Saturday, May 10, 2008

query: signing of HUD papers by bank owned seller - how long

With all the foreclosures and REO being sold, we have to deal with this issue all the time. How long does it take to get a seller signed HUD-1 from a bank? In my experience it takes anywhere from one to five day with most in the two to three day category.

The trick is to read the instruction letter provided by the attorney representing the bank/seller. This letter let's us know the typical procedure and timeline expectations.

When we receive a title order for REO property, we carefully review the target date for closing, the time requirements of the seller and whether or not we logistically can meet all targets. This is an important step because the buyer is typically under some kind of daily penalty for closing late - usually $100 per day.

If we've received the order without sufficient time to process title and get the HUD to the bank/seller, we contact everyone immediately and have them process an extension.

Once we are sure we can reasonably meet all deadlines, we mark the file with the target dates and our coordinators make certain that the file moves forward within those guidelines.

This usually works but sometimes there are problems. For instance, if the real estate agent or the mortgage lender doesn't understand that we need figures ahead of closing, and they want to make a last minutes adjustment to the HUD, they may not be able to do so without postponing the closing.

So, the bottom line is that whoever the settlement agent is, they should know early in the transaction what the timelines are and then adjust the game plan to match those expectations.


Anonymous said...

I'm not sure how your market is, but FATCO controls REO here. The REO purchase agreements dictate the use of FATCO for title. If the buyer chooses another, it gets stuck with a significant FATCO charge.

Diane Cipa said...

Buyers should consider that the owner policy is for their benefit and choose their own provider. Yes, they then pay for the policy themselves but they should not be forced to use or pay FATCO. I would have a chat with your state insurance department.

In PA title insurance is typically paid for by the buyer and perhaps that makes it not so much of an issue here.

I would say, however, to buyers of REO in other areas that you should stick up for your rights when you negotiate the contract of purchase. Don't let the seller bully you into their title company.

We have caught numerous title problems including mistakes in foreclosure that the seller controlled company may have wanted to fudge over.