Posted by preforeclosureinvestor on February 04, 2009 at 14:19:23:
SHORT ANSWER:
If the lender decides to check, and sees you on title, chances are high that they will reject the offer. Not to say that it CAN’T be done, or even that it’s not worth trying. Worst case scenario is they proceed to foreclose anyway.
LONG ANSWER:
When you say “own” the deed, has it been recorded yet?
And by deed I assume you are refering to a grant, warranty, or qc deed, as opposed to, what we call, the “deed packet” consisting not only of the above mentioned doc(s), but also the Purchase Agreement, LOA, LPOA, short sale disclosure/ CYA, etc…We find this to be the most effective way to “tie up” the property while we negotiate with the lender.
Not to be confused with the actual short sale “packet” that you submit to the bank, which includes some (not all)of these, and other docs.
The key is knowing which docs to GET, and knowing which ones to send, and which ones NOT to send to the bank.
In a short sale, you definitely want to have the deed (packet), but do NOT want to record it (the warranty deed) before the lender has approved your offer. Or even AFTER it’s approved, but before closing.
If they decide to check, and see you on title, chances are high that they will reject the offer.
And you definitely don’t want the bank to get the impression that the the homeowner has somehow profited from the deal AT ALL. As far as they are concerned, the owner should get NOTHING.
The only real reason to record before the actual closing, would be, if you found out that the homeowner had also deeded the property to another party (which does happen), and it becomes a matter of who records first. You would effectively create a cloud on title, forcing the homeowner/ 2nd party to deal with YOU before the house can be sold.
At least, that’s the way some of us do it.