Bank of America to Halt Foreclosure Sales IN ALL 50 STATES--Yes, Your Non-Judicial Foreclosure State, Too!
I personally am not sure if this is good news or not. The houses that have already been foreclosed on and listed for sale with an REO agent, could be in jeopardy of being pulled back, off the market, by the bank. If that is indeed a possible next step. Can they make this "stop foreclosure" action "retroactive" to impact homes already foreclosed on? I'd love to see a concrete answer on this.
**BREAKING NEWS**
Because of recent problems with documentation and chain of title issues with foreclosures and their subsequent sales to new homeowners, Bank of America has decided to temporarily halt foreclosure sales in all 50 states. This is a significant move, as it will slow the release of pent-up distressed properties onto the market.
Why is this important? I'm not an attorney, etc. etc., but here is how I understand the decision in layman's terms (I'm happy to have your input):
Originally, the national banks had halted foreclosures only in judicial foreclosure states (we'll call them JF states). This did not include many states, including Washington and California. In JF states, the banks actually go through the court system to foreclose upon a home.
In non-judicial foreclosure (NJF) states, buyers of real estate receive deeds of trust that will allow a bank to foreclose on their home without going through the courts. The foreclosure can happen through a trustee, speeding up the process in many cases.
The issue for the banks, was that after selling a foreclosed home to a new owner, in many JF states, another person would come forward with documentation claiming ownership of the home. There would be confusion as to the true owner, and the banks' paperwork (being as poorly organized as it has been in recent years), wouldn't clear up the issue. This made for a lot of litigation, and unhappy "homeowners".
In NJF states, lawsuits as to this chain of title are not allowed after the foreclosure sale. Therefore, the banks could go on foreclosing on these homes, as they wouldn't be held up by the extra litigation. If they got the home sold, they were ok.
Bank of America is apparently making this decision to stop foreclosure sales in all states out of overall business prudence, not just legal necessity.
This is good news.....for now.
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