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Consumer Action in Lieu of Property Disclosure Statement of Bank Owned Property?

By
Mortgage and Lending with Karen Cooper | Sr Mortgage Loan Originator ! NMLS # 223305 | First Federal Bank of Florida, Ocala, FL NMLS 223305

Disclosure photo courtesy of flickr.com From Raul PWhat would happen do you think if homeowners who have encountered financial difficulties that they are unable to resolve with their bank and its investors did their own Property Disclosure Statement and notified their bank/investors, surrounding neighbors, banks’ listing agents and State Real Estate Agency when the property reverts to the bank? Maybe posted it publicly in case buyers are considering purchasing the home on the court house steps at the Trustee Sale or delivered it by attending the sale themselves?

 

Since the banks and their investors like Fannie Mae, Freddie Mac, HUD and other institutions are not required by law (at least in California and Oregon, based on my experience) to provide a Seller’s Transfer/Property Disclosure Statement, do you think this would be of benefit to future buyers and their real estate agents?

 

What would happen if the homeowners being foreclosed on notified their bank/investors of the property’s potential “disclosure items” that would come out on the Seller’s Transfer/ Property Disclosure Statement? Would/should this now trigger the necessity for the bank/investors on bank owned real estate to disclose property condition they have been made aware of?

 

With so many bank owned homes on the market with the current high foreclosure volume, do you think getting Seller’s Transfer/Property Disclosure Statement in to the hands of unknowing buyers is a good idea?

 

See you out there!

Posted by

Karen Cooper Southern Oregon|California Mortgage ConsultantKaren Cooper - Home Lending Advisor Nationwide

               NMLS #223305

 

Comments(7)

Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

There are a couple of questions that arise from your post.  Did the previous owners neglect the property which led to the need for disclosure of a material defect?  Is the lender under any obligation to disclose defects based on their contracts?  Did the lender acquire the property in "as is" condition as part of the foreclosure process?  We all understand frustrated owners who have lost their property to foreclosure but suspect if they interfered in the sale of the home to a new buyer they could be opening up a can of worms that might be costly to them.

Jan 23, 2011 01:40 AM
Karen Cooper
Karen Cooper | Sr Mortgage Loan Originator ! NMLS # 223305 | First Federal Bank of Florida, Ocala, FL - The Villages, FL
Helping Homeowners w/Home Loans in 27 US States

Those are great questions, Cindy.  There are many variables in this foreclosure equation, aren't there?

Jan 23, 2011 01:48 AM
Brian Madigan
RE/MAX West Realty Inc., Brokerage (Toronto) - Toronto, ON
LL.B., Broker

Karen,

This document is not mandatory in Ontario and the Form itself causes some problems and creates potential liability.

Brian

Jan 23, 2011 03:24 AM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Karen - As much as I love this idea, a real TDS about the true condition of an REO, I too see problems with it.  I despise the fact that some REO banks are breaking laws and committing fraud when they fail to disclose property conditions and defects that they undeniably know to be true (I speak from experience when I say that). 

However, governing agencies (HUD, DRE, MLS boards, etc...) need to just start enforcing the laws and regulations that are already in place to protect consumers from sellers (regardless of who they are) and their listing agents who fail to operate and conduct business legally and ethically.  JMHO

Jan 23, 2011 08:05 AM
Karen Cooper
Karen Cooper | Sr Mortgage Loan Originator ! NMLS # 223305 | First Federal Bank of Florida, Ocala, FL - The Villages, FL
Helping Homeowners w/Home Loans in 27 US States
Brian - Thanks for sharing information specific to your market. I didn't know Ontario doesn't require a Property Disclosure Statement. Sounds like a leaning toward "Caveat Empor", eh?
Jan 24, 2011 04:40 AM
Karen Cooper
Karen Cooper | Sr Mortgage Loan Originator ! NMLS # 223305 | First Federal Bank of Florida, Ocala, FL - The Villages, FL
Helping Homeowners w/Home Loans in 27 US States
Hi Donne - yes, enforcing existing laws is important, isn't it? The laws don't require that banks disclose property condition, though. Maybe the California case that ruled that a property defect had to be known by the bank that owned it therefore they were accountable will change this. Thanks for weighing in on the topic.
Jan 24, 2011 04:52 AM
Brian Madigan
RE/MAX West Realty Inc., Brokerage (Toronto) - Toronto, ON
LL.B., Broker

Karen,

Yes, that's exactly what we have. There are just a few exceptions, but other than "concealment" of defects and the disclosure that the property is unsafe or uninhabitable, the seller can keep silent.

Brian

Jan 24, 2011 10:15 AM