On October 1, 2010, Fannie Mae and Freddie Mac released statements regarding servicer compliance with foreclosure processing of Fannie and Freddie loans. In the releases, both organizations reiterated that servicers must comply with applicable state laws governing foreclosures. Although nearly all of the foreclosures in question are expected to be fixed eventually, the current situation is creating difficulties and a new hurdle to the recovery of the housing and mortgage markets. National Association of Realtor (NAR) members are 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. While banking executives focus their attention on this problem, it is possible that servicers may be somewhat more receptive to approving loan modifications and short sales, since they avoid the foreclosure procedural problems altogether.
Here’s some things to keep in mind when you consider the above:
- For banks, it may make sense to modify loans or agree to short sales to expedite disposal of inventory. If you are in need of a loan modification or are interested in doing a short sale for your property, now is the time.
- For owners who believe their home was wrongly foreclosed, 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 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 Foreclosures in limbo are likely to be withdrawn from the market.
- There’s no way of knowing what percentage of foreclosures that were improperly processed were, in fact, inappropriate or wrongly taken.
If you have questions or need help with a short sale, please feel free to contact me.