You may have heard major banks have suspended foreclosure proceedings to investigate possible problems with documentation. You may have even heard rumors of a federal foreclosure moratorium. This part is just a rumor as the federal government does not have the right to stop all foreclosure proceedings in the entire country. This must be done on a state level. Attorneys General of many states are investigating fraudulent activities among banks to ensure proper legal handling of foreclosures. (but really mass moratoriums is not something we should hope for as it would further depress the market and move us backwards on the road to housing recovery).
Many of the moratoriums are not in my state of Arizona (a non-judicial state). Check to see which states are involved in your area. Bank of America yesterday announced they will lift the moratorium and work state by state to ensure compliance. Some major banks (such as Wells Fargo) have stated they have reviewed their foreclosure process, found no evidence of mishandling and will not halt foreclosures. So this is not as widespread in all areas of the country.
But homeowners who are facing foreclosure are wondering, What might this all mean for me? Unfortunately probably nothing. These bank moratoriums are temporary but may offer homeowners time to assess their situation. Ultimately if you are behind on your mortgage at some point your bank will take action and begin the foreclosure process. If your bank is one that has put a hold on foreclosures due to the "robo-signing" investigations or simply because they slow down during the Holidays you may have more time to facilitate a short sale. This is good news because some major banks have in recent months changed their policy when it comes to approving short sales at the 11th hour. A couple years ago it was very easy for me to convince a bank to postpone a Trustee Sale while I marketed the home for short sale. I could often have Trustee Sales postponed several times for several months. I would often take a listing from a homeowner just days away from a Trustee Sale date and still be able close it as a short sale. Now banks are telling us we not only need an offer prior to the scheduled Trustee Sale but we must close escrow by this date. One bank won't even entertain a short sale offer if the Notice of Trustee Sale has been issued (that's 90 days prior to the Sale).
But what if my paperwork was one of the ones mishandled by a "robo-signer"? Will I get to keep my home? Probably not. The bank will most likely correct the error and unless you pay the entire amount due they will still foreclose.
But I might get my house back if it sold at auction? Probably not. Title insurance would most likely kick in if the home was already sold to a 3rd party and there is dispute over legitimate foreclosure action .
However this whole crisis plays out we know the current market is difficult to navigate. Make sure you are speaking with an experienced agent in distressed properties. Information is power.
If you or someone you know in Arizona is struggling to make their mortgage payments please call.
Comments(2)