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.