There have been many articles lately in the news and on-line about the rash of foreclosure "fraud" that seemingly is running rampant in courts across the country. And there has been much discussion about lenders "freezing" foreclosures nationwide. While there may well be a "freeze" I can tell you that I received e-mail alerts today advising that more than 30 new properties came on the market today, all of which have gone through foreclosure and all of which are now being sold on the open market by the banks. So while there may be a freeze on new foreclosures, those properties which have gone through the foreclosure process are still hitting the market and can be TREATS. REO PROPERTIES SOMETIMES OFFER THE BEST VALUE IN THE NEIGHBORHOOD!
THIS IS GOOD NEWS and IT'S NOT A TRICK. Many have called me to inquire about the insurability of properties being conveyed by banks to ARMS-LENGTH PURCHASERS and I am pleased to be able to tell them that we are able to offer title insurance, with no additionoal premium to both lender and buyer on these transactions.
While we may never know whether or not any of the documents in the forclosure files represent any "fraud" nor will we likely ever know whether or not the Deeds from Trustee to seller were executed by "Robo-Signers" there is no reason to be afraid of purchasing REO property in Maryland as long as you follow these simple guidelines.
1. DO NOT USE THE SERVICES of the foreclosure mills title agencies. These agencies will readily admit to you that they have not conducted a title search on the property and that they have relied instead upon the title "report" issued to the foreclosure attorney. This report will generally only run from the date of the deed into the foreclosed party forward. Many REO contracts will suggest to you that if you use the foreclosure mills' title agent that you will save time and money, but all things considered, wouldn't you rather have peace of mind. Remember that in Maryland, the BUYER has an absolute right to select their own title agent and you should always assert that right.
2. HAVE A FREE ON-LINE MINI TITLE SEARCH DONE BEFORE YOU ENTER INTO THE CONTRACT. A quick phone call to The Preferred Title Group, Inc. will enable you to know whether or not there are any "glaring" problems in the foreclosure file and whether or not the seller is actually in title. While a policy of title insurance cannot or rather should not be offered based on these mini searches, you will at least have some idea as to the status of tilte BEFORE you enter into the contract.
3. DO NOT RELY ON EVERYTHING YOU READ- Many web-sites and blogs are indicating that title insurers are not offering title insurance on REO properties. That is simply not true across the board. Each title insurance underwriter has issued memorandum to their agents nationwide. And many of these memos are state specific. As for The Preferred Title Group, Inc., as agents of Old Republic Title, we are absolutely able to offer title insurance on Maryland REO properties to both lender and buyer.
4. Purchase a policy of title insurance at the time of closing to protect your asset. This cannot be stressed enough, particularly at this crazy time. A title insurance policy is cheap compared to the lack thereof should a claim of fraud be filed in the future.
A common question that I have repeatedly answered relating to the current "fraud" investigations have dealt with "what if". "What if the prior foreclosed owner files a claim alleging fraud in their foreclosure? Will I have to move?
It is highly unlikely that this scenario would ever play out. As an insured "Arm-Length" purchaser your title insurance policy protects you FOR AS LONG AS YOU OWN THE HOME against just such things as fraud. In an instance where fraud has been proved and the defaulting prior owner actually prevails in the litigation, the title insurance underwriter would likely pay the defaulting prior owner a sum of money to settle the suit and would seek reimbursement from the foreclosure mill or note holder in the foreclosure after the fact. As an insured under the title policy you are absolutely protected agains the fraudulent acts of others. Your interest in the property will be protected by your title policy.