More and more buyers and their agents are looking at REO (“Real Estate Owned”) properties, there are some common title issues that can postpone a closing for days, weeks, and even months:
1. Has the foreclosure deed (DUP = Deed Under Power) been recorded by the foreclosure attorney? The bank must have recorded title to the property before it can close.
2. Is there a deed from the foreclosing bank to another entity such as FNMA (Fannie Mae), HUD, or FHLMC (Federal Home Loan Mortgage Corporation)? This deed is usually a Special Warranty Deed and is most often recorded along with the DUP. If the seller on the contract is FNMA, HUD, or FHLMC, this deed must also be recorded before the closing.
3. The seller’s attorneys still may not have an approval or the signed seller deed and other documents on the closing date. Sometimes the seller’s attorneys will have POA (Power of Attorney) to sign the seller deed, which speeds up the process, but they still must have approval from their seller client. This may cause the closing to be in escrow or even cancelled (especially if the new lender will not allow an escrowed/delayed disbursement).
Thank you to Pam Robinson, Sr. Partner, Neel & Robinson Attorneys at Law, LLC for this valuable information!
