They bought the house, but it's still not theirs

Thu Jan 10, 2013 7:02am EST

(Reuters) - Brian and Holly Barnhart dreamed of turning an eyesore into a home for their growing family.

Their dream was destroyed by a zombie title - not theirs, but someone else's. As their experience shows, buying a foreclosure can be risky.

It all started in November 2010, when the Barnharts forked over $153,000 in cash savings for a Spanish-revival house in Cape Coral, Florida - a Wells Fargo foreclosure that was in a sorry state. Rats poked around the patio. The water in the swimming pool was green. The yard was wild with weeds.

The couple plowed an additional $100,000 - the balance of their savings - into a gut renovation. Here they planned to raise their two small children and the baby that was on the way.

But in January 2011, not long after unpacking their boxes, the Barnharts found out from the Lee County property appraiser that when they purchased the house, the bank didn't actually own it. So now, neither did they. The title insurance they were required to have when they closed on the house afforded no protection.

"It's an absolute and utter nightmare," says Brian Barnhart, a real estate agent. "It has pushed my wife to the breaking point."

It turned out that in 2007, Wells Fargo, which is the trustee of the previous owner's mortgage, and American Home Mortgage Servicing, which is the mortgage servicer, foreclosed on Richard Riccobono. Trustees act on behalf of the mortgage bond investors who own the loan, and foreclosure suits are usually brought in their name. Mortgage servicers actually manage the loans.

On December 30, 2008, Wells Fargo took ownership of the house. The following July, it had that move set aside and transferred the title back to Riccobono.

Riccobono says that he didn't know the house was back in his name and that he is prevented from transferring the title to the Barnharts because of various liens on the property. "It's the craziest thing I've ever seen," says Riccobono, now living in Fort Myers.

In 2011, the Barnharts sued American Home Mortgage Servicing, now called Homeward Residential, and Wells Fargo in a bid to get the banks to scrub the title. Under a settlement reached in March, the banks agreed to pay the couple's lawyer's fees and clear the title, Barnhart says.

But the title change still hasn't happened.

Wells Fargo said that as trustee, it had nothing to do with management of the loan and referred questions to Homeward Residential.

Homeward Residential said it was still working to resolve a lien and a small claim judgment against the former owner in order to clean the title. "We continue to be in regular communication with our customer regarding this situation," it said.

Barnhart says the bank had assured him it would straighten out the mess by October. That's when the family of five moved into a new house with hopes of selling their former dream home, a place Barnhart's wife won't set foot in.

But they still can't put it on the market because, as Barnhart says, "it's still not ours."

(Editing by John Blanton)

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Comments (4)
jaham wrote:
Brain Barnhart, the real estate agent, should know that title should always be transferred at closing. I suspect there was no such closing as any title attorney would have noticed that the title was not in the Bank’s name and thus could not yet be transferred to Brian.

I currently have under contract a PNC Bank foreclosure that was supposed to close in November 2012. The only problem: PNC Bank has yet to have the title transferred into their name from when they foreclosed on the property at the county master commissioner sale in July 2012.

It appears Brian jumped the gun and is suffering the consequences; I would never start working on renovating this house (it was vacant 5 years and needs plenty of work) without having the title in my name.

There is no such thing as a “zombie title”. The title transfer process can get mired in red-tape and lost in the high volumes of foreclosures the Bank’s and municipalities are dealing with, but there is no such thing as a “zombie title”.

I have a hard time believing that Brian, a real estate agent, didn’t know this and suspect that he was simply trigger happy to get started renovating the property.

I really get tired of these ill-informed articles implicating Bank’s for these issues. Should the Bank have listed and “sold” the property without securing the title first? Of course not, but that didn’t force Brian to sink money into this house before the title was in his name.

Jan 10, 2013 11:20am EST  --  Report as abuse
beancube2101 wrote:
This should be interpreted as the Bank illegally selling somebody’s property. They have pay back damages to both the new buyer and old owner; and somebody should go to jail as well. Workers in those bank should blow whistles as those Anonymous activists.

Jan 11, 2013 12:20pm EST  --  Report as abuse
lawbider wrote:
I think property owners should control and hold the abstract records themselves, or at least a current copy of such!

Jan 16, 2013 9:37am EST  --  Report as abuse
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