Bank of America stopped, and then restarted its foreclosure process because of possible bad paper work. As I understand it, each state has its own foreclosure proceedings that are set by law. The process it to protect both the loan holder and the person in default. They are governed by legal statutes and must be followed. Some states are much more lenient than others. Virginia has a process that must be followed to constitute the legal taking of a property.
Going back to the major problem of the banks and other lenders packaging loans and selling them as investments. When a portion is “toxic”, we get into paper work that may have not followed the loans as they should have. The “note” or the document that states the collateral for the loans/deeds of trust is the problem, because as the system sold all these loans, the original notes were copied and faxed or scanned, but the original note did not always get sent with the package.
The original note, as I understand it, is required to do a proper foreclosure. There were also other paper work that came from various services that may have had some problems.
Bottom line is that the owners were not making their payments and the loan holders had the right to foreclose, but all the paperwork was not correct in some cases or maybe in a lot of cases.
So what happens now? Some legal experts will weight in and some lawyers will try to see how they can make money off of it and eventually it will be sorted out. What you need to know is that any contract that you enter into to purchase a property should have the statement: “Title must be marketable and insurable to buyer’s satisfaction at their sole discretion” and make sure you get good legal advice.
I am not a lawyer and this is not legal advice!! It is what we have been advised to do. There are some great buys on the market, want one? Call us.
