Banks Halt Foreclosures!

From Real Trends Magazine:


Banks Halt Foreclosures: What Can You Do?
In September and October 2010, several lenders suspended foreclosures in two dozen states due to questions about whether foreclosures were being processed consistent with applicable state law requirements. Concerns are being raised by state and federal elected officials, as well as consumer and fair housing groups, about the validity of ownership of mortgages that have been securitized and resold. At the center of the controversy is Mortgage Electronic Registration Systems (MERS). This firm is responsible for electronically tracking the transfer of assignment of mortgages. Class-action suits are being brought against MERS alleging that the use of the system circumvents state laws. On October 1, 2010, Fannie Mae and Freddie Mac released statements reiterating that servicers must comply with applicable state laws governing foreclosures. Although nearly all of the foreclosures in question will be fixed eventually, the current situation is creating difficulties and a new hurdle to the recovery of the housing and mortgage markets. According to the National Association of Realtors (NAR), members are already reporting that upcoming sales have been delayed indefinitely or cancelled, to the detriment of all involved. Additionally, homes on the market without clear title will make sales much more difficult. NAR has developed the following talking points that can be used when responding to queries:
There's no way of knowing what percentage of foreclosures that were improperly processed were, in fact, inappropriate or wrongly taken. The assumption is that for most of them, this may be only a technicality and that the property ultimately would have been repossessed.
For owners who believe their home was wrongly foreclosed, they may wish to contact a real estate attorney to investigate the possibility of a property claim. However, that could prove costly and time consuming--regulations vary by state.
For banks, it may make sense to modify loans or agree to short sales to expedite disposal of inventory.
For buyers, the assumption is that listed foreclosures come with clear property title but they should discuss any necessary contract contingency with their attorney.
Foreclosures in limbo are likely to be withdrawn from the market. It's too early to tell if there's an impact on the market but we will be monitoring the situation.

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