A recent client of ours had a short sale offer denied by the lender due to a “cloud” on title. The “cloud” was very unusual due to the situation, and we had never encountered this before. We would like to share it with you and how we resolved it.
The homeowner had a credit card default that had been settled with an Attorney who was working on behalf of Wells Fargo. A payment of $500 each month has been made on the settlement plan for over 6 months. During the Preliminary title phase in the short sale process, the title agent told us that the deal will not close due to the lien on the home affected by the judgment. This was odd since the credit card was an unsecured obligation and had nothing to do with the property and was not secured by the home. Apparently Attorneys can (and will) assign a lien to the “person” who had the judgment even if the judgment was being paid due to the agreed pay plan. The judgment is still “active” or “open” as it has not been paid in full.
Clouds on title follow the individual not necessarily the home. So we had to contact the Attorney and negotiate a release of the lien on the property. They wanted a settlement ( $$ Money $$ ) from the homeowner who has already been paying the $500 each month on the agreed to pay plan. At first, the Attorney wanted several thousand dollars paid towards the settlement to take down the risk. After much negotiation, the Attorney settled with us and agreed to release the cloud on title.
We’ve been seeing the banks hire Attorneys to begin issuing judgments and we suspect this activity will only continue into and past 2012.
Call us if you have any questions about how a short sale may affect you 623-688-0805. There is much to be aware of.