Sunday, October 17, 2010

Buyers of foreclosed homes may face big problems

Buyers of foreclosed homes may face big problems:
"“Anyone who’s purchased a foreclosed property in the last three years should really be concerned,” says George Babcock, a Providence lawyer who represents homeowners who have been foreclosed on."
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This is why banks are freezing the foreclosure process. If the mortgagee uses sketchy practices to to prove they have the right to foreclose, then sells it to a new owner, that new owner may not really have title to the property. Lawyers being the opportunistic types they are, you can then have an interesting situation. What if the former owner (the original mortgagor) shows up and claims the house? Title insurance should protect the new owner, but this is yet another permutation in the unfolding weirdness of the post-crash housing market.

3 comments:

Anonymous said...

So is title insurance the next domino to fall in this residential real estate crash?

jb said...

Why isn't anybody commenting on the problems in commercial real estate loans. All you have to watch is Fitch's daily reports to see that there are some serious problems in this market.

Anonymous said...

Buyers are being duped. The buyer thinks they are getting a deal but they are getting the Brooklyn bridge. The buyer, however, is executing a promissory note that they will be on the hook for. They get "whatever interest the bank has" in the property - which may be nothing. See:
Wells Fargo Dumping Risk on Hapless Buyers