“Robo-Signing” and New Risks Foreclosure Buyers Face Today

The Realty Times website just released a new article where I discuss some important points regarding the recent news of “robo-signing” by some of the larger banks and how this will affect foreclosure sales.

I also discuss some important information that agents need to know about foreclosed homes that are currently occupied by long-term tenants.

Below is an excerpt from the article:

“What does this do to the foreclosure market for buyers?

“For the buyers of these properties, there shouldn’t be any problem,” says Churchill.

But he says it depends on where you purchase them, “If I as an investor bought a foreclosure at an auction and it turned out it’s a robo-signing type situation, I shouldn’t have any problem or suffer any consequences from it because virtually all state laws provide that if you’re a good faith purchaser for value at the auction, you get good title. If there’s a screw up where the lender didn’t protect the borrower or didn’t do something right, that’s a lawsuit between the two of them now,” says Churchill.

But he does offer this advice about buying foreclosures.

“A new thing that has come into play is the federal government last year passed this Protecting Tenants at Foreclosure Act. If there is a tenant in the property that’s foreclosed on [that tenant] can stay for the balance of the lease. So if you buy a property that’s occupied, if you don’t know whether it’s the owner or a tenant that’s occupying it, you could get in trouble,” says Churchill.

Churchill says if the property is occupied by the owners, they have to leave the property fairly quickly or are evicted. “But because of this new federal law, [tenants] are guaranteed to stay at least 90 days under the federal law and if they have a long-term lease (two-year lease), they can stay for the balance of the lease.”

He points out that a tenant does have to make rent payments. “But if you intended to move in to that [property] or flip it, you’re going to be stuck with it or you have to figure out a way to buy out the tenant,” says Churchill.”

>> Click here to read the article at Realty Times