Until the paperwork trail is cleaned up there is now a potential question of whether many of the foreclosures (whether done through the judicial process or a trustee sale) by any of the banks, were done with the proper supporting documentation. Apparently, some of the title insurance companies agree as well and as of this blog post at least one has backed off from writing policies on certain REO foreclosures. We also hear that Fidelity is requiring BofA to provide additional assurances, whatever that may mean.
We assume the banks are lawyering up in response to what will certainly be an onslaught of individual and potential class action lawsuits. Make no mistake about this, if buyers can not secure title insurance on REO foreclosure purchases, there will be no homes sales and a weakening of the market for real estate in general. Additionally, if the banks take further hits (as is highly likely) it will also be more difficult for any borrower to secure a mortgage. Needles to say, investors are also pushing back via their Wall Street cohorts. An investor cram down, which many homeowners are holding out for, will also lead to tightening loan criteria, higher interest rates, and a further softening of home prices. We have not at this point seen any leakage to short sale, but it may only be a matter of time until the question is raised as to whether the short sales that were approved were done with the proper audit trail either. In other words, if the banks did not have the proper paperwork to foreclose, did they have the right documentation to approve short sales?
While these questions linger, a cloud of uncertainty hangs over everyone. Many homeowners in some stage of (BofA) foreclosure are clinging to this straw in the hope that they will ultimately get some form of relief either in terms of a loan modification, principle reduction or some other miracle. We hope for their sake that is what happens. Remember, however, that ultimately the investor of the note has to decide to provide any relief and they may be reluctant to do so as long as they feel they have recourse not only to the homeowner but the servicers (BofA, Wells Fargo, Chase, etc.) as well. Technically, this is what is considered a "mess".
We'd like to point you to a few posts on this topic we like. Robert Kuttner has authored an excellent article on this and how it relates to how the sub prime crisis was handled initially. Click here to read it. We also like this blog post from MND Newswire. You can also read this article for further background on how we got to this point. You will also see a number of rapidly breaking posts on all the blog sites regarding this topic. The Wall Street Journal just published this piece, and this post appeared on ABC News.
If you haven't heard yet, Wells Fargo has announced that they will NOT, we repeat not, be implementing any foreclosure moratorium. Chase has not gone as far as BofA, but clearly they have put the brakes on almost 40 states including judicial and non judicial procedures.
In our opinion, BofA, while doing the "right thing" they may be a little too far ahead of the curve relative to their competitors and investors to sustain their position for very long barring any government intervention which the Obama administration seems unlikely to support. (The Repuclican position as expressed on the Sunday talk shows is "let them foreclosure - personal responsibility"). This story is rapidly evolving and we will attempt to keep you updated as material changes unfold.
Our advice to anyone selling a home and facing foreclosure is to keep your options open but be realistic. If, at the end of the day you can not afford the home even at reduced payments, it is time to move on. If you are holding out for a loan modification or principle reduction, this may be the break in the dam but we just don't know yet.
For home foreclosure buyers, proceed with caution. It is unclear as to the status of Title Insurance until this is sorted out. This advisory is for both REO and short sale buyers at this point.
If you are a buyer still interested in acquiring either a REO foreclosure or buying a home being sold as a short sale, use the quick MLS searches below.
Westside REO Listings - Search/Find Homes Listed in the MLS
Culver City REO Foreclosure Listings MLS
Palms-Mar Vista REO Foreclosure Listings MLS
Santa Monica REO Foreclosure Listings MLS
Venice REO Foreclosure Listings MLS
Marina Del Rey Foreclosure Listings MLS
Playa Del Rey Foreclosure Listings MLS
Playa Vista Foreclosure Listings MLS
Westchester Foreclosure Listings MLS
Beverly Hills Foreclosure Listings MLS
Bel Air - Holmby Hills Foreclosure Listings MLS
Hancock Park Foreclosure Listings MLS
Westwood - Century City Foreclosure Listings MLS
Pacific Palisades Foreclosure Listings MLS
Malibu Foreclosure Listings MLS
South Bay REO Listings - Search/Find Homes Listed in the MLS
Manhattan Beach REO Foreclosure Listings MLS
Hermosa Beach REO Foreclosure Listings MLS
Redondo Beach REO Foreclosure Listings MLS
El Segundo REO Foreclosure Listings MLS
Rancho Palos Verdes REO Foreclosure Listings MLS
Rolling Hills REO Foreclosure Listings MLS
Rolling Hills Estates REO Foreclosure Listings MLS
Torrance REO Foreclosure Listings MLS
Lomita REO Foreclosure Listings MLS
San Pedro REO Foreclosure Listings MLS
Hawthorne REO Foreclosure Listings MLS
Gardena REO Foreclosure Listings MLS
Lawndale REO Foreclosure Listings MLS
Inglewood REO Foreclosure Listings
Carson REO Foreclosure Listings
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