Foreclosure Freeze Update and What it Means for You
The sales in distressed properties dropped significantly in the month of October. According to a survey conducted by Campbell/Inside Mortgage Finance, “14% of owner-occupant homebuyers and 6% of investors refused to view foreclosed properties”. This drop is a direct result of the current freeze that major lenders have put on their foreclosure process. Fortunately for the Housing Market, the freeze won’t last forever. There are no benefits to the banks in prolonging the process. In the meantime, however, people are wondering what the foreclosure freeze means for them? Obviously, the answer to this question depends on your situation.
What if you’re facing a foreclosure?
Initially, those facing foreclosure may see the freeze as some sort of saving grace from losing their homes. Unfortunately, if you have already missed several payments on your home, the freeze will not reverse the foreclosure process, it will only prolong it. In the case that you have defaulted on your loan, the bank’s right to seize your property, is not illegal. It is the legitimacy of their documentation process that is under investigation, not the act of foreclosure itself. If you suspect that any documentation you obtained when you bought your home may be faulty, contact a lawyer for a thorough review. Again though, even faulty documentation cannot reverse any payments you missed on your home.
The biggest advantage the freeze is giving to those facing a foreclosure is the buying of time. This is an opportunity to get in touch with an educated real estate professional and explore alternative options to foreclosure, such as a short sale.
What if you recently purchased a foreclosed home?
Those of you that recently purchased a foreclosed property may be stricken by panic over the possibility of losing your new home to its previous owner. Take a deep breath! This situation is very rare. Think about it: even if the paperwork done in transferring the property was not entirely legitimate, the courts would have a real hard time returning a home to someone who could not afford to make the payments on it in the first place. As Rick Sharga of RealtyTrac Inc. states, “most of the homes affected by the paperwork problems were legitimately seized, […] it’s more a matter of cleaning up the documentation than it is seeing the whole repossession reversed”.
The best thing you can do to protect yourself in this circumstance, if you have not already, is to get insurance on the title for your home. If any defects in the title come up in the future, the insurance company will help cover you for financial losses.
What if you’re planning on buying?
Linda Stern, a financial expert and columnist for Reuters.com, urges buyers not to go to a courthouse auction in search of a new home. For one, “you’ll have to pay cash, and it is unlikely to come back to you if problems arise […and] you can’t as easily ascertain whether the title is clean while you’re standing in front of the courthouse […]”. Instead, she advises that you remain patient because the prices on foreclosed homes may decrease even more once they’re put back on the market.
Short sales are another great option for homebuyers right now. You may not find as great of a deal as you would on buying a foreclosed property, but short sales are a safer option. The old owner cannot claim that their house was illegally foreclosed on them. Furthermore, you may see even more short sale properties on the market in the near future. The banks have enough work cut out for them with all of the foreclosures, and short sales offer them less paperwork.
Courtesy of:
http://www.randrealty.com/blog.aspx?postid=1500
http://money.cnn.com/2010/10/08/real_estate/foreclosure_halt_QA/index.htm
http://blogs.reuters.com/deep-pocket/2010/10/11/5-ways-to-avoid-foreclosure-limbo/
Whether you’re a buyer, or one of the millions currently trying to avoid foreclosure, Angel Lynn Realty is your trusted source for buying a home and your understanding expert in the short sale process.
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