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Beware of Forged Grant Deed Scam!
Posted by Karen May | Currently 3 Comments »
You never think a scam could ever happen to you. Well I thought the same thing , until last week! My husband and I have been investing in real estate for the last 3 years, and we purchased a property in Vista last month from another investor who had purchased it from the bank (no Realtors were involved). As a Realtor, I am very cautious and did my due diligence. I looked up tax records and previous MLS information about the property. I even had title run a search on ownership and they came back with a grant deed recorded 3 weeks prior transferring title from the bank to this investor. So we submitted an offer and opened escrow. As an entity purchasing the property, we had to supply title with all of our documentation showing ownership of our entity, just as the seller had to do as well, to verify the entities are not fake. Title verifies the documentation and that the entities are currently registered with the state. Only after that verification process, I was told, will title allow escrow to close. So both entities passed title inspection and we closed escrow.
In the meantime, we contacted the tenants who were still living in the property and they agreed to move out early, after they secured a new place to live. Two weeks later the tenants are served notice to vacate the house due to eviction by the bank, Wachovia. We immediately contacted the attorney who filed the eviction notice and explained we were the new owners. We sent them our recorded grant deed and the one showing Wachovia sold the property to our seller. Several days later we receive a call from the tenant that the sheriff is at their door trying to evict them. I immediately rush over there with all documentation in hand, and was confronted by a Wachovia representative that they still own the house and we have been “scammed”. The bank never sold the house and the grant deed that was recorded is a fake. They have been trying to find the criminals who created a fake grant deed and have documentation on 3 other homes they’ve also created fake deeds on, and involve 2 other banks as well. Needless to say I was speechless! What do you say when someone tells you you have just been scammed out of $250,000.
The one saving grace is that we had just opened escrow a few days prior on a second property in Vista with the same seller, since we thought we had such a great first transaction. We were scheduled to close this week. We contacted the Police Dept to file a report. They were able to use this opportunity of another escrow transaction to catch the criminals in the act of a second fraud while signing escrow documents on the second property. The seller and his two cohorts were immediately arrested! We are now working with police, title/escrow and Wachovia to sort out the details. On another happy note, thank goodness for title insurance! Without title insurance, we would owe $250,000 to the lender on a house we don’t own.
We have researched how this happened, what we could have done to prevent this, and have been told by numerous people that there was no way of our foreseeing this fraud. The criminals created a realistic looking grant deed, forged the bank officials signatures and the notary signature and seal, and it all looked real. They recorded it and when the title company researched the ownership, they found the recorded deed verifying the suspects owned the property. We’ve asked and been asked what could be done differently next time to catch this type of fraud and prevent it from happening again. No one can seem to answer that question for us. If you have any ideas, or information that could help, please post a response. We would love to hear from you.
2011 will still be a great year for us! This experience will only make us stronger and more cautious on whom we do business with in the future. I can definitely say that if this same scenario ever presents itself again on a purchase, I will be calling the bank next time to verify they truly did sell the property. What’s that saying…….. “fool me once, shame on you, fool me twice, shame on me.”
Our only words of advice - know who you’re doing business with and purchase title insurance!
Karen May [email protected]
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FHA 90 Day Rule Is Being Waived!!!
Posted by Karen May | Currently 1 Comment »
Pinch me, am I dreaming? HUD/FHA just released Friday, January 15th, they will be temporarily waiving their 90 day flipping rule beginning February 1st, 2010 for a period of one year. This means more opportunities for buyers to purchase homes without having to wait the required 91 days before writing an offer. The news release from the HUD website on Friday reads as follows:
In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.
“As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers,” said Donovan. “FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization.”
With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.
“This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” Donovan said.
In today’s market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.
The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.
“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” said FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”
The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:
- All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
- In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
- The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD’s website.
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