This is a great piece written from someone within our business, and I thought it would be good to share:
There have been a lot of recent headlines about the foreclosure moratorium put in place by several of the nation’s largest banks and I felt it appropriate to communicate a brief explanation of where we are and how this may, or may not, impact our market and to also update you on the latest headlines.
In short, this issue came about after the discovery that many of the nation’s largest banks had cut corners in the review of foreclosure documents which resulted in self-imposed moratoriums put into place so that the banks could undertake a self review of their own internal procedures. This was not a fundamental flaw which resulted in foreclosures being incorrectly filed, but a question as to the thoroughness of the banks’ review procedures. Remember, South Carolina, along with 22 other States, is a Judicial Foreclosure State, meaning a Judge is required before a foreclosure can go through. That extra level of scrutiny decreased the chances that any of the foreclosures that were in process, or those which had been completed, were faulty.
It is important to note that Wells Fargo did not impose a moratorium as they were comfortable with their internal procedures. Additionally, Bank of America announced today that it was partially lifting a self-imposed nationwide moratorium on foreclosures in the 23 U.S. states that require a judge's approval, including South Carolina. Bank of America’s initial assessments, in both judicial and non judicial states, has indicated that their decisions and supporting documentation were accurate.
I have also cut and pasted a portion of the latest article from Steve Harney addressing how the moratoriums that are still in place might impact an owner in foreclosure, a buyer or a seller.
You are a homeowner in the foreclosure process:
It appears that some banks will be backing away from following through with normal foreclosure processes until they can be assured that their paperwork is in order. Early estimates are calling for a potential 30-90 delay to many foreclosure procedures (notices, repossessions, sales, etc.) However, there is absolutely no way for anyone to be sure whether your particular situation will be delayed.
You are currently selling a house:
We have reported often on the affect foreclosures have on home prices in a community. The actual impact is measurable.
According to RealtyTrac, bank-owned properties went for an average of 35% less than non-foreclosure sales. Foreclosures not only absorb buyers but also impact the appraisals of the homes that surround them.
Obviously, if there are less distressed properties coming to the market, there will be less downward pressure on pricing in the short term. The Washington Post, in an article last week, reported:
Stretching out the foreclosure process would reduce the number of houses dumped on the market over the next six months, which could help firm up housing prices in the short term and put some extra support under a sagging economy.
There may be a window of opportunity for a seller to maximize the price they receive for their home if they sell in the next 90 days.
You are currently buying a foreclosure:
A portion of the inventory of foreclosed homes on the market has been frozen. Banks and title companies (who insure good title to the property a buyer purchases) want to make sure the bank actually owns the property legally before they sell it.
The Washington Post in an article last week reported:
Nick Chaconas, a Maryland real estate agent, said he was one week from completing a foreclosure deal for one client, who was buying a $470,000 fixer-upper in Potomac, when an e-mail arrived putting the deal on the skids.
The e-mail, from the title insurance company involved in the deal, said the mortgage lender PNC was suspending foreclosure sales for at least 30 days “due to a review being undertaken on all foreclosure files.”
If you are buying a foreclosure, anticipate potential delays. We do not believe there will be large numbers of cancellations. Be patient and realize that you are getting a substantial savings on the purchase.
Mike Ciucci specializes in the Charleston SC real estate market. He has been a Charleston realtor for over 15 years, focusing on quality and attention to detail his clients have come to expect.