When processing a large volume of short sales, you will eventually run into all different kinds of title issues. At times you will find liens not being subordinated or removed properly. You may also find individuals on title who do not belong there. One title issue that has become more prevalent in short sales are when an individual is on title with an active bankruptcy, but that individual have no direct relation to the property. When an individual files bankruptcy it will place an automatic stay on the property thus preventing the trustee from foreclosing on the property until the automatic stay is lifted. An automatic stay could be lifted if the bankruptcy is discharged, dismissed, or if a motion to sell is granted. This is the reasoning it seems that unknown individuals with active bankruptcy’s are being added to title who have no direct relation to the property. Some people are selling this as a service to unbeknownst homeowners which typically uses deceptive matters and could be construed as fraud. This service will also cloud a borrowers title and in the process it may prevent them completing a sale for a varying period of time. There may or may not be a way to resolve a title issue such as this prior to the bankruptcy on title being removed. Depending on who the mortgage servicer is and what sort of assistance their departments provide will determine what can be done to clear a mess such as this up. We have worked with banks in the past who have been able to clear up issues as this, but you will need to know who to contact and what supporting documents to provide otherwise it may be a long wait before you can move forward with a sale.
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