For example, John Smith* owns #34 in my building. He received a notice from Fannie Mae, that they had started foreclosure proceedings, so Mr. Smith packs up and moves out. The association hasn't seen condo payments in months, so we are eager for Fannie Mae to take possession and pay at least the required 6 months of back fees. However, instead of finalizing the foreclosure proceedings, Fannie Mae does not transfer the title from Mr. Smith's name, to theirs. The reason behind the delay is so they don't have to pay the back or current condo fees while trying to sell the unit. Unfortunately, now the mortgage companies are playing even more games. They are starting the foreclosure process, marketing the homes for sale, and subsequently selling them, prior to completing the foreclosure. Thus forcing the property into weird real estate limbo.
So in the case of Mr. Smith's property, Mr. Johnson* comes along and offers Fannie Mae a cash deal. He's an investor and sees a $150,000 property being sold for $35,000--what a steal. He gives Fannie Mae cash and is told by the title company that he'll receive his deed, etc in 90 days. Except 90 days comes and goes. The title company stops returning his phone calls and Fannie Mae wants nothing to do with the buyer. Mr. Johnson calls the city and inquires about the hold up, and the recorder says that Fannie Mae doesn't own the unit, Mr. Smith (the original owner) still owns the unit....
About another month goes by and the city finally records the sale of the unit. But which sale do they record? The sale of the condo between Mr. Smith and Fannie Mae. Mr. Johnson is still high and dry.
Upon hearing Mr. Johnson's tale, I honestly have to say, that I thought this was some random fluke. But unfortunately it's not. Not only does Mr. Johnson have his HUD-1, but just this afternoon, I received an email from another homeowner in my association, Mr. Thomas* who is reporting of the same underhanded dealings. Apparently the mortgage company that "owned" the unit that he bought (another cash deal) also did not actually have title.
I know for a fact that there are at least 7 or 8 other "bank foreclosures" in our association. And now I wonder if they are all being played the same way. While it's extremely unfair to the buyers, what happens to the Association and the money owed to us? In many cases we are owed thousands of dollars in back condo fees, and if the mortgage companies, the title companies and the management companies are in on the deals, then who is going to ensure the Association gets the money that is rightfully owed?
According to Mr. Johnson? The US Attorney's office. Apparently, what is happening to the above mentioned homeowners is happening to homeowners across the region, and an official investigation has now begun. I guess only time will tell, what will happen next...
*names and addresses have been changed
