Here they go again. The lenders, that is. Washing their hands and passing all of their title problems to the unsuspecting buyers of their REO properties. But after reading this, you will know how to handle them all. So let's dig into it.
As you've probably heard by now, foreclosure proceedings are being reviewed all over the U.S. What you haven't probably heard is about the potential title problems that may come back and bite you financially hard in the future. How? Let me ask you...
What are the odds that the home you're living in right now or in the future may have had a foreclosure in its history? I would say very high based on the skyrocketing number of foreclosures. What if this property was incorrectly foreclosed upon?
As I talked about in one of my blog posting before, even if the foreclosure happened a long time ago, a title defect can put you in a lot of problems if the transfer of ownership has breaks in it. You may have bought or will buy a property that whomever sold it to you did not technically own it!
I just heard that Wells Fargo Bank is creating an addendum to their REO property sales contract that basically transfers all risk for any title defects on to the buyer. So they could be selling you something they don't legally own and they are not responsible. At the last minute before closing, Wells Fargo Bank presents this addendum which you must sign it in eight different places or there is no deal.
The effect is like getting a "Quitclaim Deed". When you get a Quitclaim Deed, the seller is transferring to you their "rights" to the property, which could be NONE!
What can you do? I'll tell you what I will do. I will not accept anything less that a Grant Deed from any bank. If the deal falls through, so be it.
Tuesday, November 2, 2010
Monday, October 25, 2010
FHA loans will be harder to get
Gibran Nicholas, Chairman, CMPS Institute www.CMPSInstitute.org writes in Volume 31 number 20 of Bottom Line Personal for October 2010 that soon there will be higher monthly fees, larger down payments and tougher credit-score requirements for loans backed by the Federal Housing Administration (FHA).
The article states that the rules passed by Congress and implemented by the FHA are designed to make sure that the FHA stays solvent by improving the quality of its loan portfolio. Monthly premiums for mandatory credit-risk insurance will be increased and for the first time the FHA will require that loan applicants meet credit score requirements with loan term adjustments based on scores. It also notes that there will be limits on how much of a home's price the seller can contribute toward the buyer's price.
The articles ends by recommending you to check if you qualify for better terms with Fannie Mae or Freddie Mac home loans instead of FHA.
See you soon.
The article states that the rules passed by Congress and implemented by the FHA are designed to make sure that the FHA stays solvent by improving the quality of its loan portfolio. Monthly premiums for mandatory credit-risk insurance will be increased and for the first time the FHA will require that loan applicants meet credit score requirements with loan term adjustments based on scores. It also notes that there will be limits on how much of a home's price the seller can contribute toward the buyer's price.
The articles ends by recommending you to check if you qualify for better terms with Fannie Mae or Freddie Mac home loans instead of FHA.
See you soon.
Tuesday, October 19, 2010
More on the Foreclosure Freeze. Uncertainty.
More uncertainty has been created by this "foreclosure freeze" buzz and uncertainty is never good for business.
One of the areas that investors like me are now concerned about is the sale of REO's (Real Estate Owned) or bank owned property that you may have recently purchased.
Some people that lost their homes to foreclosure are now contacting attorneys about the possibility of getting their homes back, even months after the foreclosure ended. What could this mean to you?
If you sell a property that was an REO, your purchase and sale of said property could be undone if the bank that sold you the property did something wrong during the foreclosure proceedings. Can you imagine the mess you'd be in? It could END your real estate investment career.
I invite you to comment on this and previous posts.
One of the areas that investors like me are now concerned about is the sale of REO's (Real Estate Owned) or bank owned property that you may have recently purchased.
Some people that lost their homes to foreclosure are now contacting attorneys about the possibility of getting their homes back, even months after the foreclosure ended. What could this mean to you?
If you sell a property that was an REO, your purchase and sale of said property could be undone if the bank that sold you the property did something wrong during the foreclosure proceedings. Can you imagine the mess you'd be in? It could END your real estate investment career.
I invite you to comment on this and previous posts.
Wednesday, October 13, 2010
More of my thoughts about the foreclosure freeze
In my previous blog I talked about how this "freeze" (that could soon may become a "moratorium") benefited those who were about to lose their homes by allowing them to live rent-free for a few (or a lot) more months.
What's the downside? Plenty. A lot of "gurus" had predicted that sales of foreclosed homes would continue until about the end of 2011. But because lenders now will have to review all of their foreclosure procedures and documents for each and every file on a home they are about to foreclose, they are predicting that this "mess" will continue another 3 more years.
Real Estate Agents are immediately negatively impacted by this. How? They cannot sell REO's (Real Estate Owned) houses. No sales, no money! For REO Listing Agents, this is the only source of income. Ouch!
Banks are not getting paid on their loans. When a borrower stops paying, this becomes a non-performing asset. That's when they start the foreclosure process against a borrower (homeowner). They will take a hit on these assets. They will either sell the notes at a great discount to people or business with CASH or eventually they will own the property REO and will take the loss when they sell it.
What do banks do in this situation? They don't loan money! If you cannot borrow to buy a home, a house is NOT sold. This will eventually create more inventory of unsold homes and the price will have to go down, according to the laws of supply and demand. Is this good?
I will continue my thoughts in the next blog.
What's the downside? Plenty. A lot of "gurus" had predicted that sales of foreclosed homes would continue until about the end of 2011. But because lenders now will have to review all of their foreclosure procedures and documents for each and every file on a home they are about to foreclose, they are predicting that this "mess" will continue another 3 more years.
Real Estate Agents are immediately negatively impacted by this. How? They cannot sell REO's (Real Estate Owned) houses. No sales, no money! For REO Listing Agents, this is the only source of income. Ouch!
Banks are not getting paid on their loans. When a borrower stops paying, this becomes a non-performing asset. That's when they start the foreclosure process against a borrower (homeowner). They will take a hit on these assets. They will either sell the notes at a great discount to people or business with CASH or eventually they will own the property REO and will take the loss when they sell it.
What do banks do in this situation? They don't loan money! If you cannot borrow to buy a home, a house is NOT sold. This will eventually create more inventory of unsold homes and the price will have to go down, according to the laws of supply and demand. Is this good?
I will continue my thoughts in the next blog.
My Thoughts About The Foreclosure Freeze Mess
It's all over the media, the foreclosure freeze that could become a moratorium. Banks have been supposedly caught doing illegal acts to more quickly take the homes from their owners and Attorney Generals filing lawsuits right and left against lenders to prevent foreclosures. You've read it, viewed it or heard it didn't you?
What does the foreclosure freeze do? First of all, it allows homeowners who had already stopped paying their mortgage, a few more months of rent-free living. I'm talking about those folks that got the NOD (Notice of Deficiency) from their lender after missing 2, 3 or more monthly payments (in some cases more than a year of missed payments) and they made a decision to stay in the home until evicted or move before it.
This is good for these folks. They can save money by living rent-free for as long as possible. I hope they are really putting this money away and not wasting it. They will need it because getting credit for anything for the next 7 years will almost be impossible.
I'm not going to judge anybody although some are 100% at fault for their plight. Others just lost their jobs and have not been able to find another with the same pay. Some were too optimistic about their future earning potential and bought a house they could not really afford. And now they all are in foreclosure proceedings and about to lose their homes.
I think I've gone long enough for this initial post. In my next post I will continue with my thoughts about this mess and the downside for other that are directly affected by this freeze.
What does the foreclosure freeze do? First of all, it allows homeowners who had already stopped paying their mortgage, a few more months of rent-free living. I'm talking about those folks that got the NOD (Notice of Deficiency) from their lender after missing 2, 3 or more monthly payments (in some cases more than a year of missed payments) and they made a decision to stay in the home until evicted or move before it.
This is good for these folks. They can save money by living rent-free for as long as possible. I hope they are really putting this money away and not wasting it. They will need it because getting credit for anything for the next 7 years will almost be impossible.
I'm not going to judge anybody although some are 100% at fault for their plight. Others just lost their jobs and have not been able to find another with the same pay. Some were too optimistic about their future earning potential and bought a house they could not really afford. And now they all are in foreclosure proceedings and about to lose their homes.
I think I've gone long enough for this initial post. In my next post I will continue with my thoughts about this mess and the downside for other that are directly affected by this freeze.
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