The Texas Attorney General has taken action against banks here very recently with regard to foreclosures. Here are some Frequently Asked Questions and Answers:
What is the Texas Attorney General doing regarding foreclosures?
Texas Attorney General Greg Abbott has sent a demand letter to 30 mortgage banking and servicing institutions asking that these institutions immediately "suspend all foreclosures, all sales of properties" previously foreclosed upon, and all evictions of persons residing in previously foreclosed upon properties" until these institutions have taken specific steps to rectify possible past errors in mortgage documents.
What is a demand letter?
A demand letter is a tool lawyers use to ask someone to do something. The demand letter by itself does not have the force and effect of law. A demand letter typically will describe possible future legal action against the recipient of the letter if the recipient does not take certain actions. In this case, Texas Attorney General Abbott has noted possible violation by these banking institutions of the Texas Deceptive Trade Practices Act, the Texas Debt Collection Act, the Texas Penal Code, the Texas Property Code, the Texas Government Code, and the Texas Constitution.
How will the banks respond?
We don't know how individual banks will respond to the demand letter. Anecdotally, we've been told that some banks had already halted foreclosures due to concerns about the accuracy of documents and the integrity of the loan servicing and administration of the foreclosure process. The Houston Chronicle reported on Oct. 6 that some banks will not honor the AG's request.
How will the demand letter affect current transactions?
If an institution chooses not to respond to or honor the demand letter, then the transaction should proceed as if no demand letter had been sent.
If an institution chooses to respond to the demand letter, then the transaction could be affected in various ways:
Foreclosures: Institutions that honor the AG's request will likely postpone foreclosures that have already been posted and will likely not post additional foreclosutes until the dispute has been resolved.
Foreclosed properties that are listed for sale: Institutions that honor the AG's request will likely not enter into a sales contract for a listed foreclosure until the dispute has been resolved.
Foreclosed properties that are under contract for sale: Institutions that honor the AG's request may delay closing a sales contract for a listed foreclosure under contract until the dispute has been resolved.
Short sales: Institutions that honor the AG's request may choose to delay closing on a pending short-sale transaction until the dispute has been resolved.
Evictions of persons residing in previously foreclosed upon properties: Institutions that honor the AG's request will likely not evict previous homeowners who continue to live in the foreclosed house until the dispute has been resolved. The institutions could, however, attempt to convince the occupant to leave the property by offering cash for keys.
Commercial vs. residential properties: The demand letter makes no distinction between commercial and residential properties.
So for foreclosed homes in Texas, definitely in a holding pattern for the moment!!
It may be a GREAT opportunity to LIST a property now with the law of supply and demand as ALL the foreclosed properties seem to have been FROZEN out for the moment.
Connect. Share. Learn.Welcome to ActiveRain, the #1 social community for real estate professionals.
;)
;)
;)
6 Comments on Attorney General Action Against Banks With Foreclosures Things To Note
Gary, it's getting awfully interesting! I think that the loan servicing companies (MERS in particular) who are on so many of the ownership records filed with local registrars of deeds are going to present so interesting challenges to us, the title companies and the lenders. Here some agents are reporting title companies refusing to insure foreclosures because there is no paper trail indicating who actually has the right to sell the place.
Hi Gary...There has been an admission by some lender employees that they signed off on foreclosure documents without reading them. This has precipitated a halt by some companies in order to see what has happened and to see what needs to be done to remedy the situation.
Can you imagine losing your home and then finding out that this is what happened to your paperwork?
Kate
Gary,
An ineppt impotent letter implying impropriety less than a month before elections.
Wow! This AG really cares!
Where was his concern over the last three years?
This is pandering nothing else!
If the former home owners defaulted procedural errors will only delay the inevitable!
Next we're going to hear "there ought to be a law!" It's the little blue pill for incompetentpolitcos.
The gullible and entitlement crowd will love it.
Billl
Pat: No paper trail is scary stuff. Maybe rubber stamping foreclosures is seen as a short cut to get files off people's desks.
Kate: Where are the managers of the lower level people at these lending institutions? Are there no checks on the work?
Bill: I agree it is bad enough the financial situation and we add on top of it paperwork/clerical administration issues.
Have to agree with Bill..odd how it just suddenly is an issue. The road here is slippery. I don't want government getting so involved that a note and deed of trust aren't worth the paper they are written on.
Gary, It does seem like a slippery slope that we are one. It appears to be an interesting ride if nothing else.