Be EXTREMELY careful when buying an REO property.

Here they go again. The lenders, that is. Washing their hands and passing all of their title problems to the unsuspecting buyers of their REO properties. But after reading this, you will know how to handle them all. So let's dig into it.

As you've probably heard by now, foreclosure proceedings are being reviewed all over the U.S. What you haven't probably heard is about the potential title problems that may come back and bite you financially hard in the future. How? Let me ask you...

What are the odds that the home you're living in right now or in the future may have had a foreclosure in its history? I would say very high based on the skyrocketing number of foreclosures. What if this property was incorrectly foreclosed upon?

As I talked about in one of my blog posting before, even if the foreclosure happened a long time ago, a title defect can put you in a lot of problems if the transfer of ownership has breaks in it. You may have bought or will buy a property that whomever sold it to you did not technically own it!

I just heard that Wells Fargo Bank is creating an addendum to their REO property sales contract that basically transfers all risk for any title defects on to the buyer. So they could be selling you something they don't legally own and they are not responsible. At the last minute before closing, Wells Fargo Bank presents this addendum which you must sign it in eight different places or there is no deal.

The effect is like getting a "Quitclaim Deed". When you get a Quitclaim Deed, the seller is transferring to you their "rights" to the property, which could be NONE!

What can you do? I'll tell you what I will do. I will not accept anything less that a Grant Deed from any bank. If the deal falls through, so be it.