The bank filed a foreclosure suit, won, took title, and sold the property to an independent third party. Now imagine that you are the third party purchaser – you bought a home from a bank that obtained title via foreclosure. You move into and live in the house you purchased from the bank at a foreclosure auction.  Then suddenly, the original homeowner, who owned the property before the bank foreclosed, has convinced a court that she still owns the property.  Incredibly, in light of the bank’s failure to correctly prosecute the foreclosure lawsuit, the homeowner is right –  she still owns the house.

The problem is created through a break in the chain of mortgage ownership. Until the 1980’s, most mortgages were loans between the homeowner and a bank, who lent the money directly.  More recently, the mortgage financing system transformed into an international system of securitization, with mortgage lenders packaging their loans into securities, bought and sold by investors like stocks. These transactions even split individual mortgages into sections, where each loan could have parts owned by different investment banks.

The transfer of ownership in these mortgage backed securities (MBS) was done with contracts on the balance sheets of Wall Street investment banks, such as Morgan Stanley and Goldman Sachs. The company who originally appeared to make the loan was normally a retail lending company such as Countrywide or Lending Tree, who typically acted as a sales company, and sometimes remained contracted to service the loan.

In the event that the loan goes into foreclosure at a later date, the then-current owner of the loan files the foreclosure and sells the property to a new owner, often at auction. The land records would show a deed of transfer from the investment bank to the new owner. This creates a break in the chain of ownership of the mortgage rights. In many cases, the transfer of ownership of the mortgage loan has gone from the original lender, through several owners, and then to the foreclosing bank, none of which is recorded on the property title history. Technically, the foreclosing bank has no recorded title rights to foreclose in the first place.

MERS announced it changed its procedures to require that an assignment of mortgage be filed prior to the start of any foreclosure suit. Typically, a mortgage is recorded in the public records with MERS as nominee for ABC Corporation. Invariably, when the foreclosure lawsuit is filed, it is not filed in the name of ABC Corporation it is filed in the name of Bank of America, JP Morgan Chase or some securitized trust – an entity with no relationship to ABC Corporation.

In most foreclosure cases, banks’ lawyers argue the plaintiff has standing if it is the “holder” of the Note (i.e. if it possesses the original note with a special endorsement in blank.) Many judges accept this position, no questions asked and thus, an assignment of mortgage is often viewed as irrelevant and superfluous.

Even if Bank of America, JP Morgan Chase, or the securitized trust has standing without an Assignment of Mortgage in the public record, ABC Corporation is still the mortgage holder of record. This means that even if Bank of America, JP Morgan, or whoever prevails in the foreclosure is the high bidder at the auction, acquires title, and sells the property to a third party, ABC Corporation is still the mortgage holder of record. What does that mean? Essentially, the entire foreclosure case was like a wild deed – it took place, but ABC Corporation can still institute a foreclosure lawsuit in its own name, as it would have priority over the bona fide purchaser who acquired title from the bank.

If ABC Corporation is the mortgage holder of record, and it is not named as a party in the mortgage foreclosure suit, and there is no Assignment of Mortgage, then the mortgage in favor of ABC Corporation still exists, even after the foreclosure, even after the auction, and even after the sale to the third party. The foreclosure happened, but as far as ABC Corporation is concerned, the foreclosure is irrelevant – it still has the mortgage.

To sum it all up, when purchasing your next Tampa home, especially in the case of foreclosure, it is very important to seek the advice of a real estate attorney and if possible, purchase title insurance when you purchase a property.

A: This bank owned home sits waterfront with a pool in Tierra Verde.  It dons new paint, an updated boat lift and a wide open floor plan.  An extremely clean home- great for entertaining.

Q: What are the advantages of the location & neighborhood?

A: Sands Point is a very desired Tierra Verde neighborhood.   From the master balcony of this waterfront home, you can enjoy views of the Skyway Bridge and intercostal Waterway.

Q: What makes the price of this home so great?

A: Since the property is bank owned, the price is negotiable!  Bring an offer- the bank is ready to sell it!

Q: Is there anything else you’d like to tell us about the home?

A: This home for sale in St. Pete is located in a great family oriented neighborhood. It is the perfect location for the everyday or occasional boater.

With a negotiable price and fabulous location, 124- 8th Street East St. Petersburg, FL 33715 will not be on the market long.  Contact Bryan Belcher today to view the property or make an offer!

About Bryan:

Florida native and St. Pete realtor, Bryan Belcher has been a licensed agent since 2003.  Striving for 100% customer satisfaction, Bryan is the total package when it comes to real estate!

The other 60% of the current market are regular real estate sales. So how do they manage to sell their home?   They can sell quickly at today’s market price, and move on to the next property at a great value.  In most cases the properties do not have giant loans or the owners have had the property for many years (over 5).  They can afford to sell their Tampa real estate and are flexible enough to get it done.

If you fall into a situation where you need to move, but can’t sell (either because you’re not willing to take a loss or do not want to harm your credit), then leasing your home to a renter is a very viable option.

In an article provided by MSN, June Walbert of USAA explains some things homeowners should be aware of when renting a property.  This is great advice for any owner considering renting out their Tampa real estate.  “First replace your homeowners insurance policy with rental-home insurance. It covers the building and provides liability protection but doesn’t cover possessions, so it tends to cost about 20% less than a regular homeowners policy.” She also recommends including “a section in the lease requiring your tenants to buy renters insurance, which will cover their liability and belongings.”  In addition, she recommends that homeowners be aware of how reting will affect them at tax time.  “When you file your tax return, you’ll generally report rental income and expenses on Schedule E. You’ll be able to deduct your mortgage interest on the rental property, as well as insurance premiums, real estate taxes, advertising costs to rent the house, rental management fees, utilities you pay, travel to and from the property and legal and accounting costs.”

Smith & Associates Real Estate can assist with listing your Tampa real estate for rent and finding a tenant. We specialize in quickly locating qualified rental clients. Our experts will provide you with rental services that will allow for maximum exposure of your property. The steps would include having a property orientation, preparing the property offering, meeting and evaluating prospective tenants, preparing lease agreements prepared by a Florida eviction attorney ($50.00 fee), advertising, and processing of applications and credit checks. Please inquire with us about our fees. Smith & Associates Real Estate complies with all fair housing laws with applicants.

Short sales constitute a good percentage of current Tampa real estate listings. Anyone who has ever been involved in a short sale knows that the short sale request process is like entering the wild west –  the rules change day by day and you never know what to expect. There has been a public outcry for regulation in regards to short sales since the Tampa real estate market (and the rest of the country’s) bubble burst.

In response, the federal government has released the Home Affordable Foreclosure Alternative (HAFA) Program which will take effect on April 5, 2010. HAFA is different from last year’s Home Affordable Modification Program (HAMP), in that HAMP was intended to help people retain their homes, while HAFA is intended to help people short sale their homes. HAFA offers guidelines by which homeowners can sell their homes for less than what is owed on the existing mortgage(s).  The program is supposed to streamline the short sale request process by using standard processes, documents and timeframes. In order to attract participation from lenders, lending institutions are offered financial incentives to follow HAFA’s guidance and use its standard forms. Nevertheless, the program is strictly voluntary and lenders do not have to follow the US Treasury Department’s promulgated guidelines. It is important to know that HAFA is not a law.

In order to be eligible for the HAFA program, borrowers must have applied for the HAMP program and their application was either denied or they were unable to keep up on the modified mortgage. The HAFA program utilizes documents that were already collected as part of the mortgage modification program and permits homeowners to get pre-approval for short sales. This is an improvement to the standard short sale because typically, lenders will only consider a short sale request if there is a buyer for the property. The HAFA program is limited to loans that were originated prior to January 1, 2009 on the borrower’s primary residence, which do not exceed $729,750 and which causes a financial hardship because the monthly payment exceed 31% of the borrower’s gross income.

Whether this new government program will help to move short sale homes in Tampa and thereby improve the Tampa real estate market remains to be seen.

Here is the link to the complete article.

There are common misconceptions about the process and how it affects the homeowner. The most common misconception I hear from clients is that if the homeowner wants to sell his or her home via a short sale, he or she can simply do it and do not need to obtain an approval from his or her mortgage lender. A short sale requires the approval of the lender because, unless the lender accepts what is less than owed on the mortgage, the lien will not be released.  If the mortgage is not released, the new owner will take ownership of a property encumbered by someone else’s debt. This presents various problems which would be better left for another discussion. These and other misconceptions continue to pervade the real estate conversation.

Seeking a short sale approval can be an overwhelming process as it requires a lot of documentation from the homeowner and certainly, a lot of patience from everyone involved. Most lenders require a hardship letter, tax returns, pay stubs, bank statements, and a financial statement. It is very important for the homeowner to provide complete documentation. Furthermore, it is vital that all documentation be submitted at one time, rather than by piecemeal because the individual documents will inevitably be misplaced. After the complete short sale request package is submitted to the lender, someone must follow up and track to whom the package is assigned to. Once the short sale package has been assigned to a short sale negotiator or loss mitigator, the homeowner (or his/her representative) must be diligent and attempt to keep in close communication with the negotiator or mitigator – the homeowner (or the representative) must remain tenacious.

It is also important to note that a short sale will negatively impact the homeowner’s credit score; however, in most instances, it is not as damaging as a foreclosure or a bankruptcy. Nevertheless, a short sale may present legal consequences and tax liabilities. Homeowners exploring the possibility of a short sale are strongly advised to seek the advice of an attorney and a tax professional.