Toxic Titles: Buyer Beware – Problems with Foreclosure Purchases Can Haunt You Years Later

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By:Liza Fernandez

LEHIGH ACRES, Fla. – If you’ve ever owned property, you know how it’s supposed to work.
You pay for it, you get the title. And you would think that property’s yours, right? Not so fast.
Four In Your Corner’s Liza Fernandez introduces us to a couple who bought a lot in Lehigh Acres that’s now in legal limbo.

This Lehigh Acres house was supposed to be a dream retirement home for Kathy and Gerry Powers.

“All the paperwork and everything came through, and we basically had the the two half-acre lots and the house,” Kathy tells us by phone.

Snagged at a great price in a 2009 foreclosure, the Indiana couple then decided to sell when their retirement plans changed a few years later. They felt lucky to find a buyer.

“Then we got a call. Their title insurance company discovered an error that the half acre that was supposed to accompany our home did not actually legally belong to us. And it could not be sold,” Kathy explains.

You better believe it — the couple attorney Todd Allen shows us the documents.

“Countrywide (mortgage company) never had a mortgage on that lot. They had a mortgage on this lot the one that the house is on. But somehow in the foreclosure process, they included lot #9 as part of the foreclosure proceeding,” says Allen.

The initial foreclosure action document shows only one lot. But later documents do, in fact, show the lot in question had somehow been added to the paperwork in the process. So when the Powers bought the foreclosure, they thought they were getting both lots.

“You could point fingers at the bank for not doing its due diligence, you could point finger at the judge, for not reviewing the legal description when they completed the foreclosure. And you could point the finger at the title company for not catching it when they insured the transaction,” says Allen.

As for the Powers: “Basically what it’s done is, it put everything on hold. We weren’t able to pursue everything we want to do, and it has strapped us financially. It’s definitely put our life on hold,” says Kathy.

The original mortgage company, Countrywide, is now out of business. But 4 In Your Corner contacted the law firm out of Tampa that handled the transaction and the company the Powers bought from — Freddie Mac. Reps for both say they’re looking into it. The title company that insured the transaction hung up when we explained the problem.

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