With all the recent news about Old Republic Title Insurance Company having stopped writing title insurance policies for J.P. Morgan Chase and GMAC Mortgage foreclosed properties because of objectionable issues about their foreclosure processes, one wonders if things could get any worse. Couple this with Bank of America having already frozen foreclosures in certain states because of concerns over the preparation and execution of foreclosure documents, it seems only a matter of time before BofA puts their own freeze on foreclosed properties already on the market for lack of insurable title.
Can this happen to one of our country's largest sellers of bank owned properties and would it apply to all states including California which is a non-judicial foreclosure state? Absolutely! It seems this epidemic is spreading with more banks being concerned over their foreclosure processes. I have just been informed of my client's escrow relative to her purchase of a bank owned property is being frozen today! And, it's not an asset held by BofA. PNC Bank, the nations fifth largest bank based in Philadelphia, has made a blanket policy to freeze all current sales until such time as they can sort out whether they have followed all appropriate laws and practices for "clean" foreclosures whether in judicial or non-judicial states. Wow, this is going to really create concern amongst buyers.
So, now which is better for a buyer, the short sale that needs lender approval or the bank owned property that could be frozen for an internal review or have uninsurable title declared prior to close of escrow? I'd hate to be a buyer today trying to buy as there just aren't enough traditional sales to look at on the market if you really want to get a home to live in with much certainty after signing the contract. Distressed properties are uncertain - the discount to market comes at a price to the buyer. Time will tell what happens next.
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