Foreclosure Fiasco spreads - Bank of America extends freeze to 50 states

If you keep up with the news, Bank of America's announcent extending their foreclosure freeze to all 50 stateshas been spreading with people wondering what is next?  The "Repogate" foreclosure fiasco has taken several turns. Here are some observations as I have seen it.

I attended a Sheriff Sale yesterday and the sheriff remarked that 17 minutes was a record for the quickest sale since he has been sheriff.  The vast majority of properties were canceled from the sale. There are normally a certain percentage canceled, but this seemed to be an unusually high percentage.

Our area's listings include bank-owned properties, as is common with most areas.  As of this morning 135 bank-owned properties had a status of withdrawn.  Over 100 of those were withdrawn Oct. 1st or later.  I do not know how many of them went from active to withdrawn and how many went from pending to withdrawn.

There have been the predictable calls by members of Congress for an investigation into a range of issues including foreclosure irregularities, loan modification mishaps, and bank handling of short sale applications.  And there was news of a suit filed in Kentucky under RICO (racketeering) statutes.

For those who are considering purchase of a bank-owned home right now, be ready to expect anything.  And do make sure that title insurance will be available for your purchase.  Solving the title insurance issue should be a priority right now.

Except in rare circumstances where payments got mishandled or other missteps, most of the defendants in foreclosure actions are probably indeed behind in their mortgage. Probably some lenders and servicers were not following requirements to offer forbearance, loan modifications or short sales.  But for the most part this freezing of foreclosures and withdrawal of REO's from the market is probably a delay of the inevitable.

In my market area (Indianapolis-Carmel Indiana) I will be trying to keep clients informed about recent headlines.  And I may suggest to buyers of Indianapolis and Carmel Indiana real estate that there might be smoother sailing with new homes and homes where there has not been a foreclosure.