Illegal Foreclosure Claims Spur Foreclosure Avoidance Counseling and Short Sales

By
Real Estate Broker/Owner with Liberty House Realty LLC

An article by Jennifer Harmon with www.ManagingREO.com highlights just another reason why I believe that REO's are not what banks want and that our industry is in the beginning stages of a paradigm shift. Back on October 8, 2008 I wrote a blog titled, "REO's Become Extinct" which focused on the idea that REO's just simply cost too much to continue doing and our industry had numerous reasons to change and start doing more Short Sales.

Well, like with any fast growing industry, growing pains with short sales are rampant. Many people complain about short sales and, the list is too long to review here but, we are seeing MLS boards taking steps to force more regulation and in return, the process is smoothing out a little bit.

As I mentioned in my October 8th, blog, we are seeing a surge in Foreclosure Avoidance companies like Titanium Inc. and BSG3. Just so you know, I am an HRC with Titanium and love them, thought I would share that in the spirit of disclosure.

Now, with all that being said, let me get back on task and that is, how are illegal foreclosure claims spurring the growth of these Foreclosure Avoidance Counseling companies and subsequently short sales.

Jennifer Harmon mentions in her article that legal aid groups and the such are trying to sniff out illegal foreclosures and, therefore they are seeing a rise in these types of claims. Simply put, courts, legal aid groups as well as certain law firms are looking to give these homeowners a way of keeping their homes. This isn't really a bad thing, I am all for a homeowner staying in their home, when they can afford it.

Jennifer's point is, lenders need to do more homework and work more effectively to ensure that the chain of title is complete, accurate and legal before they decide to foreclose. It's a great point but, I don't see that happening. Truth is, 2009 isn't going to be any better than 2008 unless the government steps in and does something drastic to stop the foreclosure tsunami. In reality these lenders can't wait for government so, they are taking steps on their own to protect themselves and hence, short sales can do just that.

You see, with a short sale, the bank isn't selling the home, the homeowner is. All the bank is doing is approving the amount they are willing to take as a loss when it's sold. In essence, they avoid the foreclosure all together and don't really need to worry about claims of any illegal foreclosure.

Now I am no Attorney so, I may not aware of some obscure legal principle that makes my argument mute however, it makes a lot of sense to me......lol

In closing, I feel, believe and speculate that REO's are not the way of the future. I really do believe they will always have a place in our society but, I don't see the Default Industry surviving this economic downturn looking like it did when we went in. I do think old business standards are changing as we speak and short sales are going to be a preferred way to do business.

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Rainmaker
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Richard Shuman
The Only B.S. I Have is from the University of Massachusetts - Lake Mary, FL
Real Estate Broker - Orlando Area - Love Referrals

Lets hope that someone comes up with a solution or everyone will be foreclosed on!

Jan 22, 2009 04:45 AM #1
Ambassador
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Roland Woodworth
Q Realty - Clarksville, TN
Q Realty - Power In Real Estate

Jesse: I agree that the banks really don't want to foreclose on the homes. They give the home owner many opportunities to keep their home. Some times, there is just no choice but to foreclose.

Jan 23, 2009 07:20 AM #2
Rainmaker
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Kay Van Kampen
RE/MAX Broker, RE/MAX - Springfield, MO
Realtor®, Springfield Mo Real Estate

Jesse, I am having problems with the way my MLS requires us to work short sales.  Any accepted offer must go to MLS as under contract.  Working with another broker and our attorney, we are now able to keep short sales on the market untile we receive approval from the banks.  I believe short sales may be a common event over foreclosures in the future.

Jan 23, 2009 12:55 PM #3
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Rainer
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Liberty House Realty LLC

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