You have to love the banks and Wall Street. (well, not really) First, they get the country caught in this economic mess which has lasted about 5 years so far, (primarily due to greed) (Forrest Gump can explain that much better than I can). …and now, due to bank’s lack-luster handling of paperwork which is even fraudulent in some cases, judges in up to 23 states may be halting the foreclosure process due to the bank’s ability to even prove they have the right to foreclose.
This is bad enough, as it will delay (but not eliminate) foreclosures. Unfortunately, this set back won’t be able to help most of the homeowners keep their homes long term; but now is where it gets even worse. Old Republic National Title Insurance Company (a very large company) has just announced Friday that they have halted insuring titles from Chase and GMAC, and more banks make make the list. Bank of America has announced they too will temporarily stall the foreclosure process in these states as well.
Why is this important and how does it effect you as a potential buyer? As I reported in my Sarasota real estate statistics article for August 2010 numbers, In Sarasota, 47% of all Sarasota real estate sales are considered distressed sales. When Sarasota foreclosures are done with faulty documentation, that could leave the new owners of the house vulnerable to claims. Title insurance protects the buyer against defects, errors or omissions in the chain of title.
If more title insurance firms began to shy away from insuring foreclosed properties, certainly the foreclosure market may suffer. The prices of foreclosures could potentially drop, because lenders will not issue a new mortgage without title insurance. … Not sure how this will play out in the overall Sarasota real estate market, but I think I am going to buy shares of stock in Mcneil Pharmaceuticals….makers of Tylenol.