Buying property with an Assignment of deed of trust a month prior to NOD.


#1

There is only 1 loan on the property since 2006 from Wells Fargo. This year, an Assignment of deed of trust was recorded a month prior to NOD. The NOD and Trustee sale lists Wells Fargo as the foreclosing beneficiary. Is this of concern for a third party buyer to purchase this property at the trustee sale? Which bank would recieve the proceeds at the sale? Wells Fargo, or the assignee? Thanks in advance for replies.


#2

The recording of the assignment prior to the Deed of Trust would not be a concern for a third party investor bidding at trustee sale. The lender has the right to sell or transfer the servicing or substitute the trustee under the terms of the Deed of Trust. The foreclosing lender and trustee as it appears on the Notice of Default would get the proceeds and you would follow the instructions as the auctioneer if you are the successful bidder.


#3

Thanks for your reply Michelle. You meant to say “The recording of the assignment prior to the NOD would not be a concern for a third party investor bidding at trustee sale”, correct? In the public records, the assignment, the NOD, and the Trustee sale are all referenced to the original loan in 2006 by Wells Fargo. I was just afraid that the new assignee would come after the investor bidder saying that they are entitled to the proceeds. Or Wells Fargo would ask for the proceeds from bidder if assignee recieved the money…


#4

Hi Bob, Yes, I meant to say the recording of the assignment prior to the Notice of Default. The assignment is only documenting the paper trail on who owns or services the loan and you as the 3rd party investor would not be responsible for determining who gets the money from the trustee sale.


#5

I bought the house at the trustee sale today. What are the next steps I should take? The home is vacant, how soon can I rekey the property? Do I pay off the property tax lien after the trustee’s deed is recorded? I’ve read the trustee’s deed needs to be recorded within 14 days. This is my first time, so a checklist would be greatly appreciated. Thanks!


#6

Hi Bob, A checklist is a great idea. The trustee will send the trustees deed for you to record. Provided that it is recorded within 14 days the effective sale date will be today. If the property is vacant you can go and change the locks today and take possession of the property. Once you have the trustees deed then you can also go and pay the property taxes. If you are intending to hold this property you may want to consider purchasing an owners title policy once the trustees deed is recorded. This would mean opening escrow at your local title company. If you are looking to flip this property it is not a bad idea to open an escrow so that you can make sure there are no other liens, loans or clouds on title that you may have missed.


#7

Fantastic, I plan to hold onto this property. I will get a title policy once the deed is recorded. This forum is very useful and informative!

For my own knowledge, why do lenders record the assignment of the deed of trust prior to foreclosing and the notice of default? Is it to prove the foreclosure is valid in case the previous owner tries to protest?


#8

Hi Bob,
The lender has the right to sell or transfer the loan. They must document this by recording the appropriate assignments. With the rapid selling and transferring of the loans on the secondary market the title work became a bit sloppy. With the robo-signing scandals lenders/trustees are now dotting their I’s and crossing their T’s and prior to filing a Notice of Default they make sure that the “owner” of the loan has recorded the necessary documents (e.g. assignments, substitution of trustee etc) before they start to legally foreclose on the property.


#9

Beware of a clouded title. Although foreclosure may start on flimsy grounds, it had better not end that way. If the essential pieces do not come together by the end, you could be buying big trouble. The Deed of Trust (DOT) is the NOT the means by which the servicer is appointed. Servicers are merely third party agents of the holder of beneficial interest in the the DOT as a security instrument providing collateral for the Note which is the actual debt. If you have a bad foreclosure by the wrong party or the holder of the Note in due process is not the same as the last assignment owner of the beneficial interest in the DOT, you may be throwing your money away in a blatantly illegal foreclosure. Trustees sales are extremely sleazy in that they warrant nothing and they sure won’t cover you rear end. At best legal challenges may tie up your “trustee’s deed” leaving it of questionable worth. How the foreclosure participants fight among themselves is irrelevant, if they do it wrong, they are literally selling you what they do not own. Beware of improper foreclosures as the courts are less and less tolerant of illegal behavior on the part of foreclosing parties.