The Preliminary Title Report provides us with a wealth of information as we prepare to list and market a short sale listing. This information helps us develop a strategy, find tools, and streamline our efforts with the short sale process. Upon the initial interview with a potential client, there may be many assumptions that we will initially make, and these assumptions can be clarified with examination of the preliminary title report. What are some of the nuggets of information that are available?
Loans have been transferred
It is very common for loans to originate with one lender only to be resold on the secondary market. The original lender may choose to outsource the servicing of their loan to a third party. The lender may write off a loan and send their loan to a collections agency. The preliminary title report will identify the current owners of all the existing loans on the property, providing us with the correct destination where we will be submitting a short sale application.
Notice of Default, Notice of Trustee Sale
If any of these are filed against the property, you will be aware of the potential timeline you have to market the property and find a buyer. You may need to take action to obtain a postponement of a trustee sale by contacting the lender to request additional marketing time.
Loan Origination Information
The date of the loan origination may be significant with respect to government programs that benefit the homeowner. For example, the Home Affordable Foreclosure Alternative (HAFA) program applies to loans that originated before January 1st, 2009. The report will also show if the loan is the original loan, or if it has been refinanced – and help determine eligibility for programs such as the “Mortgage Forgiveness Debt Relief Act of 2007” or the “Home Affordable Mortgage Program”.
Other non-mortgage liens
There are several other parties that can attach a lien on a property. You will find mechanic liens from contractors who have not been paid, IRS or state tax liens for unpaid past due taxes, city liens for code violations, Homeowner Association liens for delinquent HOA dues, private party liens from loans from individuals, child support liens for past due support payments. For every single lienholder, there is a need to deliver an approval letter detailing the lienholder’s agreement to release the lien, and the agreed terms for the lien release. If you discover that a lienholder will refuse to negotiate for the release of their lien, do not take the listing, as it will not be possible for the title company to complete the close of escrow.
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