If you have listened to the news over the past 2 weeks, if would be almost impossible to miss the news that many foreclosures have come into question. The root of it all is what is called “Robo Signing”. Essentially, a designated person signs off on a stack of foreclosures without reviewing them. It calls into question whether the paperwork is all correct in order to execute the foreclosure properly.
Many, but not all, institutions began to suspend foreclosure proceedings in certain states which utilize a judicial process for the proceedings. The lender needs to go back and review the paperwork as well as their processes in order to move forward again. As of today, some have restarted the process while others are still trying to get their act together.
So who are the winners and losers in this mess?
The winners are:
1. The person who is about to lose their property. They are getting a short term delay in getting kicked to the curb. It also gives them additional time to try and sell their property if they have it listed.
2. Short Sale property owners. It may give additional time to the short sale owner if a pending foreclosure is put off.
3. Short Sale buyers may win if banks decide they want to accept a short sale offer on a property as opposed to pushing it into foreclosure.
The losers include:
1. The housing market as a whole (and economy). Delaying this wave of properties to the market just delays the ultimate adjustment to prices and finding of the “bottom” of the market.
2. If you are buying a foreclosed property, be prepared for a delay in the closing. With the lenders taking a second look at the paperwork, it can only slow things down. However, I will tip my hat to Litton Loan Services who moved the paperwork of a property to the front of the line for review because they knew that it was set to close shortly. My clients thank you. I would add that if you are purchasing a foreclosed property, GET A TITLE INSURANCE POLICY! You need to be protected in the event that the lender did do something incorrectly.
3. Condo and Homeowner Associations. When a homeowner is not paying their mortgage, they are sure to not be paying their dues. If a community has had a high number of foreclosures, the budgets could be shot leading to higher dues to you and possibly lenders who will not make loans on properties where HOA’s are under water.
4. Investors are going to be delayed in making those great deals on properties due to the stall in the foreclosure market.
Ultimately, it is a losing situation for everyone. Let’s hope that all the banks get back on track and get this mess cleaned up rather quickly.
New and Views on Real Estate in South Charlotte 