Sunday, 29 January 2012
Defective Foreclosures and How to Avoid Them
Every two years I have to take a legal and ethics updates class to renew my brokers license. Besides being apprised of all the new real estate forms and procedures taking place you need to keep a score card as far as what the banks are doing in controlling the market.
You've heard about the robo signings in main stream media but have you heard how it applies to real world real estate? The course I took was a two day class and a big brand brokerage who will remained anonymous declared they had experienced 3 defective foreclosures this year. What does that mean? The explanation was the bank didn't do it right! What! How can you not do a foreclosure right? That's robo signing at its finest. Probably a clerical, hourly - "nit wit" determining whether you stay or leave your home.
Sounds bad and it is....
So what happens in a defective foreclosure? The new buyer that spent months and lots of money looking for that perfect home gets kicked out. The original owner probably had filed a suit against the bank and because the bank couldn't proved they owned or much less found the note, the foreclosure was declared defective. Yes, it's happening all over America.
What can you do to avoid the whole experience? One way is not to purchase a foreclosure.
But because foreclosures are attractive to many buyers that's not going to happen. One way is to investigate the lending process history and sales of the property. The amount of information that's available to brokers is amazing if only agents would use it. Seems like the title companies would find out who owned the property before it was sold again, don't you think...
One call out of a robo signing foreclosure would be the absurd number of times a property changed hands during the past 8 years. The other "for sure thing you can do" is ask the bank to prove their ownership by providing the note. Alas, that's a different department...imagine that! One county of Ohio actually has a certificate of readiness that the bank must prove they own the note before the judicial process can start, Texas is a non-judicial state. That process should be a given to protect the consumer.
The point being is there's a tremendous amount of information out there so as not to waste a buyers time or money! I can't imagine buying a home and then being told you had to move out because it was a defective foreclosure. And so it goes...it ain't over yet!
