffMapleConnoteaMyLinkVaultSphinnCare2 NewsSphereGabbrTagzaVodPodAmazon Wish ListRead It LaterEmailYahoo MailAOL Mail Send from any other email service:Any email Powered by AddToAny Login | Register | Connect with Username: * Password: * Remember me Create new accountRequest new password Crooks and LiarsBlue AmericaLate Nite Music ClubNewstalgiaThird BranchVideo CafeHomeContactHelp Home » Blogs » Susie Madrak's blog September 20, 2010 10:30 AM In Ticking Time Bomb, Wells Fargo Dumps Risk Onto Unsuspecting Buyers of Foreclosed Properties By Susie Madrak enlargeGuess what? When you buy a foreclosed property from Wells Fargo, you may not have a clear title to the property. Go read the whole sorry mess, as spelled out by Yves from Naked Capitalism: Now specifically, the potential problem with the deal is the bank in many states will at best be giving the buyer a “quitclaim” deed (the addendum finesses this in paragraph 18, that the buyer only gets a “special/limited warranty deed. As the lawyer who took a dim view of this addendum put it, “This is like the ‘Special Olympics,’ not like ‘You are my special someone’.” That means the bank is merely transferring whatever it interest it has.) But per the AFX article above, the bank may own nothing .It may have foreclosed without having a clear enforceable right to the property (this is the basis of the burgeoning number of cases where borrowers are successfully challenging the bank/servicer’s right to foreclose, because it cannot prove it actually owns the note, which is the IOU between the borrower and the lender; if you don’t own the note, in 45 states, you have no right to enforce the lien on the property). Now this little problem can be solved by title insurance, right? Well, guess what, some title insurers have exited the business, some others are starting to write policies with meaningful exceptions when they can’t go to the courthouse and find a clear chain of title. Oh, and Wells is trying to steer you towards their title insurer. What do you think the odds are that their title insurance policy doesn’t have exceptions? So what is the risk? The lawyer explains: The typical (unsophisticated) buyer thinks that because they have a lawyer at closing (no matter whose lawyer it is), a title policy, etc…….that they are all safe and sound. They struggle through one of these REO transactions for a month or two, finally get in the house, something bad goes wrong, and they find out that 1) the title policy won’t cover them and 2) the land isn’t unique (see the nasty provision in paragraph 27 on “specific performance”), so a refund is all you get – and you are out on your ear. Hopefully, with a refund – and that may be the best outcome. But if somebody comes in, and voids a foreclosure, your title policy doesn’t pay – Wells Fargo has clearly disclosed that this was a foreclosure, so you only got what they had (nothing), and you have no recourse, no insurance, and guess what, an unsecured loan for half a million bucks. Given how many sales will be done out of REO, and the rising number of problems surfacing with making sure that mortgage securitizations took all the steps to become the real party of interest in a particular property, it is only a matter of time before we see some blowups of the sort the attorney was worried about, of a buyer shelling out hard dollars for a house, or taking a big mortgage, and winding up with nothing. And a few incidents like that getting the press they deserve will put a pall on REO sales. Think the risk isn’t real? Then why has Wells bothered to insist that REO buyers sign a new type of addendum, when it has been selling REO for decades? This effort to shift all title risks on to the buyer is a tacit admission of problems. And look at the document itself. The buyer has to initial it in eight places as well as sign it. That’s a clear statement of Wells’ intent to shift the risk to the buyer. Tags: mortgage foreclosures, title insurance, Wells Fargo EmailPrintShare This Post71 digg diggLink To This Post Short URL: Long URL: 20 CommentsThanks Susie for consistently good financial reporting!! Geronimo. — 9/20/10 10:42am Even the Little Guy Now Realizes that the Stock Market is Gamed, And Many Are Pulling Out Entirely American Businesses and Consumers are NOT Deleveraging ... They Are Going On One Last Binge Krugman - The Angry Rich "The spectacle of high-income Americans, the world’s luckiest people, wallowing in self-pity and self-righteousness would be funny, except for one thing: they may well get their way." And how they continue to succeed: "The attack on ACORN succeeded. The organization as we knew it no longer exists. The loss is immense because ACORN was the largest and most effective representative of poor and minority people in this country, which is why it attracted the full fuselage of the organized right." How Right-Wing Billionaires and Business Propaganda Got Us into the Economic Mess of the Century http://www.alternet.org/economy/148194/how_ri... more ▼Wow. I have been wanting to buy a house. UnEasyOne — 9/20/10 10:40am Not specifically a foreclosure, but I do want to get a good price. Getting a good inspection (to make sure it isn't about to fall down) is already a minefield. Now I have something new to worry about. goodie. more ▼I was just thinking the same thing Empanada — 9/20/10 11:09am It's exhausting living in this libertarian paradise. I have to read every single label looking for High Fructose Corn Syrup and MSG - It's almost impossible to find anything without them. So, I'm forced to home make everything which means, in trying to avoid all the good ol' American frankenfood, I look for organic, non GMO, grass fed, cage-free stuff which not only makes food shopping a tedious, time consuming chore but is also putting us in the poor house. Then, to avoid even more cancer, I have to look for BPA-free plastic stuff because of course, as other countries ban this carcinogen, the U.S. continues using it. Just when I think I can sit down and peruse Crooks and Liars, my cell phone buzzes with a bank alert. Now I have to check my bank statements to make sure my stupid bank isn't nickle and diming me - again (still trying to convince my husband to move our money). This story only solidifies the notion that we are on our own and the corporations have taken over long ago. We have no protections whatsoever because when someone attempts to protect consumers, they are labeled socialist anti-business. For whatever reason, the name calling is quite effective. more ▼You're not alone. My best friend cries when she goes savannah43 — 9/20/10 12:33pm grocery shopping. Who wants to poison their own family? Where I live, there are several farmer's markets, big and small, that have opened this year selling locally grown and organic foods. Credit unions should solve some of your problems. They play a whole different ball game than banks do. Anyone can join one. You should be proud that you are aware of the "corporate influence," for lack of a better term. You are ahead of the curve. more ▼Me too. fastfeat — 9/20/10 11:15am I doubt that my credit is good enough at the moment, but I make plenty to pay a mortgage. But I'm sure that I'd likely be steered toward some sort of a lemon like this as a first-time buyer. I've bought vehicles with salvaged/junked titles; they're no fun to work with. A home with something similar can only be worse. "The same fate that may save you can also break your back When you're whistling past the graveyard And the graveyard whistles back." --Paul Metsa more ▼Here is one of the best things you can do: savannah43 — 9/20/10 12:25pm Hire a structural engineer. Some "home inspectors" know what they're doing, but many don't. Get the real professional. I am constantly amazed how people investing thousands and even hundreds of thousands in a piece of real property don't want to spend several hundred to make sure they are getting real value. more ▼Another good thing to try is avoiding the aisle with the onions. ricky — 9/20/10 12:56pm Got that from my support group. "Consistently good reporting...even better links" Abe Froman more ▼Caveat Emptor Joe — 9/20/10 10:49am Now, more than ever. more ▼Tranching LillithMc — 9/20/10 11:03am I have read that some judges have tossed cases out of court when the property title is "clouded". This could be a divorce, bankruptcy, foreclosure case or any other case where the property has value. Somewhere I read that at least one Wall Street firm had a staff working to try to "clear" title on their "tranched" mortgages. Generally mortgages are regulated by states, but Wall Street thought following state laws would limit their ability to be "creative" in the global market. Without adequate paperwork showing ownership of a mortgage, the title can not be traced and insured. This is not a result of "securitization". We have had securitized mortgages for 30 years and they had "clear" title. This is a result of not doing adequate paperwork when the mortgages were created. I would never buy a property without a "clear" title and title insurance from a reputable company. more ▼JUST LIKE THE MOVIE "REPO MEN" longnow — 9/20/10 11:10am "Repo Men" was a Si/fi satire on something called predatory mortgage lending and liars loans. "JUST SIGN HERE, HERE AND HERE. THINK OF YOUR FAMILY, THINK OF THE FUTURE AND YOUR KIDS IN A SECURE HOME AND GREAT ENVIRONMENT" and bla bla bla. Great movie if you knew what it was really about. Liev Schreiber did a great acting job in the movie but how much did art imitate his life? Did he get hustled in real life with an apartment in the #1 Madison Ave foreclosure monstrosity by two Jersey con-artists? "This can't miss Liev, think of the future looking down on Mad Ave with Susan Sarandon as a guest on all the uptown peasants." more ▼I'm a title lawyer Ajaye — 9/20/10 11:13am The seller is required in standard contracts to clear title defects within a certain period of time. Depending on the custom in your area, the title work is either paid for and done by buyer's attorney or seller's attorney. No property coming out of foreclosure is "clear title." All title companies are required to examine the court foreclosure file and carefully examine the title search resultss to make sure that the foreclosure proceedings were proper and there are no junior liens that were not foreclosed. Unfortunately, with the chaos in the banking industry, a lot of banks went under and their loans were taken over by various other parties. It would be fraud if a company like Wells Fargo foreclosed on a property that they didn't actually have a mortgage on, so I don't think that part of the story is true. I do not believe that lenders are foreclosing on properties they have no interest in, it's just that sometimes assignments are not recorded. It is the job of the title company, no matter who performs it, in a standard purchase and sale to review title and issue a title commitment, then a policy. Once you have a title commitment, the title insurance company, or its underwriter are on the hook for any defects that are not specifically excluded. If you buy foreclosed property on the courthouse steps, its caveat emptor, you have to do all the work yourself and make sure it's all clear, but if it is a proper sale with the lender as seller and you as buyer, you need to have a lawyer review the contract to ensure that at the very least, if there is a title defect, you can get out of the sale. If you are financing the sale, there is no way that a lender will accept a title commitment that just excludes the foreclosure proceedings wholesale, so I doubt that this is a widespread practice. Most buyers require financing. Nobody should be accepting any title commitments that exclude any problems with the foreclosure proceedings themselves. The purpose of title insurance by its very nature is to pay to correct problems that arise in the event that the attorney reviewing the title made a mistake. It's basically malpractice insurance, but you're paying it. The bottom line is: Hire an attorney who is familiar with title work and real estate, including foreclosures to review the contract before you sign it. Also have your attorney review the title commitment, title search etc. before closing, and all the seller documents. Most of the time people don't want to pay attorney fees, but it's worth it because defects can be far costlier to correct. The way I see this operate in the real world is this: The lender which owns the property will say to a potential buyer, sure you can get your own title company, but if we pick the title company, then we'll pay for the title insurance. That creates a big disincentive for buyers to get their own lawyer to do the title work. It's also a nice big scam with the big foreclosure mills because they do the foreclosure work and then they do the closing. more ▼I agree. People who buy someone else's foreclosed ricky — 9/20/10 12:00pm home from Well's Fargo deserve "the whole sorry mess." "Consistently good reporting...even better links" Abe Froman more ▼WTF FloydGeorge104 — 9/20/10 12:06pm i did coment about how the lending assholes have it fixed to them and my coment is gone???? more ▼When I was refinancing mortgages at Wells Fargo, BigDaddyMalcontent — 9/20/10 12:34pm as a temp, no less, they were very fond of saying that they did very few sub-prime mortgages. However, a division of Wells Fargo called America's Servicing Company did do sub-prime mortgages. In fact, that's about all they did, and most of ASC's customers were black and/or rural folks who didn't understand they that had gotten ARM loans, all of which were now adjusting to rapacious interest rates. When we were trained to take calls from ASC customers, the trainers told us that ASC was a separate company and that Wells Fargo was simply servicing the loans as a paid service to ASC. In other words, the trainers lied to us. Now, Wells Fargo is admitting that ASC is actually a division of Wells Fargo. So the upshot is that Wells Fargo was just as guilty as Ameriquest or Countrywide -- if not more so -- of the predatory lending that led to the housing collapse. Now, many of those mortgages have wound up on Wells Fargo's REO list and the shenanigans continue. Even now, it is almost impossible to find out anything about ASC. I don't know how Wells Fargo is able to disguise their relationship to ASC or why no one in the "news" media has exposed this scam. Other Wells Fargo scams have found their way into the "news." I don't know why the ASC scam remains concealed. more ▼BTW, I walked off the job in the middle of the morning one day. BigDaddyMalcontent — 9/20/10 12:36pm I wish more people would do that. more ▼"Paging Dr. Warren, Dr. Elizabeth Warren" bj-not-a-crook — 9/20/10 12:53pm "You are wanted in the O.R., stat." "Criminal bank dissection." BJ more ▼On the bright side ikalbertus — 9/20/10 2:01pm Some good news is that homeowners are challenging the bankster's attempts to foreclose because the bank can't prove that it owns the note. I hope a lot of lawyers take this up and the banks get it stuck to them by this route. I'm convinced that a lot of foreclosures cost the lender more than working with the buyer to make payments the buyer can afford, but because the lenders are arrogant pricks who want to show they can't be fucked with, they foreclose anyway. At some point when foreclosures become epidemic people will simply refuse to leave. more ▼Ah banking. The world's Powkat — 9/20/10 3:47pm Ah banking. The world's second slimiest profession. Insurance being the first. Put the two together and you have a guaranteed rip-off. more ▼What's in a name... villagemutt — 9/20/10 6:33pm Be it Wells Fargo or ASC - They are now imposing escrow increases on their mortgages. There's some sort of cryptic clause that let's them now enforce an escrow account based on what your past not - current property value is worth via county tax records and demands you pony up cash to make up the difference. i.e., if you own 150,000 and they determine you property is now worth 130,000 you have to come up with the 20,000 NOW. There are few exception but most of my neighbors, like myself have been stuck with a NOW bill. Don't pay and your forced in to foreclosure. It's that simple. It's their property and they have to protect themselves. It doesn't matter if you pay your own taxes or homeowners insurance you now have to have an escrow account created. This company and it's affiliate are parasites on the American homeowner - who by the way are not too stoooopid to understand what they signed or agreed to. But they are too powerless to do anything. So....fuck it. Declare bankruptcy and go into foreclosure and ride it out - get a decent lawyer though. Everyone I've spoken with in the 'trade' claims it taking 16 to 24 months to get you out of your home. Live free and save YOUR money. The feds will bail out the banks not you so enjoy your money and maybe they'll make you an offer to stay. http://www.dailyfinance.com/story/real-estate... I expect nothing from WF or ASC but it is an election year and maybe the spineless talking head in the white house will push for companies to do what GMAC did. more ▼It takes that long to get you out of your house savannah43 — 9/20/10 6:51pm because the bank wants the property taxes to be charged to you and not them. As they like to say, "We're in the lending business, not the property owning business." Assholes have every damn thing covered. BTW, I don't believe one can discharge a mortgage easily, if at all, in bankruptcy. Since the credit card companies, etc., had the bankruptcy code "reformed" to their standards under BushCo, the whole process is not as helpful to real people as one might wish it to be. more ▼Comments are restricted to registered users only. Login - RegisterAdvertise Here Related Posts Now Even Renters Are Losing Their Homes Over Mortgage Foreclosures By: Susie Madrak On Mon, 11/23/2009 - 16:00 Elizabeth Warren: Time To 'Sober Up' On Mortgage Foreclosures By: Susie Madrak On Fri, 04/16/2010 - 07:00 WSJ: Banks Using Life Insurance Policies on Low-Level Employees to Fund Executive Bonuses By: Susie Madrak On Wed, 05/20/2009 - 18:00 Crooks and Liars Daily Email Enter your email address: Delivered by FeedBurner Crooks and Liars's Latest Posts Olmert: US will give citizenship to 100K Palestinian refugees Mon, 09/20/2010 - 17:30 Is 'Waiting For Superman' An Inspiring Call To Arms -- Or A Convenient Cover For Privatizing Schools? Mon, 09/20/2010 - 16:30 What is Anthem Blue Cross of California Doing? Mon, 09/20/2010 - 15:30 Wandering in the Desert of 50-and-over Unemployed Mon, 09/20/2010 - 14:30 Megyn Kelly, No Human Being Is "Illegal" Mon, 09/20/2010 - 13:30 What Do Florida Republicans See in Rick Scott? Mon, 09/20/2010 - 11:30 In Ticking Time Bomb, Wells Fargo Dumps Risk Onto Unsuspecting Buyers of Foreclosed Properties Mon, 09/20/2010 - 10:30 Colin Powell Admits Using Undocumented Workers Around His Home Mon, 09/20/2010 - 09:30 Tax Cuts for the rich create jobs outside the US Mon, 09/20/2010 - 08:30 Clinton On Mideast Peace Talks: 'What's The Alternative?' Mon, 09/20/2010 - 07:00 Values Voters: In Wellpoint We Trust Mon, 09/20/2010 - 06:00 Mike's Blog Round Up Mon, 09/20/2010 - 05:00 Open Thread Sun, 09/19/2010 - 20:30 Clinton: Lots of jobs, not enough skill Sun, 09/19/2010 - 18:00 This Week: In Memoriam Sun, 09/19/2010 - 16:00 Now Playing Christine O'Donnell: Con ArtistTriumph The Insult Comic Dog Visits Luxury Dog Spa In Beverly HillsJudd Gregg freaks out on two female MSNBC anchors. He owes them an apologyColbert Nails Dinesh D'SouzaSally Quinn: Scott Brown is a Hunk and Posing Semi-Nude Gave Him Huge Advantage in Public RecognitionTop Media DayWeekYearChristine O'Donnell: Con Artist Plays: 2473 Downloads: 35 Rove: O'Donnell should explain 'dabbling' in witchcraft Plays: 1247 Downloads: 83 Values Voters: In Wellpoint We Trust Plays: 1013 Downloads: 75 Fox News Watch Panel Isn't Happy With O'Donnell Victory Being Framed as Civil War Between GOP Plays: 852 Downloads: 70 New Rule: If You Know Less About Barack Obama Than Any Other President in History, You Might be a Redneck Plays: 822 Downloads: 72 Christine O'Donnell: 'I Dabbled into Witchcraft' but 'I Never Joined a Coven' Plays: 5224 Downloads: 227 Ed Schultz Reminds Brian Kilmeade That Most Americans Don't Make Anywhere Near $250K a Year Plays: 3397 Downloads: 138 Karl Rove disses Christine O'Donnell, Teabaggers throw conniption Plays: 3094 Downloads: 153 The smell of schadenfreude in the morning: Christine O'Donnell sparks all-out right-wing civil war Plays: 2645 Downloads: 122 New Rule: If You Know Less About Barack Obama Than Any Other President in History, You Might be a Redneck Plays: 2070 Downloads: 139 A Message From The Mayan People Plays: 11724 Downloads: 2310 Christine O'Donnell: 'I Dabbled into Witchcraft' but 'I Never Joined a Coven' Plays: 5224 Downloads: 227 Megyn Kelly wanted to make fun of Obama's speech on the economy -- but then he punked her Plays: 4278 Downloads: 130 President to Republicans: How Can We Solve Problems When You Simply Want to Scare People? Plays: 3503 Downloads: 635 Blogroll Ezra Klein Shakesville skippy the bush kangaroo alicublog The Black Snob Intoxination Average Bro TBogg steve audio Juan Cole/Informed Comment at-Largely Correntewire Daily Kos The Huffington Post democratic underground pandagon Bob Cesca Firedoglake AOL Hot Seat The Moderate Voice more Advertise Here One Year Ago Let's Make A Deal! White House Has Egg on Face After Admitting They Capped Drug Company Reform Costs Visit the archives » Happening Now Blue AmericaLate Nite Music ClubNewstalgiaThird BranchVideo Cafe Today's Left Jab Video: Monday Night Teabaggers! Left-Jab Video of the Day - PRICELESS: GOP/Teabaggers Blame Dems for THEIR Deficit Spending Left jab of the day by Blue America and Americans for America: John Boehner's big booze tab Left jab of the day by Blue America and Americans for America: Alaska's Craziest Catch-Joe Miller Blue America Welcomes Back Jack Conway (D-KY) C&L's Late Night Music Club With The Specials C&L's Late Night Music Club With Cyndi Lauper C&L's Late Night Music Club With The Grateful Dead C&L's Late Night Music Club With The Ramones C&L's Late Night Music Club With Randy Newman Nights At The Roundtable - The Maybes? - 2008 Weekend Talk Shows Past: Issues and Answers - The John Birch Society - 1964 Newstalgia Reference Room - Crystal Ball Gazing In 1951 Weekend Gallimaufry - Achieving Inurement In 1944 Newstalgia Pop Chronicles - Jimi Hendrix Supreme Court clueless about pagers, texting and e-mails.... Just say no to Cass Sunstein. The Supreme Court is ready to lift more gun law bans. Chicago is up next. Obama Attacks Unlimited Foreign $$$ in US Elections, Alito Shakes His Head, and the GOP Licks Its Chops President Obama, Your Legacy Clock Is Ticking President Obama to Hedge Fund Manager -- Asking that You're Taxed More Like Your Secretary is Not Anti-Business Greenwald and Ratigan Tag-Team PNAC War Monger Cliff May for Hyping Iranian Threat Watchdog: 'Christine O'Donnell is clearly a criminal' Juan Williams Actually Starts to Point Out the Astroturf Funding for the Tea Party on Fox News Sunday Christine O'Donnell vs Al Franken In 1997: Sex, Condoms And Hypocrisy Terms of ServicePrivacyAdvertising InformationHelp©2010 Crooks and Liars