Just reading the title to myself made me vow to be much less verbose than I could be. I promise!
Anyhow, I thought I’d take a post and talk about Lake Wallenpaupack foreclosures, foreclosure moratorium and what that means to you, the prospective buyer.
By now you’ve heard that many big banks in all 50 states have placed a moratorium, or freeze, on foreclosures. No matter where a home is in the foreclosure process, the lender cannot proceed until the freeze is lifted. Why? Well, in order to foreclose the lender has to prove that they actually own the mortgage note. Sounds simple, right? Not so much. During the housing boom, banks gave loans…then they sold those loans…and those loans were sold…and then portions of those loans were sold to multiple investors all over the world. This, folks, is a paperwork NIGHTMARE. There is often NO way to prove who bought what from whom and for how much and when (this is called chain of custody). You see where this is going, don’t you? If the bank or person initiating the foreclosure cannot provide the proper chain of custody, they pretty much can’t prove that they own the loan and that you owe the money.
Now, for years banks have been providing something called affidavits…that’s a piece of paper that says ‘I know about this account, the transactions made, and certify that Jane Doe owes us XXXX’. Someone who signs this is supposed to actually have reviewed all the paperwork and made sure it is true and correct, and this counts as legal even if the note isn’t produced. Then someone discovered that people were signing these affidavits at the rate of hundreds a day, sometimes not even in this country…and there was no way possible they could have reviewed the information personally. Until this mess is straightened out, expect the freeze to remain.
So, how does this affect the buyer? Well, if you’re already in contract to buy a foreclosure you may never get to closing if the former owner decides to question the validity of the foreclosure action. If you’re just looking, it may be wise to avoid foreclosures, especially if you’re in a hurry. If you’re set on buying one, OBTAIN TITLE INSURANCE. If you will need a mortgage, you have to have it anyway…but if you’re paying cash…DO NOT SKIMP AND DECIDE AGAINST IT! Title insurance protects you in the event something goes wrong with the title of the property…like, if a prior lien was thought to be paid or taken care of (like a mortgage) and it turns out to NOT be paid or settled. If you don’t have clear title (that’s a title that is free of any encumbrances) you can lose the home to the lienholder. Title insurance protects your financial interest in a property…so you are reimbursed for monetary loss, or have defense in a lawsuit.
How this foreclosure freeze will affect the Lake Wallenpaupack real estate market remains to be seen…but there are still many other properties that AREN’T foreclosures that are really amazing deals. Let me help you find one today!
