The recent halt on foreclosures by many of the large lending institutions has caused quite a stir in the news media but what does the suspension of foreclosure activity mean as far as real estate transactions in Missouri and Kansas?
I was notified by email that the following banks are stopping all foreclosure proceedings in Missouri and Kansas: Bank of America, Chase, Countrywide, GMAC and JP Morgan. These banks are under investigation by the State Attorney General. PNC Financial may also be halting or suspending foreclosure proceedings.
Why are they stopping, suspending or putting on hold the foreclosure proceedings? There may have been errors made in processing and/or preparing the paperwork.
Apparently the allegations that the banks did not process and/or prepare the paperwork correctly is serious enough for Bank of America to have shut down foreclosures in all 50 states. B of A was first; the others followed. Several State Attorney Generals are conducting investigations. There is also a federal investigation.
For those of us practicing real estate in Kansas and Missouri (Kansas City is in both), this means that any listings we have that are REO properties with these banks, the listings are to be pulled from the MLS. For agents representing buyers of an REO property with any of these banks can expect a delayed closing (maybe) pending the results of the investigations. Properties with contracts PENDING may keep their contracts in place. Buyers may withdraw from the contract if they wish.
Some Title Companies have stopped issuing title insurance on foreclosure sales by certain banks. As this varies from title company to title company and locale, I cannot provide comprehensive details. Please consult with your title company representative for specific questions. The main point is that if the title company won't issue title insurance, how are you going to close?
What effect willl the halt on foreclosures have on FNMA and Freddie Mac properties serviced by any of these banks? Nobody seems to know the answer to that question at the moment.
How will this affect the real estate market? On the one hand, fewer foreclosure properties on the market should boost sales price. All of the foreclosures have made it almost impossible for some homeowners to sell their homes for fair market value because the 'comps' bring the values down. This is especially true in neighborhoods with a high ratio of rental to owner-occupied properties.
On the other hand, people are concerned about housing values, job security and our economy in general. People who fear losing their jobs are not inclined to take on a mortgage. People who fear buying a home and having its' value decline after they buy are less likely to buy now. Many of the married buyers I see are buying a home based on one persons salary just in case one of them loses their job. Single buyers are looking at homes that they could afford on half their salary.
Specifically in Kansas City Real Estate: areas where most of the homes for sale were REO and Short Sales will have a marked decrease in inventory. In some neighborhoods, the only homes listed for sale were REO's and Short Sales. Maybe good for property values but what is going to happen when all those homes are pulled off of the market and no one mows the lawn or checks for intruders?
Other areas of Kansas City will not really notice a big change since there are few, if any, REO or Short Sale properties in some neighborhoods. Once again, location is key in real estate. People buying in these areas will continue to buy. Homeowners wanting to move will continue to sell.
For regular buyers, they will still have a large assortment of homes to choose from but won't be distracted by the 'good deals' they think REO's and Short Sales were. For investors, they will continue on as always, having their agents seek out the best deals for their ROI goais.
Me? I'm hoping Chase gets it together and approves the Short Sale for my seller before he is forced into defaulting. They've had plenty of time and God knows they have enough documents. If only they had one individual to handle each case from start to finish instead of a 'PROCESS.' Ajd don't talk to me about getting 'assigned to a negotiator' - the file goes through 20 or 30 people before that happens. It's a waste of time and a p__s-poor system! The file needs to be handled by one individual from the moment the real estate agent contacts the bank. Period.
Don't get me started!
Kansas City Real Estate Agent ♫ ♪ ♫ Maria Morton ♫ ♪ ♫ ♪
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**Views expressed in this blog post are not necessarily those of Heartland MLS, Prudential Kansas City Realty or any other company. Any opinions offered on this blog are those of Maria Morton.
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