10/8/10: UPDATE: BANK OF AMERICA HALTS FORECLOSURES IN 50 STATES. See on Reuters.
Many of you have seen the news lately, “Three Banks Halting Foreclosures” detailing the chaos that has fallen onto the Foreclosure and REO markets this week.
Allegedly, Chase, GMAC Mortgage, and Bank of America have stopped foreclosures in 23 states. Many states are concerned that the foreclosure proceedings have been handled improperly, and many allegations that the “robo-signers” and parties signing the foreclosure paperwork bank side are not authorized to do so, having SERIOUS implications for many properties in foreclosure.
As of yet, I have yet to find an article detailing which 23 states have been affected, but I have confirmed that some of the banks have put the brakes on even REO transactions in escrow here in Spokane.
This potential liability for the banks has them taking drastic measures to ensure their foreclosures were properly handled. Stopping REO transactions in their tracks the day of closing is a SERIOUS measure leaving would-be home owners left holding the bag, living in a hotel and their items in a U-Haul.
On the brighter side, Wells Fargo has refused to halt their foreclosures and has pressed onward. I feel we’ve seen the tip of this “crisis iceberg,” incorrect signatures on foreclosure paperwork could mean a “restart” of the timelines on an unsurmountable sum of foreclosures in process. I can’t even begin to estimate the number that could be affected.
For those in foreclosure, this could buy you more time in your home or allow more time to negotiate the short sales.
I can’t help but think that in light of facing a “restart” in the foreclosure process and looking at an offer to buy the property through short sale sitting in the bank’s negotiation department, the short sale may start to look pretty good. We may see a surge of approved short sales coming down the pipe as a result of this. Who knows, purely prediction, but seems logical to me.
Some references and further reading: