Does that mean we get to stay?

Now that J.P. Morgan Chase, Bank of America and Ally Financial (GMAC) have announced a delay in foreclosures many homeowners are wondering if they will not be forced out of their homes. What is really happening?

First, this affects only 23 states:

Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.

These are judicial states for foreclosure which means that the bank usually has to go to court to be allowed to foreclose.

Old Republic has now announced it will no longer write title policies on J.P. Morgan Chase foreclosures. In all this news, I do see a silver lining. That the banks which are notoriously slow in their short sale process should now be more accommodating and get these deals closed.

A short sale is when the homeowner still owns the property and it is the homeowner negotiating with his mortgagor the acceptable terms of payoff. The reason is because the payoff is short of the mortgage amount due plus all the interest, penalty fees, attorney fees, and everything else the bank wants to throw on there at time of settlement.

The title companies are now realizing that it will be them taking the loss on the foreclosure should a former homeowner determine that the law was not followed and that they were incorrectly foreclosed on as they technically still own the home. That former homeowner could file suit to recover their home. How could that be you might ask? Well, if the home was not properly foreclosed on that means that the bank did not properly pass title to own the property. This means they did not have the right to re-sell the home as a bank owned property.

There are 50 states in the Union so there are another 27 states that are not affected by this. Every state in the Union is different and depending on your particular state the procedure will vary. Example in some states it is a specific day in the month say the first Tuesday of every month and in other states it can be after they have met the advertisement requirements.

My first suggestion to homeowners is go get those closing documents you signed and read them. Then call your friendly attorney and ask for it to be explained to you so you totally understand what you have signed. It is clearly spelled out what remedy your specific mortgage holder's policy and procedures are for foreclosure. The next step is to then look up your state and what the law states is their procedure for executing a foreclosure.

For general information you can check here to determine if your state is a judicial or non-judicial state http://www.realtytrac.com/foreclosure-laws/foreclosure-laws-comparison.asp.

If you are in a FHA mortgage I urge the homeowner to call HUD and HUD will direct them to a HUD certified credit counseling service. Do not pay any attorney, company or individual to do this for you. These services are free and they are there to help you.

If you are a buyer of a foreclosure sale buying directly from a bank or you are buying a short sale buy the extra homeowner's title insurance for yourself. In some states this is not a requirement but an option.

Finally, if you are a distressed seller reach out and get help. If you can't stay you can sell your home.