New Moratorium

Well it seems that now some of the big banks are freezing foreclosure procedures due to their inavility to comply with local laws and regulations that protect the home owners or delay the foreclosure procedures, it seems that some lenders have rush the foreclosure procedures and broke the laws. First started wtih GMAC, then Chase, now Bank of America.

There are several issues with this new moratorium, first there will be more banks adding to this list, and this mess might not be sorted out until March or May of next year, that might be done on purpose because the GSE are pushing for the lender to take action on the late loans, see the news on Wells Fargo last week. http://www.dsnews.com/articles/wells-fargo-puts-stop-to-short-sale-extensions-2010-10-01. Also the OCC ordered the Largest Servicers to review their foreclosure process. This might not affect us because they are liquidating their inventory little by little to avoid a really hard crash and decline of propery values, lets face it, with low prices, low interest and no one is buying, it is hard to say if it is because they are not lending or because there is very little confidence from buyers, but also at the end of the day we all need shelter, so it makes sense to purchase now, and I have seen several potential buyer not been able to qualify for a home mortgage loan.

The other problem I see is the rumble from lawyers and previouse owners, who will try to sue the lenders for not been in compliance with the federal and local laws and regulations of the foreclosure procedures, etc. I did a cash for key on Saturday, and the borrower just kept asking me if my client was following the right procedures, if they were going to join Bank of America and Chase with this issue, etc.

It is going to be interesting to follow this new moratorium, because of the political impact and the possible impact it might have in the business. I think if the foreclosure process was not done correctly, then what would they do, if the house is already sold, can the courts reverse the sales, etc, then we will have the issue of the current owner. Most likely this would be ratified with money, how much? morally the prevoius borrower was in default, but I am sure there could be damages, etc. Would the courts and the credit bureus wipe out the "Foreclosure" from their records so maybe if their finances have change they can get a loan, would the lender try to work something where they can put the previous owner with a new loan or similar loan to the previuos one in one of their houses.

As REO agents I think is important for us to do as many Cash for Keys as possible, this way the previous owner has agreed to relinquish his/her home to the bank, but I am sure there are some loopholes there too. Well maybe the new assignments from the bank would be more like deed in lieu with a lot of legal terms to protect the bank, and I hope we can have the right documents to protect ourselves just in case,

The biggest impact this has had on me at the current time is that CHASE and the other banks involved have put a hold on signing closing docs until this is sorted out. I have three properties under contract that were scheduled to close by the 5th of this month but the seller (CHASE) is not signing the HUD due to this. We have no clue, and no one can give me an answer, as to when this will be lifted.

But here is my biggest concern (I am use to properties not closing due to crap like this), I currently have approx. $40,000 of my own money out in re-keyes, rehabs, lock outs, trash outs, etc. Not all with CHASE, it is spread out over several REO companies. But what happens when these banks start going under? Do you think I am going to be their first priority to honor their commitment to reimburse me for these expenses? They have been outsourcing these expenses to us and we pay them based on the hope that they will pay us back. This is far too big of a risk and liability on us. I have been in this business for over 6 years and have closed over 500 transactions. This business has been good to me, but what frustrates me the most is that we, no matter how hard we work or how ethical we are in our business practice, are always dependent on others to do their work or to do the wright thing.

This is somewhat of a rant, but I had to blow off some steam. Thanks for listening.

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Comments

Nick Miller October 7, 2010 at 9:43am

The biggest impact this has had on me at the current time is that CHASE and the other banks involved have put a hold on signing closing docs until this is sorted out. I have three properties under contract that were scheduled to close by the 5th of this month but the seller (CHASE) is not signing the HUD due to this. We have no clue, and no one can give me an answer, as to when this will be lifted.

But here is my biggest concern (I am use to properties not closing due to crap like this), I currently have approx. $40,000 of my own money out in re-keyes, rehabs, lock outs, trash outs, etc. Not all with CHASE, it is spread out over several REO companies. But what happens when these banks start going under? Do you think I am going to be their first priority to honor their commitment to reimburse me for these expenses? They have been outsourcing these expenses to us and we pay them based on the hope that they will pay us back. This is far too big of a risk and liability on us. I have been in this business for over 6 years and have closed over 500 transactions. This business has been good to me, but what frustrates me the most is that we, no matter how hard we work or how ethical we are in our business practice, are always dependent on others to do their work or to do the wright thing.

This is somewhat of a rant, but I had to blow off some steam. Thanks for listening.
Susan Cook, RDCPro, CDPE, SFR October 5, 2010 at 2:47pm

Oh my goodness, Marie...this could get really ugly for foreclosure agents!
Marie Walton October 5, 2010 at 5:01am

I say a news report yesterday that said Old Republic Title was going to stop issuing title policies to buyers of foreclosure properties in the effected states until they could be sure that the lenders had aquired clear title to the properties. The artical went on to say that if other title companies followed suite that this could put a real crimp into sales of foreclosure properties.
Fortunatly I'm in Texas and we are not effected but that didn't stop our Atorney General from demanding lenders stop all foreclosures. Guess he was just trying to score some political points!
Susan Cook, RDCPro, CDPE, SFR October 5, 2010 at 2:11am

Well said Jose. One thing that I've been thinking since we are also doing short sales is how this all has started after reports that loan mods are not working. Also, at the Fannie Mae training, we saw how short sales get the banks more money than REO, in fact I was surprised that they were bringing that up during the training. Not now. So many of these little reports from the media and from our clients all seem to lead to one thing, they don't want to foreclose because they will get more money. Your thought on Deed-in-Lieu also makes sense.

So let's ask ourselves what happened during the last Moratorium and the "trial" mods that were supposed to help our economy and jump start the housing mess. I would have to say that it accomplished exactly what "they" set out to do. Homeowners started talking to their servicers, with the help of us in some cases, anybody work for Titanium? Loan mods were accepted but A LOT were rejected and so the short sales increased. Now we are coming off of one of the biggest spring seasons we have had in some years, all thanks to a new law and tax break and poof! a new stop on foreclosures. WHY are you guys so surprised? History repeats itself. It stopped foreclosures before and houses were still sold, why not do it all over again?
Marcy Moyer October 4, 2010 at 4:34pm

This is just in the 23 states though right? Non judicial foreclosure states like Calif are not affected, or am I missing something?
Robert NRBA Slick SC REO October 4, 2010 at 4:08pm

Wow! Finally a rational discussion of this issue. If you go on Active Rain you might think the world is coming to an end. My greatest fear is not that anything has been done improperly but the impact that additional delays will have on the market. It's like stopping only the paint department in a car factory. You'll get lots of cars with no paint sitting around getting rusty with more coming every day. How will we deal with the additional backlog? Has anyone else noticed that buyer demand is at an all time low? Now prices will be under further downward pressure.
Henry B. Torn October 4, 2010 at 2:25pm

This scares me in a big way. This will only prolong the foreclosure process and I fear will put a very long "Pause" on any property in or about to hit the pipeline! This will also only make prospective buyers and investors more distrusting to purchase an REO due to perceived title issues.
George Bellino October 4, 2010 at 2:19pm

All of my clients put all CFK's, evictions, and sales on hold. I had one that was supposed to close today but the bank said they wouldn't be able to at this point.

It wouldn't matter if they agreed to the CFK's because they would have agreed without the knowledge that the new owner foreclosed improperly. This is going to be very interesting to see how this all plays out.
Steve Adkins October 4, 2010 at 5:24am

Jose, your last sentence should be a BIG issue for all agents right now. This whole issue opens the door to new issues we have never had to think about yet. It may be advisable to consult legal counsel quickly. This may be the time bomb we were all expecting, just not in this manner.

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